2026-VIL-1620-CESTAT-ALH-CE
  1. Home
  2. 2026-VIL-1620-CESTAT-ALH-CE

CENTRAL EXCISE CESTAT Cases

Central Excise – Clandestine manufacture and removal of Pan Masala and Scented Chewing Tobacco, Admissibility of third-party private documents, Burden of proof, Applicability of Section 11A, 11AA and 11AC of Central Excise Act, 1944 – The Department issued Show Cause Notice alleging that Appellant engaged in clandestine manufacture and supply of Pan Masala and Scented Jarda Tobacco, raising demands for Basic Excise duty and NCCD totaling approximately Rs.27 crores based primarily on File No.17 recovered from a third-party transporter and alleged market practices – Whether the Revenue has discharged the burden of proving by legally admissible and cogent evidence that the Appellant clandestinely manufactured and cleared Pan Masala and Scented Chewing Tobacco during December 2020 to May 2021 – HELD – File No.17, the principal document relied upon, was a third-party private record without established authenticity, authorship or evidentiary value and recovered from a person whose legal status, authority and relationship with the transporter company remained unexplored, and mere existence of an entry in a private record maintained by a third party does not ipso facto establish actual movement or delivery of goods. The Department failed to establish the essential links in the chain of evidence – delivery of alleged laminate to Appellant's factory, receipt, consumption in manufacture, actual manufacture of alleged quantity and clandestine clearance. No documentary evidence or corroborative material was placed on record to substantiate the assertion that the said pages contain details of transportation of laminates from any secret premises. The demand for chewing tobacco was computed solely on the basis of presumed market practice that pouches of Pan Masala and Chewing Tobacco are always sold in equal numbers without any direct evidence of procurement, manufacture, clearance, transportation or sale of chewing tobacco. The investigation is conspicuously silent regarding actual receipt of laminate at factory, unloading records, gate registers, weighbridge slips, inward registers or warehouse records and no transporter stated that disputed consignments were actually unloaded at Appellant's premises. The methodology adopted for determining the alleged weight of laminate from number of boxes by applying an average calculated from selected entries was arbitrary, statistically unreliable and legally unsafe for sustaining a charge as serious as clandestine manufacture and removal, more so when the Department's own data showed that identical number of boxes had different weights, establishing that uniformity of contents and weight has not been established. Clandestine manufacture cannot be alleged on basis of presumptions, general market practices or unverified third-party statements and must be supported by concrete evidence such as procurement of excess raw materials, manufacture of excess finished goods, availability of adequate infrastructure, abnormal consumption of electricity or fuel, deployment of additional labour, transportation of clandestinely manufactured goods, identification of buyers, receipt of consideration and corresponding financial flow-back. A presumption cannot be founded upon another presumption and suspicion cannot substitute legal proof. Allegations of clandestine manufacture and removal cannot be sustained on probabilities, assumptions, market perceptions or mathematical calculations but must rest upon positive, cogent and independent evidence establishing every constituent element of alleged clandestine activity. The findings recorded by Adjudicating Authority, as affirmed by Commissioner (Appeals), call for no interference – The departmental appeal is dismissed and Order-in-Original dropping the proceedings, as affirmed by Commissioner (Appeals), is upheld
Download File

Quick Search

/

Advance Search

GST Resources

/

Gst Rate Finder

Weekly Summary

VIL Video

GST & Customs updates: Sep'26
By CA Vivek Jalan

Create Account

Security-Code
New Code?

Log In

New User ? Forgot Password ?

Forgot Password

Security-Code
New Code?
Please Note: This facility is only for Subscribing Members.

Email this page

Security-Code
New Code?

Feedback this page

Schedule a Demo

Schedule a demo to know the features and advantages of VILGST portal. Get to know the tips to find the desired results in faster way.

Security-Code
New Code?

Caselaw Request Form (CRF)

Didn’t find what you are searching for? No worries, please give us the following details and VIL will email you the desired Caselaws at the earliest:

Security-Code
New Code?