1998 (7) TMI 718 - AT - Central Excise

Tribunal rejects Revenue's appeal, upholds Commissioner's order. JAL prevails with no proof of clandestine removal.

CCE, Bangalore Versus Jindal Aluminium Ltd.

The Tribunal dismissed the Revenue's appeal against M/s. Jindal Aluminium Ltd. due to non-joinder of necessary parties, lack of substantial evidence, and ... - Issues Involved:1. Non-joinder of necessary parties.2. Allegations of clandestine removal of goods.3. Violation of principles of natural justice.4. Admissibility and reliability of evidence, including lorry challans.5. Examination and retraction of witness statements.6. Comparison and analysis of production figures.7. Procedural fairness in adjudication.Detailed Analysis:1. Non-joinder of Necessary Parties:The Revenue's appeal was fundamentally flawed due to the non-joinder of M/s. Arya Central Transport Ltd. (ACTL). The evidence against M/s. Jindal Aluminium Ltd. (JAL) was based on lorry challans seized from ACTL's premises. The Tribunal emphasized that without making ACTL a party to the proceedings, the appeal against JAL was not maintainable and liable for dismissal.2. Allegations of Clandestine Removal of Goods:The Revenue alleged that JAL was involved in clandestine removal of goods without payment of Central Excise Duty (CED). This allegation was based on discrepancies found in lorry challans and consignment notes. However, no incriminating evidence was found during the search of JAL's premises, and the statutory and private records did not support the Revenue's claims. The Tribunal noted that the case built on lorry challans alone was insufficient to prove clandestine removal without corroborative evidence.3. Violation of Principles of Natural Justice:The Revenue claimed that the Commissioner of Central Excise violated principles of natural justice by not allowing the Department to depute officers to defend the case and by not postponing the personal hearing. The Tribunal found these allegations baseless, noting that the Commissioner had provided fair opportunities for the Revenue to present its case. The Tribunal emphasized that the Revenue's thorough investigation yielded no evidence against JAL, and the allegations of procedural unfairness were unfounded.4. Admissibility and Reliability of Evidence:The Tribunal critically examined the reliability of lorry challans as evidence. It was argued that lorry challans were prepared for accounting purposes and not for documenting the removal of goods. The Tribunal found that the lorry challans alone could not substantiate the allegations of clandestine removal, especially when no corroborative evidence was found in JAL's records. The Tribunal cited precedents establishing that private records without corroborative evidence are insufficient to prove clandestine removal.5. Examination and Retraction of Witness Statements:The Tribunal addressed the retraction of statements by key witnesses, specifically Shri Kamalesh Gaind of ACTL. The Tribunal noted that his retraction was found baseless upon inquiry and that the original statements were credible. The Tribunal criticized the Adjudicating Authority for accepting retractions without valid reasons and without allowing the Department to cross-examine witnesses, thus violating principles of natural justice.6. Comparison and Analysis of Production Figures:The Tribunal examined the production figures submitted by JAL, which were certified by a Chartered Accountant and the Range Superintendent. These figures indicated a consistent production yield of around 98%, contradicting the Revenue's allegations of suppressed production and clandestine removal. The Tribunal found that the Adjudicating Authority had properly relied on these figures, and the Revenue failed to provide irrefutable evidence to the contrary.7. Procedural Fairness in Adjudication:The Tribunal upheld the Commissioner's order, noting that it was well-reasoned and based on a thorough analysis of evidence. The Tribunal emphasized that the Commissioner had judiciously considered all submissions and evidence, and there was no indication of bias or procedural unfairness. The Tribunal reiterated that the burden of proving clandestine removal lies heavily on the Revenue, which it failed to discharge in this case.Conclusion:The Tribunal dismissed the Revenue's appeal, finding it lacked merit due to non-joinder of necessary parties, insufficient evidence, and baseless allegations of procedural unfairness. The Tribunal affirmed the Commissioner's order, which had judiciously analyzed the evidence and found no substantiation for the allegations against JAL. The cross-appeal by JAL was also disposed of accordingly.