2019 (8) TMI 871 - AT - Central Excise

Tribunal overturns duty demand & penalties due to insufficient evidence, stressing need for corroboration.

The Tribunal set aside the demand of duty and penalties imposed on the appellant for alleged clandestine clearance. It found the Revenue's case lacking ... Clandestine removal - it was alleged that appellant have received the inputs manufactured by M/s Lauls Limited without any cover of invoice of manufacturer and without payment of duty - various statements recorded during the course of investigation and on the basis of the conclusion drawn by the DGCEI that M/s Lauls Limited is manufacturing M.S. Ingots and clearing the same without payment of duty - HELD THAT:- Revenue has failed to bring any corroborative evidence on record except the statement recorded during the course of investigation. Merely admission by way of statement without corroborative evidence cannot result to prove the allegation of clandestine removal of goods - on the said basis demand cannot be confirmed. As held by this Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE, DELHI-I, M/S KUBER TOBACCO INDIA LTD, SHRI DHANPAT SINGHEE, DIRECTOR, SHRI CHATAR SINGH BAID, SHRI VIKAS MALU VERSUS M/S KUBER TOBACCO INDIA LTD, COMMISSIONER OF CENTRAL EXCISE, DELHI-I [2016 (4) TMI 622 - CESTAT NEW DELHI] wherein it has been held that the statement recorded during the course of investigation is to be testified by the adjudicating authority in terms of Section 9D of the Central Excise Act, 1994 and thereafter same is allowed to be cross examined to the assessee. But none of the said act has been done by the adjudicating authority in this case. The charge clandestine clearance has not been established by the Revenue with tangible evidence - Appeal allowed - decided in favor of appellant. Issues:Appeal against demand of duty and penalty imposition on the appellant for alleged clandestine clearance without payment of duty.Detailed Analysis:1. Allegation and Investigation:The appellants contested the demand of duty and penalties imposed, arguing that similar cases against other manufacturers were set aside by the Tribunal. They claimed a violation of natural justice due to the lack of cross-examination of certain individuals. The Revenue, however, relied on the confessional statement of the Director and the non-retraction of statements recorded under the Central Excise Act, asserting the duty liability. The charge against the appellant for clandestine activities was deemed proven by the Revenue.2. Adjudication and Evidence:Upon review, it was noted that no discrepancies were found during the investigation at the appellant's premises. The case against the appellant was primarily based on statements recorded during the investigation and conclusions drawn by the DGCEI. The lack of corroborative evidence, besides statements, was highlighted. The Tribunal emphasized that mere admission through statements, without supporting evidence, is insufficient to prove clandestine activities.3. Legal Precedents and Proofs:Citing a previous Tribunal decision, it was emphasized that statements recorded during investigations must be testified by the adjudicating authority and subjected to cross-examination by the assessee. Failure to follow this procedure weakened the case against the appellant. The Tribunal also referenced similar cases where charges of clandestine activities were not sustained due to lack of tangible evidence. Rulings in cases involving other manufacturers supported the decision to set aside the impugned order due to the absence of concrete proof.4. Conclusion:In light of the above analysis and legal precedents, the Tribunal found the Revenue's case lacking in substantial evidence to establish the charge of clandestine clearance against the appellant. The impugned order was set aside, and all appeals were allowed with consequential relief. The judgment emphasized the necessity of corroborative evidence and proper procedural adherence in establishing allegations of duty evasion and clandestine activities.(Order pronounced on 16.08.2019)