Appeals allowed due to insufficient evidence for clandestine removal of goods. Importance of statutory provisions and corroborative evidence emphasized.

The appeals were allowed, and the impugned order was set aside due to insufficient evidence to establish clandestine removal of goods by the appellant. The court emphasized the importance of adhering to statutory provisions for the admissibility of evidence and the necessity of corroborative evidence to support oral statements. The judgment underscored the lack of conclusive proof, especially considering the negation of statements during cross-examination and the absence of sufficient corroborative evidence, leading to the decision in favor of the appellant.

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Issues Involved:
1. Validity and reliability of statements made under Section 14 of the Central Excise Act.
2. Admissibility of evidence under Section 9D of the Central Excise Act.
3. Establishment of clandestine removal of goods by the appellant.
4. Corroboration of documentary evidence with oral statements.
5. Determination of flow back of money to the appellant.
6. Preponderance of probabilities in proving the case.

Issue-wise Detailed Analysis:

1. Validity and Reliability of Statements under Section 14:
The appellant was accused of clandestine removal of resins, with statements made by various individuals under Section 14 of the Central Excise Act forming a significant part of the evidence. The statements were made by employees and associates of the appellant firm, including the Managing Director and other key personnel. The reliability of these statements was questioned as some individuals negated their statements during cross-examination, and others were not cross-examined at all.

2. Admissibility of Evidence under Section 9D:
The judgment emphasized that statements made under Section 14 are admissible as evidence only if the conditions of Section 9D are fulfilled. This includes the requirement that the person making the statement must be examined as a witness before the adjudicating authority. In this case, only 12 out of 18 individuals were cross-examined, rendering the statements of the remaining six individuals inadmissible.

3. Establishment of Clandestine Removal:
The revenue's case relied on six pieces of evidence, including chemical analysis of seized barrels, statements from transporters and buyers, private books of accounts, and evidence of money flow. The adjudicating authority found that the clandestine removal was established through the modus operandi of misdeclaring goods and using dummy firms for transportation and billing.

4. Corroboration of Documentary Evidence with Oral Statements:
The judgment highlighted the importance of corroborating documentary evidence with oral statements. The statements of key individuals, such as the employees who managed dummy firms and the transporters, were crucial. However, during cross-examination, many individuals negated their earlier statements, weakening the revenue's case.

5. Determination of Flow Back of Money:
Evidence of money flow included bank account records and deposit slips showing cash and cheque deposits into accounts operated by employees of the appellant. The adjudicating authority found some evidence of money flow but deemed it insufficient to conclusively establish that the money flowed back to the appellant.

6. Preponderance of Probabilities in Proving the Case:
The judgment acknowledged that in civil cases under the Central Excise Act, the standard of proof is based on the preponderance of probabilities rather than beyond a reasonable doubt. Despite this, the revenue's case was found lacking due to the negation of statements during cross-examination and insufficient corroborative evidence.

Separate Judgments:
The judgment included a separate order by the Member (Judicial), who disagreed with the Member (Technical). The Member (Judicial) upheld the revenue's case, emphasizing the corroborative documentary evidence and the consistent statements of key individuals, even during cross-examination. The difference of opinion led to the matter being referred to a third member for resolution.

Conclusion:
The appeals were allowed, and the impugned order was set aside due to insufficient evidence to establish clandestine removal of goods by the appellant. The judgment highlighted the importance of adhering to statutory provisions for the admissibility of evidence and the need for corroborative evidence to support oral statements.

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