Court overturns duty evasion and penalty based on lack of concrete evidence, emphasizing need for proof beyond record discrepancies.

The appeal was allowed as the court found that the Revenue failed to provide substantial positive evidence beyond record discrepancies to prove clandestine removal of goods, emphasizing the need for concrete evidence. The court highlighted that discrepancies in records alone were insufficient to establish charges of clandestine removal. Therefore, the demand for duty evasion and penalty imposition was set aside, and the appeal was allowed with consequential relief for the appellants.

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Issues: Alleged evasion of duty based on mismatch of quantities in excise records and account records; Challenge on limitation of the demand raised after the normal period.

Analysis:
1. The appellants were involved in the manufacture of unwrought zinc, ingots, brass cast bars, and copper cast bars falling under specific chapters of the Central Excise Tariff Act, 1985.

2. During an audit, a significant difference was noted in the quantity of excisable goods manufactured, cleared, and in closing balance as per the records for the financial year 2008-2009.

3. The audit revealed discrepancies in the closing stock of zinc sulphate hepta and brass ingots as per the excise records compared to the balance sheet, alleging excess clearance of brass ingots without duty payment.

4. The appellants provided a reconciliation statement certified by a Chartered Accountant, stating the presence of brass cast stock at their depot and the clearance of lead scrap as brass ingots.

5. Subsequently, a show cause notice was issued, alleging duty evasion of Rs. 30,22,661, invoking the extended period for demand confirmation, interest, and penalty imposition, leading to the present appeal after orders by the original adjudicating authority and Commissioner (Appeals).

6. The appellant's advocate argued that the Revenue's case solely relied on discrepancies in records without corroborative evidence of clandestine removal, citing Tribunal decisions and challenging the demand's limitation period based on a High Court ruling.

7. The Member (Judicial) observed that the Revenue's case lacked evidence beyond record discrepancies to prove clandestine removal, emphasizing the necessity for positive evidence, referencing Tribunal decisions where discrepancies alone were insufficient to establish clandestine removal charges.

8. The judgment highlighted that proving clandestine removal requires substantial positive evidence, not assumptions. As the Revenue failed to provide such evidence beyond record discrepancies, the charge of clandestine removal was not upheld, leading to setting aside the impugned order and allowing the appeal with consequential relief.

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