Tribunal overturns charge of clandestine removal due to procedural lapses and lack of evidence

The Tribunal found that the charge of clandestine removal against the appellant was not proven beyond doubt due to procedural lapses and lack of corroborative evidence. The impugned order was set aside, and the appeal was allowed with consequential relief, if any, in accordance with the law. The judgment highlighted the significance of adhering to statutory procedures for admitting evidence and the necessity of corroborative evidence in cases involving clandestine removal.

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Issues Involved:
1. Admissibility and relevance of statements recorded under Section 14 of the Central Excise Act, 1944.
2. Refusal of cross-examination of witnesses under Section 9D of the Central Excise Act, 1944.
3. Reliability of computer printouts from a USB drive as evidence of clandestine removal of goods.
4. Lack of corroborative evidence to support the charge of clandestine removal of goods.

Issue-wise Detailed Analysis:

1. Admissibility and Relevance of Statements Recorded Under Section 14 of the Central Excise Act, 1944:
The appellant argued that the case was primarily based on statements recorded under Section 14, which were not reliable or admissible as evidence. The statements from suppliers and buyers were deemed stereotypical and lacked supporting records. The Tribunal noted that the statements could not be considered relevant without following the mandate of Section 9D, which requires witnesses to be examined before the adjudicating authority. The Tribunal cited the case of Jindal Drugs Pvt. Ltd. to emphasize that statements recorded during investigation must be admitted in evidence following the procedure prescribed in Section 9D. The Tribunal concluded that the reliance on these statements without proper examination rendered them inadmissible.

2. Refusal of Cross-Examination of Witnesses Under Section 9D of the Central Excise Act, 1944:
The appellant's request for cross-examination of the witnesses whose statements were relied upon was denied by the adjudicating authority. The Tribunal highlighted that Section 9D mandates the examination of witnesses before the adjudicating authority, and the refusal to allow cross-examination violates this mandate. The Tribunal referred to various judgments, including G-Tech Industries Vs. UOI and Basudev Garg Vs. UOI, to support the view that without following Section 9D, the statements cannot be used to prove the truth of their contents. The denial of cross-examination was deemed a significant procedural lapse, impacting the fairness of the adjudication process.

3. Reliability of Computer Printouts from a USB Drive as Evidence of Clandestine Removal of Goods:
The appellant contended that the printouts from the USB drive were not reliable evidence of clandestine removal. The Tribunal observed that the USB drive was kept by the department for 40 days before taking printouts, raising questions about the integrity of the evidence. Additionally, the conditions under Section 36B (2) and (4) of the Central Excise Act, 1944, which require a certificate from a responsible official and regular use of the computer for storing information, were not fulfilled. The Tribunal concluded that the printouts could not be considered reliable evidence without meeting these statutory requirements.

4. Lack of Corroborative Evidence to Support the Charge of Clandestine Removal of Goods:
The Tribunal noted the absence of corroborative evidence such as discrepancies in stock, transportation records, or records from suppliers and buyers. The appellant argued that no evidence of actual manufacture and removal of goods was found during the investigation. The Tribunal agreed, stating that the case was based primarily on statements and computer printouts, which lacked corroborative support. The Tribunal cited the case of Arya Fibres P. Ltd v CCE, where it was held that in the absence of evidence of actual manufacture, the allegation of clandestine removal is not sustainable.

Conclusion:
The Tribunal found that the charge of clandestine removal against the appellant was not established beyond doubt due to the procedural lapses and lack of corroborative evidence. The impugned order was set aside, and the appeal was allowed with consequential relief, if any, in accordance with law. The judgment emphasized the importance of following statutory procedures for admitting evidence and the need for corroborative evidence in cases of clandestine removal.

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