Balance sheet vs RT-12 production mismatch in alleged clandestine excise removals; appeal rejected for lack of corroborative evidence.

Clandestine removal was alleged solely on the ground that production reflected in the balance sheet exceeded production declared in RT-12 returns. The Tribunal held that clandestine manufacture and clearance is a serious charge requiring the Revenue to adduce sufficient, tangible, corroborative evidence; mere discrepancies in documents, without proof of actual manufacture, unaccounted raw materials, transport, buyers, or receipt of sale proceeds, are inadequate, and the standard cannot be diluted to mere preponderance of probabilities. Accepting the assessee's explanation that balance sheet figures were inflated for financing purposes, the Tribunal found the allegation unsubstantiated and rejected the Revenue's appeal.

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Issues involved: Appeal by Revenue challenging dropping of charge of clandestine removal against respondents based on discrepancies in production figures between balance sheet and RT-12 returns.

Summary:

Issue 1: Dropping of charge of clandestine removal
The Revenue appealed against the dropping of the charge of clandestine removal by the Commissioner due to discrepancies in production figures between the balance sheet and RT-12 returns. The adjudicating authority found no corroborative evidence to support the higher production figures shown in the balance sheet. The authority emphasized the need for further evidence to hold the assessee accountable for duty payment, such as correlating finished products with raw material consumption. The authority also noted the possibility of inflated figures in the balance sheet for loan purposes. The Tribunal agreed with the adjudicating authority, stating that the charge of clandestine removal requires sufficient and tangible evidence. The Tribunal rejected the Revenue's argument that the standard of proof should be based on preponderance of probabilities, not absolute proof. As no additional evidence was presented by the Revenue besides the production figure differences, and the respondents explained the inflated figures for loan purposes, the Tribunal found no merit in the Revenue's appeal and dismissed it.

This judgment highlights the importance of substantial evidence in cases of clandestine removal and emphasizes the need for a thorough investigation to establish liability for duty payment.

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