2019 (1) TMI 1225 - AT - Central Excise

Case on Central Excise duty evasion in Packaged Drinking Water manufacturing results in party's victory over Revenue's appeal.

Commissioner, CGST & Central Excise, Lucknow Versus M/s Bohra Sales & Trading

The case involved allegations of clandestine removal of goods without payment of Central Excise duty in the manufacturing of Packaged Drinking water. The ... Clandestine removal - SSI Exemption - no evidence produced by Revenue to prove clandestine activities - Held that:- The Revenue has not advanced any further evidence to show the clandestine activities of the respondents. It is well settled law that clandestine removal allegations are required to be established by sufficient and positive evidence and the same cannot be upheld on the basis of surmises and conjecture - demand cannot be upheld - appeal dismissed - decided against Revenue. Issues: Alleged clandestine removal of goods without payment of Central Excise duty, validity of seizure of goods, confirmation of duty demand, imposition of interest and penalties, ownership and genuineness of seized register, applicability of SSI exemption, confiscation of goods, sufficiency of evidence for clandestine activities.Analysis:1. Clandestine Removal Allegations:The case involved allegations of clandestine removal of goods without payment of Central Excise duty. The party was engaged in manufacturing Packaged Drinking water under CETH 22. The department seized goods valued at Rs. 91,872 with duty involvement of Rs. 11,455, suspected to be intended for removal without payment of duty. The party denied the veracity of the seized BST register, leading to show cause notices and confirmation of duty demand for various periods under Section 11A(1) of the Central Excise Act, 1994.2. Seizure and Confiscation of Goods:The Adjudicating Authority confirmed the confiscation of 11,136 bottles of packaged drinking water valued at Rs. 91,872, along with the demand for duty, interest, and penalties for different periods. The imposition of penalties under Section 11AC of the Act and Rule of the Central Excise Rules, 2002 was also confirmed based on the actual clearance shown by the party and entries in the seized BST register.3. Ownership and Genuineness of Seized Register:The Commissioner (Appeals) observed discrepancies regarding the ownership of the seized register. The party claimed no knowledge of the entries in the register, stating it was maintained by a loading person. The Commissioner found force in the party's statement, questioning the genuineness of the register and the entries therein, especially those related to brands not manufactured by the party. The Commissioner relied on established case laws to support the party's claim regarding the doubtful nature of the register.4. Applicability of SSI Exemption and Confiscation of Goods:The Commissioner (Appeals) noted that the party, being eligible for the SSI exemption, was not required to take registration in the relevant financial years. Therefore, the finished goods found in the premises were deemed not liable for confiscation. The Commissioner allowed the party's appeal, concluding that since the demand was not sustainable, interest and penalties were also not justified.5. Sufficiency of Evidence for Clandestine Activities:The Appellate Tribunal emphasized the requirement for sufficient and positive evidence to establish allegations of clandestine activities. In this case, the Revenue failed to provide further evidence to support the clandestine removal allegations against the party. As such, the Appellate Authority rightly set aside the demand, leading to the rejection of the Revenue's appeal due to insufficient evidence.In conclusion, the judgment revolved around the disputed clandestine removal allegations, ownership of the seized register, applicability of SSI exemption, and sufficiency of evidence. The Commissioner (Appeals) and the Appellate Tribunal both found in favor of the party, rejecting the Revenue's appeal based on the lack of concrete evidence supporting the allegations of clandestine activities.