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of <h1>Tribunal overturns duty demand and penalties due to lack of evidence</h1> <h3>Satguru Cement Pvt. Ltd., Shri Mohan Lal Bansal, Shri Badri Bansal, Shri Rajesh Bansal, Shri Jagdish Chandra Gupta And Shri R.K. Bajaj Versus CCE, Indore</h3> Satguru Cement Pvt. Ltd., Shri Mohan Lal Bansal, Shri Badri Bansal, Shri Rajesh Bansal, Shri Jagdish Chandra Gupta And Shri R.K. Bajaj Versus CCE, Indore ... Issues Involved:1. Demand of duty based on alleged clandestine removal.2. Reliability of loose slips as evidence.3. Production capacity and its impact on the demand.4. Storage and handling of cement.5. Recovery of currency and its correlation to clandestine activities.6. Imposition of penalties on appellants.Detailed Analysis:1. Demand of Duty Based on Alleged Clandestine Removal:The appellants were accused of clandestinely removing cement without payment of duty based on loose slips and statements recorded during a search by the Directorate General of Central Excise Intelligence. The initial demand was recalculated and reduced by the adjudicating authority, but the Tribunal remanded the matter for fresh adjudication, emphasizing the need to examine documentary evidence and annual production capacity.2. Reliability of Loose Slips as Evidence:The defense argued that the loose slips, which were used for rough work, did not indicate correct dispatches and could not be relied upon. The slips were not corroborated with statutory records, and statements recorded were retracted on the same day. The Tribunal found the reliance on loose slips without corroborative evidence to be unsustainable.3. Production Capacity and Its Impact on the Demand:The adjudicating authority accepted the production capacity of 33,600 MT per annum but failed to consider the impact of seasonal variations and actual production records. The Tribunal noted that the maximum production capacity could not be achieved due to factors like wear and tear and rainy seasons. The adjudicating authority's presumption that the cement was manufactured and stored for later clearance was deemed unsubstantiated.4. Storage and Handling of Cement:The defense highlighted that storing such a large quantity of cement was impractical due to space limitations and the perishable nature of cement. The Tribunal agreed, noting that the appellant had limited storage space and that cement stored for long periods, especially in rainy seasons, would spoil.5. Recovery of Currency and Its Correlation to Clandestine Activities:The defense explained the source of the recovered currency, supported by affidavits and CA certificates. The Tribunal found no evidence linking the currency directly to clandestine activities, and the Sales Tax department had dropped similar charges.6. Imposition of Penalties on Appellants:Since the demand for duty was not sustainable, the Tribunal held that the imposition of penalties on the appellants was also unwarranted. The penalties were set aside accordingly.Conclusion:The Tribunal concluded that the demand based on loose slips was not sustainable due to the lack of corroborative evidence. The adjudicating authority's reliance on production capacity and assumptions about storage were flawed. Consequently, the duty demand and penalties were set aside, and the appeals were allowed with consequential relief.
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