The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that no demand of clandestine manufacture and clearance can be confirmed purely on assumptions.
The Appellant, M/s. Vinayak Agro Industries has been engaged in the manufacture and sale of laminated spring leaves classifiable under Chapter 73 of the Central Excise Tariff Act from its factory-cum-office premises situated at Ratakhandi, Odisha. Mr. Rajesh Kumar Rajuka besides being a Partner of the M/s. Vinayak Agro Industries is also a Proprietor of M/s. Radhagopi Auto Industries and a Director in M/s. Maa Bhagwati Rerolling Mills Pvt. Ltd.
The Officers of DGCEI conducted simultaneous search operations at the factory-cum-office premises of M/s. Vinayak Agro Industries, residence of Mr.Rajuka and the offices of the other business concerns. Pursuant to the search proceedings, DGCEI officials seized a Laptop and 4 Pen drives from the residence of Appellant in presence of wife and nephew.
The case of the department in the Show Cause Notice is that the difference in the sales value as appearing in the alleged Sales Ledger obtained from the seized Pen drives in relation to the available Central Excise Invoices for the relevant period represents clandestine clearances by the Appellant.
The demand proposed came to be confirmed in the adjudication proceedings.
Mr. Rahul Dhanuka, Advocate appearing for both the Appellants has assailed the order on the ground that the charge of clandestine manufacture and clearance is a serious charge, which is required to be established with positive/affirmative/tangible evidence and the burden of establishing the said charge lies heavily upon the revenue and that no demand of clandestine manufacture and clearance can be confirmed purely on conjectures, surmises, assumptions and presumptions.
The coram consisting of P.K.Choudhary and P.Anjani Kumar noted that no efforts have been made by the investigating agencies to establish the existence of any unaccounted manufacturing activity in the form of unaccounted raw material, shortage of stock, shortage of raw material/finished goods, excess consumption of electricity, unaccounted labour payments, interrogation of buyers/transporters or any incriminating record/document to suggest any flow back of cash etc.
The Tribunal further observed that the revenue authorities in this case have failed to discharge the burden of proving the serious charge of clandestine clearance or undervaluation with cogent and clinching evidence.
“It has been consistently held that no demand of clandestine manufacture and clearance can be confirmed purely on assumptions and presumptions and the same is required to be proved by the revenue by direct, affirmative and incontrovertible evidence,” it ruled.
The CESTAT further held that the charge of clandestine removal/undervaluation cannot sustain on the basis of the Pen drive data alone more so when the printouts have not been obtained in compliance with the mandatory conditions of Section 36(2) and (4) of the Central Excise Act.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan AdFree. We welcome your comments at info@taxscan.in
