2020 (3) TMI 739 - AT - Central Excise

Tribunal rules in favor of appellants in duty evasion case due to lack of corroborative evidence

M/s Rathi Steel Dakshin Limited, Ajay Kumar Malhotra, M/s Bhiwadi Rolling Mills Pvt. Ltd. Versus Commissioner, Central Excise & Central Goods and Service Tax

The Tribunal found in favor of the appellants in a case involving allegations of clandestine removal and duty evasion. The authorities relied solely on ... Clandestine removal - Miss-Rolls - demand based on third party record - corroborative evidences or not - impugned order based on presumption and surmises - HELD THAT:- The whole of the case is based upon third party record. There is no corroborative evidence supporting the allegations of the department. The director of appellant No. 1- Sh. Ajay Kumar Malhotra specifically denied any clandestine clearance of Miss-Roll to BRMPL. The department neither made investigation from the transporter or the truck drivers who transported the goods from the factory of the appellant No. 1 - There is no corroborative evidence that SRSDL received raw material, manufactured and cleared the goods clandestinely. Hence allegations made against SRSDL and Sh. Ajay Kumar Malhotra, appellant NO. 1 & 2 are not sustainable and their appeals are to be allowed. Penalty - HELD THAT:- The penalty u/r 26 cannot be imposed upon a corporate body. The appellant is a private limited company hence penalty imposed is not sustainable - the penalty imposed is not sustainable. Appeal allowed - decided in favor of appellant. Issues:1. Allegations of clandestine removal and duty evasion against the appellants.2. Reliance on third-party records without corroborative evidence.3. Time-barred demand and imposition of penalty.Analysis:1. The case involved allegations of clandestine removal and duty evasion against the appellants, who were engaged in the manufacture of MS Bars and supplied rejected MS Ingot to another manufacturer. The Directorate General of Central Excise Intelligence conducted a search at the premises of the other manufacturer based on information gathered, leading to investigations and inquiries against the raw material suppliers, including the first appellant. The authorities alleged that a significant quantity of Miss-Rolls was supplied without payment of duty, resulting in a demand of Central Excise Duty amounting to Rs. 24,53,544.2. The appellants contested the allegations, arguing that the case was based solely on third-party records without any corroborative evidence. They emphasized that the director of the first appellant specifically denied the clandestine clearance of Miss-Rolls and highlighted the lack of collateral evidence or statements from transporters to support the allegations. The appellants also cited relevant case laws to support their defense against the presumption and surmises made by the authorities.3. The Tribunal, after hearing both parties and considering the facts, observed that the entire case relied on third-party records without any corroborative evidence to substantiate the allegations of clandestine removal. The director of the first appellant explicitly denied the accusations, and no investigation was conducted with transporters or truck drivers involved in the transportation of goods. Consequently, the Tribunal held that the allegations against the first and second appellants were not sustainable and allowed their appeals. Additionally, regarding the third appellant, the Tribunal agreed that penalty imposition on a corporate body like a private limited company was not sustainable, leading to the setting aside of the impugned order and allowing all appeals with consequential relief.