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of <h1>Tribunal overturns penalties due to lack of evidence in clandestine activities case</h1> <h3>M/s Paragon Extrusions P. Ltd Versus Commissioner, CGST, Ghaziabad</h3> M/s Paragon Extrusions P. Ltd Versus Commissioner, CGST, Ghaziabad - TMI Issues:Clandestine removal of goods without payment of duty, shortages detected in stock, reliance on statement of authorized signatory, lack of corroborative evidence, imposition of penalties.Analysis:1. Clandestine Removal of Goods:The case involved allegations of clandestine removal of finished goods without payment of duty. Central Excise Officers found shortages of Aluminum Profiles during a visit to the factory. The Revenue alleged that the appellant cleared final products without paying duty amounting to a significant sum. The Adjudicating Authority vacated the show cause notice, emphasizing the lack of corroborative evidence besides the statement of the authorized signatory. The Commissioner (Appeals), however, relied heavily on the signatory's statement, considering it confessional, and upheld the allegations of clandestine removal.2. Shortages Detected in Stock:Apart from clandestine removal, shortages of goods were also detected in the stock during the officers' visit. The show cause notice proposed a demand for duty in respect of these shortages. The Adjudicating Authority observed that there was no evidence other than the statement of the authorized signatory to support the allegations of shortages. The Commissioner (Appeals), however, upheld the demand for duty on shortages based on the signatory's admission.3. Reliance on Statement of Authorized Signatory:The statement of the authorized signatory played a crucial role in the case. While the Adjudicating Authority considered the statement non-confessional and insufficient to prove clandestine activities, the Commissioner (Appeals) deemed it confessional and upheld the allegations based on this statement. The Tribunal highlighted the importance of corroborative evidence and the need for thorough investigation beyond relying solely on one individual's statement.4. Lack of Corroborative Evidence:The Tribunal emphasized the necessity of corroborative evidence to establish allegations of clandestine removal. It noted that the Revenue failed to produce tangible evidence such as raw material purchase records, transportation details, or financial flow to support the charges. The Tribunal referred to legal precedents emphasizing the requirement for concrete evidence beyond mere statements to prove clandestine activities.5. Imposition of Penalties:The Commissioner (Appeals) imposed substantial penalties on the appellant based on the upheld demands for duty and allegations of clandestine removal. However, since the Tribunal set aside the demands and restored the Adjudicating Authority's order, the penalties were also overturned. The Tribunal emphasized that penalties should be based on substantiated charges and upheld demands.In conclusion, the Tribunal set aside the Commissioner (Appeals) order and restored the decision of the Original Adjudicating Authority, highlighting the lack of concrete evidence and the importance of corroborative evidence in cases involving allegations of clandestine activities and shortages in stock.
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