2016 (5) TMI 1069 - AT - Central Excise

Tribunal overturns duty demand & penalty for alleged clandestine removal of MS Ingots

The Tribunal set aside the order confirming duty demand and penalty on the appellant for alleged clandestine removal of MS Ingots without payment of duty. ... Demand of excise duty only on the basis of certain private records maintained by the transporters - Clandestine removal of MS Ingots - Held that:- it is apparent that the presumptive conclusion in the impugned order that wherever invoice details were not available the clearances were clandestine removals without payment of duty by the appellant are based solely on private record maintained by transporters cannot be the basis for demanding Central Excise duty from the manufacturer. As forcefully contended by the appellant it is not clear as to why no verification was attempted for corroboration either with the appellant's records of premises and/or with the buyers of such ingots. The whole investigation in the case refers to only single source of evidence namely the transporters record confirming by the proprietors of such transport companies without any sort of corroboration from any other source. It is seen that in the present case there is not even an enquiry to bring out any collaboration so that the evidence can point out preponderance of probability of such possible clandestine removal by the appellant. This is not a case of various evidences if not conclusively establishing, at least pointing out a serious probability of clandestine removal of excisable goods. As already noted that the Departmental enquiry did not even cross the preliminary stage and stopped with recovery of private documents from the transporter to conclude the allegation of clandestine removal by the appellant. Reference has been made to various cases. Hence, the impugned order cannot be sustained and is set aside. - Decided in favour of appellant Issues: Allegation of clandestine removal of MS Ingots without payment of duty based on private records maintained by transporters.In this case, the appellant, engaged in the manufacture of MS Ingots, was accused of clandestine removal of goods without payment of duty amounting to Rs. 10,23,666. The Central Excise officers based their case on private records recovered from transporters, M/s Gajraj Roadlines and M/s Bajrang Transport Services. The proceedings began with a show cause notice in 2010 and concluded with an order-in-original in 2013, confirming duty demand and imposing an equal amount of penalty on the appellant. The Commissioner (Appeals) upheld the original order, leading the appellant to file an appeal challenging the decision.The appellant argued that the demand was confirmed solely based on entries in documents seized from the transporters, without any corroboration. They highlighted the lack of inquiry into various aspects such as procurement of raw material, electricity consumption, clandestine manufacture, or clearance of goods from the manufacturing unit. The appellant contended that selective inference from certain documents without collaboration could not support a serious charge of clandestine removal. They cited various legal precedents to support their stance that substantive corroboration is necessary to sustain an allegation of clandestine removal.On the other hand, the authorized representative supported the lower authorities' findings, stating that the transporters regularly transported MS Ingots manufactured by the appellant, and their records were correctly relied upon to confirm the demand. Upon examination, the Tribunal noted that the Central Excise demand was indeed based solely on private records maintained by the transporters. The order concluded that the evidence from the transporters' records was insufficient to demand Central Excise duty from the appellant. It highlighted the lack of verification attempts for corroboration with the appellant's records or buyers of the ingots, emphasizing that the investigation relied solely on one source of evidence without collaboration from any other source.The Tribunal referenced legal precedents to emphasize that clandestine removal cannot be solely established based on third-party documents without collaboration. It mentioned cases like Rama Shyama Papers Ltd. vs. CCE, Lucknow, Charminar Bottling Co. (P) Ltd. vs. CCE, Hyderabad II, Bhandary Industrial Metals Pvt. Ltd. vs. CCE, Goa, and CCE, Indore vs. Rajratan Synthetics Ltd. The Tribunal concluded that the impugned order could not be sustained due to the lack of collaboration and set it aside, allowing the appeal in favor of the appellant.