Tribunal sets aside penalties under Central Excise Act due to lack of evidence

The Tribunal set aside the demand confirmation and penalties under Section 11AC of the Central Excise Act against the appellant. It held that the demand solely based on balance sheet figures submitted for tender purposes, without evidence of actual production or clearance without duty payment, was unsustainable. Emphasizing the need for corroborative evidence and lack of investigation by the Revenue, the Tribunal allowed the appeals and granted consequential relief to the appellants in accordance with the law.

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Issues: Appeal against demand confirmation and penalties under Section 11AC of the Central Excise Act based on alleged suppression of production and wrongful availing of small scale exemption notification.

Analysis:
1. Background: The appellant, engaged in manufacturing medicaments, faced a demand of Rs. 1,61,96,088/- and penalties for allegedly suppressing production and wrongly availing a small scale exemption notification.

2. Contention - Appellant: The appellant argued that the figures in the balance sheet were inflated to meet tender requirements by the Health Department and were not indicative of actual production or clearance without duty payment. They cited various decisions supporting their stance, emphasizing that demand cannot be based solely on figures submitted for other departmental benefits.

3. Contention - Revenue: The Revenue contended that the figures in the balance sheet, submitted in response to Health Department tenders, were accurate and formed the basis for confirming duty demand.

4. Judgment: The Tribunal noted that the demand was solely based on balance sheet figures submitted for tender purposes, with no evidence of actual manufacture or clearance without duty payment. Citing precedents, the Tribunal held that demand solely relying on figures submitted for other departmental benefits is unsustainable without corroborative evidence. As no investigation was conducted by the Revenue regarding production and clearance of goods, the demand and penalties were deemed unsustainable and set aside. The appeals were allowed, granting appellants consequential relief as per the law.

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