2008 (3) TMI 104 - AT - Central Excise

Tribunal grants relief due to lack of evidence and time-bar issues

The Tribunal allowed the appeals, emphasizing the need for the Revenue to substantiate claims of clandestine activities with concrete evidence and adhere ... SCN issued after 5 years on ground that wrong entries are made in RG-1 register – assessee contended that the discrepancy in RG 1 register was only marginal and there was no corroborative evidence with regard to the clandestine removal of the goods - Revenue failed to establish the excess production or procurement of raw materials or excess consumption of electricity and clandestine removal of goods – SCN with in ordinate delay of about 5 years, is time barred – assessee’s appeal allowed Issues:Delayed issue of show cause notice after more than 5 years of investigation, rejection of plea on time-bar and merits by lower authorities, lack of corroborative evidence for clandestine removal of goods, burden of proof on the Revenue, applicability of cited judgments on time-bar and lack of evidence.Analysis:The appeal in this case stemmed from an Order-in-Appeal that rejected the assessee's appeal and upheld the demands confirmed in the Order-in-Original. The main contention revolved around the delayed issue of the show cause notice, which occurred more than 5 years after the investigation. The appellants argued that the discrepancy in the RG-1 Register was marginal, with no supporting evidence of clandestine removal of goods. Despite the plea on time-bar and merits, both lower authorities rejected their arguments.Upon hearing both sides, the learned Counsel referenced judgments to support the appellants' case. In the case of Shree Renuka Sugars Ltd., it was held that delayed issue of show cause notice without evidence of excess production or removal does not validate demands for clandestine activities. Similarly, in the case of CCE, Indore v. Prashant Electrode and Monika Electronics Ltd. v. CCE, Delhi, demands issued after significant delays were deemed time-barred. The lack of corroborative evidence further weakened the Revenue's case.The learned JDR contended that the show cause notice could be issued within 5 years of investigation, justifying the actions of the authorities. However, the Tribunal noted that the burden of proof lay with the Revenue to establish excess production, procurement of raw materials, electricity consumption, and clandestine removal of goods. As the Revenue failed to provide such evidence, the appellants succeeded on merits. Citing the judgments, the Tribunal ruled that the demands should be set aside due to the inordinate delay in issuing the show cause notice, granting relief to the appellants.In conclusion, the Tribunal allowed the appeals, emphasizing the need for the Revenue to substantiate claims of clandestine activities with concrete evidence and adhere to the statutory time limits for issuing show cause notices.