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of <h1>Tribunal overturns duty demand due to lack of evidence</h1> The Tribunal set aside the impugned order confirming the demand of duty, interest, and penalty for alleged clandestine removal due to lack of ... Clandestine removal of goods - assumption / presumption - demand based on the statement - absence of corroborative evidence - appellant submits that in this case there was no shortage of finished goods were found at the time of search and the raw material found short was assumed by the authorities below that same has been used in manufacturing of final product which have been removed clandestinely without payment of duty - Held that:- the case has been made out only on the basis of the statement of Shri Baldev Singh, Managing Director of the appellant and no other evidence in the form of to manufacture of such huge quantity, the consumption of electricity, additional packing material, payment for purchase of additional packing material, payment received for clandestine removal goods, how the goods were transported has been brought on record by the Adjudicating Authority or the inspecting team, therefore, relying on the above said decision cited hereinabove, we hold that charge of clandestine removal is not sustainable in the absence of any corroborative evidence to the statement of Shri Baldev Singh, Managing Director. - Demand set aside - Decided in favor of assessee. Issues Involved:1. Demand of duty along with interest and imposition of penalty for alleged clandestine removal.2. Validity of statements recorded under alleged duress and their subsequent retraction.3. Basis of charge of clandestine removal on assumptions and presumptions without corroborative evidence.4. Consideration of wastage percentage in manufacturing and its impact on the alleged shortage of raw materials.5. Reliance on external expert opinions regarding wastage and their relevance.Issue-wise Detailed Analysis:1. Demand of Duty Along with Interest and Imposition of Penalty for Alleged Clandestine Removal:The appellants contested the impugned order confirming the demand of duty along with interest and the imposition of penalty on the charge of clandestine removal for the period from 1st April 2003 to 21st May 2004. The Revenue's application for early hearing of appeals was dismissed as infructuous since the appeals were already listed for disposal.2. Validity of Statements Recorded Under Alleged Duress and Their Subsequent Retraction:The case facts reveal that the Central Excise officers conducted a search on 25th May 2004 and found no physical discrepancies. Statements from the Managing Director, Shri Baldev Singh, were recorded on 21st May 2004 and 3rd May 2005, admitting to a 15-20% wastage and alleged clandestine removal. These statements were retracted on 31st May 2004 and the same day, respectively, with claims of being recorded under duress. An affidavit from Shri Dinesh Kumar, an employee, stated that the statements were typed by the Department officers, not by him, which was not controverted.3. Basis of Charge of Clandestine Removal on Assumptions and Presumptions Without Corroborative Evidence:The appellants argued that the charge was based solely on assumptions and presumptions without supportive evidence. The Department's case relied on the Managing Director's statements without corroborative evidence such as additional electricity consumption, packing materials, or payment records for clandestine transactions. The Tribunal referred to similar cases (Klene Paks Ltd., Nissan Thermoware P. Ltd., Mahavir Metals Industries) where it was established that assumptions and presumptions could not substantiate allegations of clandestine removal without concrete evidence.4. Consideration of Wastage Percentage in Manufacturing and Its Impact on the Alleged Shortage of Raw Materials:The appellants highlighted that the authorities assumed the raw material found short was used for manufacturing final products removed clandestinely. They pointed out that the Knitwear Club, Ludhiana, reported a 40% wastage, contradicting the Department's assumption of 10-15% wastage. The Tribunal noted that the Adjudicating Authority did not consider the wastage on each production stage or the independent body's statement about the 40% wastage.5. Reliance on External Expert Opinions Regarding Wastage and Their Relevance:The appellants supported their argument with the Knitwear Club's wastage report and cited several judicial precedents (CCE vs. Saakeen Alloys Pvt. Ltd., Mahavir Metals Industries vs. CCE & CUS, Daman, Vapi, Nissan Thermoware P. Ltd.) emphasizing that mere statements without corroborative evidence could not substantiate clandestine removal. The Tribunal agreed that the absence of concrete evidence, such as records of additional raw materials, finished goods, or transportation, rendered the charge unsustainable.Conclusion:The Tribunal concluded that the charge of clandestine removal was not sustainable without corroborative evidence supporting the statements of the Managing Director. The impugned order was set aside, and the appeals were allowed with consequential relief. The operative part of the order was pronounced in open court.
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