Tribunal dismisses duty demand in clandestine goods case due to lack of evidence

The tribunal overturned a duty demand against an appellant accused of clandestine removal of goods. The appellant, engaged in manufacturing, faced allegations after no stock was found at a leased factory post-termination. Despite paying duty on goods sold as waste in 2015, the Revenue pursued the duty demand. The tribunal deemed the Revenue's case contradictory and lacking evidence, noting the appellant's compliance with ER-1 returns. With no proof of clandestine removal and failure to investigate buyers, the duty demand was dismissed, granting relief to the appellant.

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Issues: Alleged clandestine removal of goods and duty demand

Analysis:
The judgment pertains to the appellant engaged in manufacturing TMT bars, MS ingots, and other products. The appellant leased a factory in March 2012, and upon termination of the lease, the factory was handed back to the owner. The appellant had a closing stock of final products, duly reflected in their ER-1 return. Subsequently, proceedings were initiated against the appellant, alleging clandestine removal of goods, as no stock was found at the factory during an inspection. The appellant later sold the products as waste and scrap in 2015, paying duty on the same.

The Revenue alleged that the appellant removed goods clandestinely, leading to a duty demand. However, the appellant argued that if the stock was not present at the factory during the lease termination, how could they sell the same goods in 2015 with duty payment accepted by the Revenue. The lower authorities confirmed the duty demand based on the alleged clandestine removal. The tribunal found the Revenue's case self-contradictory, as they accepted duty payment for the sale of goods they claimed were not present in the factory.

Moreover, the tribunal noted the lack of evidence supporting the Revenue's allegations of clandestine removal. No proof of buyers, transporters, or consideration receipt was presented. The appellant had fulfilled their duty to show clearance of goods by reflecting them in ER-1 returns and subsequently selling them in 2015. The Revenue failed to investigate the buyers of the goods to establish the alleged removal as fake. Consequently, the tribunal found no justifiable reasons to uphold the duty demand, setting aside the impugned order and allowing the appeal with relief to the appellant.

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