Successful appeal in Central Excise duty case due to lack of corroborative evidence

The appeal against the demand of Central Excise duty and penalty, involving allegations of clandestine clearance through trading firms, was successful. The Tribunal ruled that the charge could not be sustained solely based on a statement without corroborative evidence. A letter requesting not to extend the inquiry was not considered as evidence. Emphasizing the necessity of corroborative evidence, the Tribunal found the Revenue failed to substantiate the charge, leading to the appeals being allowed on 14.11.2018.

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Issues:
Appeal against demand of Central Excise duty and penalty - Charge of clandestine clearance through trading firms - Admissibility of statement as evidence - Necessity of corroborative evidence - Effect of letter requesting not to extend inquiry.

Analysis:
The appeal was filed against the demand of Central Excise duty and penalty, with an additional appeal by the Authorized Signatory of the appellant against the penalty imposed. The appellant, engaged in the manufacture of C.I. Castings, was alleged to have sold goods through trading firms owned by close family members to avoid payment of duty. The main evidence against the appellant was a statement by the Authorized Signatory admitting to this practice. The appellant argued that the statement was given under duress and without corroborative evidence, the charge of clandestine clearance could not be sustained. The Revenue, however, relied on the statement and a letter dated 26.12.2006 from the appellant requesting not to extend the inquiry further.

The Tribunal analyzed the evidence and held that the charge of clandestine clearance could not be sustained solely based on the statement without corroborative evidence. The letter dated 26.12.2006, which the Revenue used to avoid further inquiry, was not produced as evidence and was not relied upon in the show cause notice. The Tribunal emphasized the necessity of corroborative evidence to establish such charges, citing the case of Shreeji Aluminum Pvt. Ltd. where a similar requirement was upheld. The Revenue had ample time to investigate and substantiate the charge but failed to do so, leading to the conclusion that the charge of clandestine clearance could not be upheld due to lack of evidence. Consequently, the appeals were allowed, and the decision was pronounced in open court on 14.11.2018.

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