2019 (10) TMI 1296 - AT - Central Excise

Tribunal Overturns Excise Duty Order, Citing Insufficient Evidence and Emphasizing Need for Thorough Investigation.

M/s. Sarthak Ispat (P) Ltd., Chaitanya Garg Versus Commissioner of Customs And Central Excise, Raipur

M/s. Sarthak Ispat (P) Ltd., Chaitanya Garg Versus Commissioner of Customs And Central Excise, Raipur - TMI Issues:Alleged clandestine removal of goods, reliance on third party evidence, recovery of Central Excise duty, appeal against Order-in-Appeal.Analysis:The judgment involves the manufacturers of MS ingots facing allegations of clandestine procurement and clearance of goods. Central Excise Officers discovered shortages in raw material and finished goods at the premises of another company, leading to investigations and recovery of incriminating documents. Statements were recorded, and a show cause notice was issued proposing the recovery of Central Excise duty from the manufacturers. The Assistant Commissioner initially dropped the proceedings, but the Commissioner (Appeals) allowed the appeals filed by the Department, resulting in an appeal before the Tribunal by the manufacturers.The manufacturers argued that the recovery was based on third party evidence without any direct evidence against them. They cited case laws to support their position. On the other hand, the Department contended that investigations and searches at the other company's premises yielded incriminating evidence implicating the manufacturers in supplying unaccounted raw material. The Tribunal considered both sides' arguments.The Tribunal examined the evidentiary value of third party evidence in cases of clandestine removal, referencing established legal precedents. It emphasized the need for concrete evidence to prove clandestine activities, including excess production details, raw material purchases, transportation records, sale proceeds realization, and power consumption. The Tribunal found the lack of such evidence against the manufacturers, leading to the setting aside of the recovery order. The judgment highlighted the seriousness of clandestine removal allegations and the necessity for tangible evidence to support such claims.In conclusion, the Tribunal ruled in favor of the manufacturers, setting aside the recovery order due to the lack of legal basis to sustain the allegations. The appeals were allowed, emphasizing the importance of thorough investigations and corroborative evidence in cases involving clandestine activities to uphold legal proceedings.