Clandestine removal inferred from inconsistent transport documents; duty demand sustained, while partner penalties were set aside.

In alleged clandestine removal, inconsistent transport documents and unexplained discrepancies between invoices and challans can support a prima facie inference of unauthorised clearance; here, the absence of credible rebuttal sustained the duty demand. The equivalent penalty under Section 11AC was considered excessive on the facts and was reduced. Personal penalties under Rule 209A were unsustainable because the record lacked any independent factual basis or discussion of the individual role of the partner-appellants, and those penalties were set aside.

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Issues: (i) Whether the discrepancy between excise invoices and transport challans established clandestine removal of chewing tobacco and justified confirmation of duty demand. (ii) Whether the penalties imposed under Section 11AC of the Central Excise Act, 1944 and Rule 209A of the Central Excise Rules, 1944 were sustainable.

Issue (i): Whether the discrepancy between excise invoices and transport challans established clandestine removal of chewing tobacco and justified confirmation of duty demand.

Analysis: The duty demand was founded on the fact that the invoices showed delivery to Nepal buyers, while the corresponding transport challans showed delivery only up to intermediary destinations such as Jaynagar or Sitamari, and in several cases the goods were booked as consigned to self. The record showed that other particulars tallied, but the inconsistent destination entries, coupled with the absence of supporting documents from the appellants to explain the transportation arrangement, created a serious doubt about the genuineness of the claimed movement of goods. Once the Revenue established a prima facie case from the transport documents, the burden shifted to the appellants to rebut the inference of clandestine clearance, which they failed to do convincingly.

Conclusion: The finding of clandestine removal was upheld and the duty demand was sustained.

Issue (ii): Whether the penalties imposed under Section 11AC of the Central Excise Act, 1944 and Rule 209A of the Central Excise Rules, 1944 were sustainable.

Analysis: The equivalent penalty under Section 11AC was considered in the light of the overall circumstances and was found to merit reduction. In contrast, the personal penalties imposed on the partner-appellants under Rule 209A were not supported by any discussion of their individual role or the factual basis required for invoking that rule, and therefore could not stand.

Conclusion: The penalty under Section 11AC was reduced, and the penalties under Rule 209A were set aside.

Final Conclusion: The duty demand was maintained, the corporate penalty was reduced, and the partner-level penalties were annulled, resulting in partial relief to the appellants and partial affirmation of the Revenue's case.

Ratio Decidendi: In cases of alleged clandestine removal, a prima facie inference may be drawn from inconsistent transport documents and unexplained documentary discrepancies, and once such a case is made out, the assessee must rebut it with credible evidence; separate penalties require an independent factual foundation.

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