Tribunal overturns order due to lack of concrete evidence, stresses need for corroborative proof

The tribunal set aside the order alleging clandestine manufacture and clearance of ceramic tiles due to insufficient concrete evidence beyond theoretical calculations and unverified statements. Emphasizing the necessity of corroborative evidence, the tribunal allowed the appeals, highlighting the lack of substantial proof to support the allegations.

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Issues:
Determining clandestine manufacture and clearance of ceramic tiles involving duty payment.

Analysis:
The appeals were filed against the order-in-appeal dated 09.07.2014 passed by the Commissioner (Appeals-I) of Central Excise- Ahmedabad. The appellants, engaged in manufacturing ceramic tiles, were alleged to have clandestinely manufactured and cleared 44,614 boxes of tiles, leading to a duty demand of &8377; 4,54,929. The basis for this allegation was the discrepancy between the recorded production in the RG-I Register and the theoretical calculation derived from the director's statement on the plant's production capacity. The director had mentioned a daily production capacity of 6500 boxes, which was used to calculate the alleged clandestine manufacture and clearance during the period in question. Additionally, a statement from a customer, Shri Javed Suleman Chania, was relied upon by the department to support the allegation. However, during cross-examination, Chania denied any dealings with the appellant company, undermining the credibility of his statement. The appellate tribunal noted that apart from the director's statement and Chania's statement, no other corroborative evidence was presented by the department to establish clandestine activities.

The appellant's advocate argued that the demand was solely based on theoretical calculations and lacked concrete evidence of clandestine activities. Despite the director mentioning customers to whom goods were sold, only one customer was investigated, and discrepancies were found in his statement during cross-examination. The advocate contended that solely relying on the director's statement about production capacity was insufficient to confirm clandestine manufacture and clearance of ceramic tiles. The revenue's representative, while supporting the findings of the Commissioner (Appeals), acknowledged the lack of substantial corroborative evidence beyond the statements of the director and Chania.

After considering the arguments and evidence, the tribunal concluded that the allegation of clandestine removal based on theoretical calculations and unverified statements was not sustainable. Citing previous cases, the tribunal emphasized the need for concrete corroborative evidence to establish clandestine activities. As a result, the impugned order was set aside, and the appeals were allowed with consequential relief, if any, as per the law.

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