2017 (11) TMI 2026 - AT - Central Excise

Tribunal overturns decision based on Sales Tax Returns, emphasizes need for evidence

The Appellate Tribunal CESTAT Kolkata, in a judgment by Mrs. Archana Wadhwa, allowed the appeal in favor of the appellant in a case involving allegations ... Clandestine removal - allegation solely based upon the comparison of the figures as reflected by the assessee in their RT-12 Returns and Sales Tax Returns - clandestine activities are required to be established beyond doubt or not - HELD THAT:- Admittedly, the findings of the lower authorities are solely based upon the Sales Tax Returns’ figures. The Tribunal’s decision in the case of VIGIROM CHEM PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, BANGALORE [2009 (8) TMI 1015 - CESTAT BANGALORE] laying down that the clandestine allegation cannot be made exclusively on the basis of record of sale of goods in the Sales Tax Returns. Otherwise also, the allegation of clandestine activities are serious allegation and are required to be based upon the evidences, which reflected upon the same. In the present case, the Revenue has not made any investigation as regards the clandestine manufacture and clearance of the appellant’s final product. In such a scenario, the said finding is neither warranted nor justified. The Revenue’s reliance on the Tribunal’s decision in the case of VICTOR COMPONENT SYSTEMS PVT. LTD. VERSUS COMMR. OF C. EX., DELHI-II [2015 (10) TMI 131 - CESTAT NEW DELHI] is not appropriate inasmuch as it is seen that in that case, the Revenue relied upon the entries made in private records seized and recovered from the appellant’s premises and the matter was remanded for re-quantification, by taking into account the sales figures as reflected in the Sales Tax Returns. The impugned order set aside - appeal allowed. Issues: Allegation of clandestine removal based on Sales Tax Returns figures, requirement of evidence for proving clandestine activities, reliance on precedent decisions of the Tribunal.In this judgment by the Appellate Tribunal CESTAT Kolkata, the Hon'ble Judicial Member, Mrs. Archana Wadhwa, addressed the issue of clandestine removal allegations against the appellant. The appellant was accused based solely on a comparison of figures in their RT-12 Returns and Sales Tax Returns. The appellant argued that clandestine activities must be proven beyond doubt, citing the Tribunal's decision in Vigirom Chem Pvt. Ltd. vs. Commr. of Central Excise, Bangalore. The Revenue, on the other hand, contended that the higher figures in Sales Tax Returns without explanation justified upholding the lower authorities' findings, relying on Victor Component Systems Pvt. Ltd. vs. Commr. of Central Excise, Delhi II.Upon reviewing the impugned order and submissions from both sides, Mrs. Archana Wadhwa noted that the lower authorities' findings were solely based on Sales Tax Returns figures. She emphasized that allegations of clandestine activities must be supported by evidence. The Tribunal's decision in Vigirom Chem Pvt. Ltd. highlighted that clandestine allegations cannot be solely based on Sales Tax Returns records. Mrs. Wadhwa pointed out the absence of investigation by the Revenue regarding clandestine activities in the appellant's case, rendering the findings unjustified. She distinguished the case from Victor Component Systems Pvt. Ltd., where private records were relied upon, leading to a remand for re-quantification based on Sales Tax Returns figures. Mrs. Wadhwa concluded that the Revenue's reliance on Victor Component Systems Pvt. Ltd. was inappropriate, setting aside the impugned order and allowing the appeal in favor of the appellant, granting consequential relief.