Tribunal sets aside duty demand, interest, penalties for lack of concrete evidence

The Tribunal allowed both appeals, setting aside the confirmation of the Central Excise duty demand, interest, and penalties. It emphasized the necessity of concrete evidence to prove allegations of clandestine activities, noting that shortages detected without sufficient corroboration cannot be considered genuine clandestine removals. The Tribunal found the remaining demand confirmation inappropriate due to lack of substantial evidence and recalled the order accordingly.

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Issues: Whether the confirmed demand of duty, interest and penalty based only on stock shortage found on eye estimation, along with the Director's statement and without independent corroborative evidence of clandestine removal, was sustainable.

Analysis: The Tribunal noted that the earlier remand had required the Department to establish clandestine removal by tangible corroborative material, including evidence of raw material purchase, excess production, dispatch, sale proceeds, buyer receipts and power consumption. On remand, the adjudicating authority itself recorded that the allegation rested on presumption and assumption and that no investigation had been made into those matters. The remaining demand was founded only on an alleged shortage noticed during stock verification, which was itself based on estimation. The Director's statement could not, by itself, conclusively prove clandestine removal, and the absence of weighment slips, inventories and other supporting evidence weakened the Revenue's case.

Conclusion: The confirmation of the remaining duty demand, interest and penalties was unsustainable and was set aside; the appeals were allowed.

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