While considering a bunch of appeals, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Delhi Bench held that the demand of duty on clandestine removal was not sustainable in the absence of corroborative evidence.
The main appellant, M/s. Elora Tobacco Company Ltd. (ETCL) engaged in the manufacture of cigarettes at the factory situated at Industrial Area, Sanwer Road, which were registered with the Central Excise Department and cigarettes are excisable to the duty of Central Excise. On search, Revenue found unaccounted stock/ cigarettes and no raw material was shown to have been issued for manufacturing of 9,80,000/- cigarettes (98 cartons) which were lying in stock to remove clandestinely.
The appellants challenged the order imposing duty and penalties and contended that there was no evidence that such cigarettes were cleared by M/s ETCL or that the material used by M/s ETCL was the same as being found in seized cigarettes at M/s Shekhwati Trading Co., Jaipur.
The adjudicating authority has confirmed the demand by holding that cigarettes bearing brand names were seized from the traders. No evidence has been brought on record to show that the Appellant has not carried on their duty diligently and there is no evidence to point out any wrongdoing on their part.
The Tribunal observed that the impugned order even failed to show the manufacture of excess cigarettes and the demand of duty against M/s ETCL was not sustainable. Further, no penalty was imposable on Shri Shyam Khemani, director of M/s ETCL as there was no evidence in the form of communication or pecuniary benefits availed by the officers from M/s ETCL on record, which can indicate any alliance between the Appellant officers and ETCL for any clandestine manufacturing.
Mr Anil Choudhary, JM and Mr C J Mathew, Technical Memberwhile allowing the appeals set aside the impugned order and held that it cannot be concluded that the officers were involved in helping M/s ETCL in alleged evasion merely on the ground that the cigarettes were seized from traders godown when these officers were deputed for supervision.
Mr Ashish Batra, Mr Anil Mishra, Mr Ankur Upadhyay, Mr Pradeep Singh Rawat, & Mr Aman Rai appeared for the Appellants and Mr Rakesh Agarwal appeared for the Respondent.
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