Clandestine removal demands fail without independent corroboration; anti-evasion officers had jurisdiction to issue notice.

Notification No. 215/86-CE vested officers of the Directorate General of Anti-Evasion with powers of corresponding Central Excise Officers throughout India, so the Deputy Director had jurisdiction to issue the show cause notice. Allegations of clandestine removal and wrongful credit availment based mainly on statements and private registers failed because the claimed gate-register corroboration did not match invoices on key particulars and there was no reliable independent evidence of transportation or receipt. Retracted statements required cogent corroboration, which was absent. On that basis, the duty demand, credit reversal, interest and penalties were set aside.

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Issues: (i) Whether the show cause notice was without jurisdiction for having been issued by officers of the Directorate General of Anti-Evasion. (ii) Whether the demands of duty, interest, credit reversal and penalties were sustainable on the basis of statements, private records and alleged corroboration from gate registers.

Issue (i): Whether the show cause notice was without jurisdiction for having been issued by officers of the Directorate General of Anti-Evasion.

Analysis: Notification No. 215/86-CE dated 27/03/1986, as amended, vested officers of the Directorate General of Anti-Evasion with the powers of corresponding Central Excise Officers throughout India. The Deputy Director of Anti-Evasion was therefore competent to issue the notice.

Conclusion: The jurisdictional challenge failed and the notice was held valid.

Issue (ii): Whether the demands of duty, interest, credit reversal and penalties were sustainable on the basis of statements, private records and alleged corroboration from gate registers.

Analysis: The alleged clandestine clearances and diversion of goods were founded mainly on statements and seized private registers. The supposed corroboration from the buyer's inward gate register did not match the invoices in respect of invoice numbers, dates, vehicle numbers or quantities, and there was no reliable independent evidence of transportation or receipt at the alleged destination units. The alleged shortage of stock was also not enough by itself to establish clandestine removal. Retracted statements required independent corroboration, which was absent. The same failure of proof also undermined the allegation of wrong availment of credit, and consequently the connected interest and penalty demands could not survive.

Conclusion: The duty demands, credit reversal, interest and penalties were unsustainable and were set aside.

Final Conclusion: The appeals succeeded because the department failed to prove clandestine removal or wrongful credit availment, although the jurisdictional objection to the notice was rejected.

Ratio Decidendi: Allegations of clandestine removal or fraudulent credit availing cannot be sustained on retracted statements and private records alone unless they are supported by cogent independent corroborative evidence.

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