TaxTMI 
TaxTMI 
2026 (5) TMI 920
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....gainst the appellant and during the course of such investigations, searches were conducted on 18.07.2006 at the godown of the appellant. During the course of search, officers found large quantities of goods stored in drums without proper identification or documentation. Samples were drawn in a representative manner in the presence of witnesses and sent for testing. Test reports indicated the presence of Menthol, Peppermint Oil and Terpenoidal Rejects. The appellant failed to produce documents to establish licit manufacture or clearance of the goods. Statements of responsible persons were recorded under Section 14 of the Central Excise Act, 1944. 2.2. Based on investigation, a Show Cause Notice dated 17.07.2007 was issued to the appellant proposing confiscation of goods, demand of duty of Central Excise duty of Rs.61,28,715/-, interest and penalty under Rule 25 of the Central Excise Rules, 2002. The Order-in-Original dated 15.05.2008 confirmed the demand of duty with interest and imposed penalty of Rs. 15,00,000/- and ordered confiscation with option to redeem the goods on payment of redemption fine of Rs. 75,00,000/-. 2.3. In the first round of litigation, the CESTAT vide ord....
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..... The appellant also makes the submission that the Principal Commissioner has erred in holding that there is a variance between the Joint Final Surveyors' Report and the test report of IIT, Delhi, regarding the contents of the subject drums. It has been submitted that the said report was prepared based on a presumption as regards the content of the said 628 drums; as observed by the Arbitral Tribunal, in its Award dated 21.07.2011, the surveyors had not carried out any chemical tests in respect of the unaffected stocks; further, the Hon'ble Delhi High Court, in its order dated 17.07.2018, observed that the report had estimated the content and value of the unaffected stocks based on the physical dimensions of the storage tanks. 3.2. The appellant contended that the Principal Commissioner has erred in drawing an adverse inference based on the alleged variance between the survey report and the test report. In any event, the appellant argues that the Principal Commissioner has erred in holding that since the total number of drums containing unaffected stocks is 628 drums as against the 1,579 drums which are the subject matter of re-adjudication, there is no connection betwee....
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.... Ahmedabad in the case of Arya Fibers Pvt. Ltd. v. CCE, Ahmedabad-II and contended that there should be tangible evidence of clandestine manufacture and clearance to demand central excise duty . Central Excise duty cannot be demanded merely on the basis of inferences or unwarranted assumptions. In view of the above, it is submitted that the impugned order has been passed without considering the principle laid down in the case of Flevel International (supra) despite specific directions of this Hon'ble Tribunal and thus, the impugned order is liable to be quashed and set aside. 3.6. Thus, the appellant's contention is that the demands of central excise duty confirmed in the impugned order along with interest and penalty is not sustainable and accordingly, have prayed for setting aside the same. 4. On the other hand, the Ld. Authorized Representative appearing for the Revenue submits that the contention of the appellant that the goods found in godown in 2006 pertain to pre-registration period and were part of stock destroyed in fire of 1998 has not been supported by the documentary evidences available on record; that the adjudicating authority examined the Joint Final Survey....
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....t central excise duty has been finally demanded and confirmed on the basis of the allegation that the appellant has removed the goods clandestinely. Clandestine removal is a serious allegation which needs to be corroborated by tangible evidence. Some goods found in a godown could not automatically lead to the conclusion that they were manufactured and cleared clandestinely. In this case, we find that no proof whatsoever has been adduced, either at the stage of investigation or at the stage of re-adjudication, the evidences required to substantiate the allegation of clandestine manufacture and clearance. There is no evidence available on record proving the existence/usage of any raw materials which may have been used for the purpose of manufacturing the finished goods alleged to have been removed clandestinely. Apart from the bald allegations in the show cause notice about certain intelligence regarding raw material suppliers in Jammu enjoying area-based exemption, no oral or documentary evidence whatsoever is brought on record by the department to prove its case that the goods lying in the godown constitute clandestinely removed goods. 6.2. In the case of Flevel International (s....