Excise Duty Challenge Succeeds: Input-Output Ratio Assumptions Rejected Under Section 35 Without Substantive Evidence

CESTAT allowed the appeal, finding the excise duty demand legally unsustainable. The tribunal determined that the revenue's case was built solely on input-output ratio assumptions without independent verification or corroborative evidence of clandestine manufacture. The department failed to provide substantive proof of unauthorized goods removal or cash transactions. No statements from potential buyers or vehicle owners were recorded, rendering the confiscation of 157.436 M.T. of Sponge Iron invalid. The tribunal set aside the redemption fine and penalties, concluding that the show cause notice lacked specific facts about suppression and was issued beyond reasonable time limitations. .....

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