2016 (12) TMI 780 - AT - Central Excise

Tribunal overturns duty demand, penalties, and confiscation, citing lack of evidence.

Shubh Labh Ispat Pvt. Ltd., Sajjan Kumar Berlia, Director Versus CCE & ST, Raipur

Shubh Labh Ispat Pvt. Ltd., Sajjan Kumar Berlia, Director Versus CCE & ST, Raipur - TMI Issues:- Alleged duty evasion by the appellant company in the manufacture and clearance of M.S. Ingots without issuing Central Excise invoices.- Validity of demand raised by the adjudicating authority based on third party evidence.- Corroboration of evidence and statements provided by the appellant company during the investigation.- Comparison with a similar case involving M/s. Raipur Forgings Pvt. Ltd. & Ors. and its impact on the current judgment.Analysis:- The case involved allegations of duty evasion by the appellant company in the manufacture and clearance of M.S. Ingots without issuing Central Excise invoices. The officers of the DGCEI visited the business premises of another company, M/s. Indian Steel, and seized records indicating the transfer of Sponge Iron to the appellant without proper documentation. The adjudicating authority confirmed the duty demand, interest, penalties, and confiscation of goods against the appellant.- The main contention raised was the validity of the demand raised by the adjudicating authority based on third party evidence. The appellant argued that the demand was solely based on third party evidence without proper corroboration from their own records. The statement provided by the appellant company's director was deemed un-corroborated, questioning the basis of the demand.- The issue of corroboration of evidence and statements during the investigation was crucial. The Tribunal referred to a similar case involving M/s. Raipur Forgings Pvt. Ltd. & Ors., where the Tribunal emphasized the need for corroborative evidence in cases of alleged clandestine activities. The Tribunal highlighted that mere admission statements by directors or partners, without further verification or corroboration, may not be conclusive evidence, especially in cases involving complex manufacturing processes and unaccounted clearances.- The comparison with the case of M/s. Raipur Forgings Pvt. Ltd. & Ors. played a significant role in the judgment. The Tribunal in that case allowed the appeal, emphasizing the lack of corroboration and the need for additional evidence beyond admission statements. Drawing parallels, the Tribunal in the current judgment concluded that the impugned orders could not be sustained, and subsequently allowed the appeals filed by the appellants based on the precedent set by the earlier case.This detailed analysis of the judgment highlights the key issues, arguments presented, and the Tribunal's decision based on the evidence, corroboration, and legal precedents cited during the proceedings.