Court sets aside demand notice against M/s Hariom Ingot & Power Pvt. Ltd. for alleged clandestine removal

The court set aside the demand notice against M/s Hariom Ingot & Power Pvt. Ltd. for alleged clandestine removal due to insufficient evidence. The Revenue's case relied on third-party records and statements but lacked concrete proof of clandestine activities. The judgment emphasized the need for substantial evidence beyond third-party documents to establish liability in such cases. The appeals were allowed in favor of the appellant, stressing the importance of tangible evidence in proving allegations of clandestine activities.

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Issues:
- Allegation of clandestine manufacture and removal
- Reliability of evidence based on third-party records
- Admissibility of third-party records in establishing clandestine removal

Analysis:
The case involves allegations of clandestine manufacture and removal against M/s Hariom Ingot & Power Pvt. Ltd. based on evidence recovered from a pen drive seized from M/s Shilpy Steel Pvt. Ltd. The Revenue claimed that sponge iron received by M/s Hariom Ingot & Power Pvt. Ltd. in a clandestine manner was used in manufacturing ingots and TMT bars cleared without duty payment. The proceedings initiated resulted in a demand notice of Rs. 1,51,778 for May 2009, upheld by the original adjudicating authority and the Commissioner (Appeals), leading to the present appeals.

Upon reviewing the impugned orders, the Member (Judicial) noted that the Revenue's case heavily relied on the printout from the pen drive and statements from M/s Shilpy Steel Pvt. Ltd. The Director of M/s Hariom Ingot & Power Pvt. Ltd. admitted to procuring sponge iron from M/s Shilpy Steel Pvt. Ltd. but denied receiving it without proper documentation. The Revenue failed to conduct further investigations, record statements from key personnel, identify buyers, transporters, or payment methods, thus lacking substantial evidence to prove clandestine removal.

The judgment emphasized established legal principles regarding the admissibility of third-party records as evidence in cases of clandestine removal. Citing precedents like the Hon'ble Allahabad High Court decision and various Tribunal cases, it was held that findings of clandestine removal cannot be upheld solely based on third-party documents without concrete evidence of clandestine manufacture and removal. Consequently, the impugned order was set aside, and both appeals were allowed in favor of the appellant, granting consequential relief.

In conclusion, the judgment highlights the importance of substantial, positive, and tangible evidence to prove allegations of clandestine activities, emphasizing the necessity for corroborative evidence beyond third-party records to establish liability in such cases.

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