R. S. Company Vs Commissioner of CGST (CESTAT Delhi)
CESTAT Quashes Gutka Duty Demand Due to Lack of Evidence Beyond Transport Records; Excise Demand Based on Mathematical Formula for Gutka Production Held Unsustainable by CESTAT; Denial of Inspection of Original Lorry Receipts Invalidates Duty Confirmation; CESTAT Sets Aside Penalty After Finding No Proof of Clandestine Gutka Clearance.
In R. S. Company Vs Commissioner of CGST, the Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed the appeals filed by the assessee and its partner, setting aside the demand of central excise duty, interest, and penalties relating to alleged clandestine manufacture and clearance of Gutka. The Tribunal held that receipt of one raw material, namely Scented Tobacco, could not conclusively establish clandestine manufacture and removal of Gutka in the absence of corroborative evidence regarding procurement and consumption of other essential raw materials.
The matter arose from investigations initiated in February 2000 by the Directorate General of Central Excise Intelligence into alleged clandestine manufacture and removal of Scented Tobacco by Suresh Enterprises, Pune. During searches, a pocket diary allegedly indicating transportation of Scented Tobacco to Indore through transporters such as Sarita Roadways, Vijayant Travels, and Hari Roadways Corporation was recovered from an employee of Suresh Enterprises. The department also alleged that the appellant had received clandestinely cleared laminated rolls from Laminar Industries. However, the appellant and its partner, Natwar Lal Sharda, denied receipt of unaccounted Scented Tobacco and laminated rolls.
