2018 (3) TMI 169 - AT - Central Excise

Tribunal rules in favor of appellants due to lack of evidence, setting aside duty demand.

The Tribunal ruled in favor of the appellants, setting aside the demand for duty and associated penalties due to insufficient evidence supporting ... Clandestine removal - The case of the Revenue is based upon such private booklet, panchnama i.e. at site wherein it is indicated that there was shortage of finished goods; confessional statement of one Shri Sharma - Held that: - In the absence of any evidence to show or indicate that this booklet on which reliance has been placed by Revenue to hold that there was clandestine removal for the period 1.9.2001 to 15.9.2001, the entire case of the Revenue falls down in the absence of any corroborative evidence in the form of purchaser or transporter's document to indicate clandestine clearance from the factory premises of the appellant. Besides, this document which is termed as booklet and no other evidence is coming forth from the record to hold that there was clandestine removal of the finished goods. In the absence of any other evidence more specifically positive evidence establishing evasion and the absence of any other material reflecting purchase of excessive raw material, excess consumption of resources, the demand of clandestine removal fails miserably. The charge of clandestine removal of the goods on the main appellant and consequent penalty on the Director does not stand scrutiny of the law and the demand needs to be set aside - appeal allowed - decided in favor of appellant. Issues:Appeal against Order-in-Appeal No.332-334/SRT-1/2010 dated 28.5.2010 passed by the Commissioner, C.Ex. & Customs (Appeals), Surat I.Analysis:1. The main issue in these appeals is the demand of central excise duty on the main appellant for alleged clandestine removal of goods based on entries in a private booklet recovered during a visit by Central Excise Officers to the premises. The case revolves around the interpretation of the private diary and the statements of individuals involved in the company's operations.2. The Appellant's counsel argued that the private diary entries were misinterpreted by the authorities and that the documents produced were for a period prior to the one in question. The counsel relied on legal precedents to support the argument that the Revenue's case lacked corroborative evidence and that the entire case was based on a confessional statement without substantial proof.3. On the other hand, the Revenue's representative referred to the entries in the private booklet as evidence of clandestine removal of goods. The Revenue contended that the Director of the company had acknowledged these entries as indicative of wrongful activities. The Revenue also highlighted the findings of the first appellate authority supporting the confirmation of the demand.4. After considering the arguments and examining the records, the Tribunal found that the Revenue's case heavily relied on the private booklet, panchnama, and a confessional statement. However, upon closer scrutiny, the Tribunal observed discrepancies in the evidence presented. The Tribunal noted that the private records did not conclusively prove clandestine removal for the specified period and highlighted the lack of corroborative evidence such as purchaser or transporter documents.5. The Tribunal also pointed out that key individuals, including the company's Director, were not examined or their statements recorded during the proceedings. This lack of crucial evidence, coupled with the absence of concrete proof of clandestine removal, led the Tribunal to conclude that the Revenue's case was not substantiated. The Tribunal emphasized the importance of positive evidence to establish evasion and highlighted the investigating authorities' failure to provide conclusive evidence of clandestine activities.6. Citing legal precedents, the Tribunal held that the charge of clandestine removal and the consequent penalties did not withstand legal scrutiny. Consequently, the Tribunal set aside the demand for duty, interest liability, and penalties on both the main appellant and the individual. The Tribunal rejected the appeal filed by the Revenue, as the demand was invalidated based on the lack of substantial evidence.7. In conclusion, all three appeals were disposed of in favor of the appellants, with the Tribunal ruling in favor of setting aside the demand for duty and associated penalties due to the lack of concrete evidence supporting the allegations of clandestine removal of goods.Judgment Delivery:The judgment was pronounced in open court on 22/1/2018 by Mr. M.V. Ravindran, Member (Judicial) of the Appellate Tribunal CESTAT NEW DELHI.