2023 (8) TMI 47 - AT - Central Excise

Allegations of clandestine goods removal unsubstantiated, duty demand and penalties overturned. Appeals allowed with relief.

M/s Sen Ferro Alloys Private Limited, Shri Bijoy Kumar Bhalotia, Director of M/s Sen Ferro Alloys Private Limited, Shri Swapan Kumar Sen, Shri Partha Banerjee Versus Commissioner of CGST & Excise, Bolpur

The Tribunal found the allegations of clandestine removal of goods unsubstantiated due to lack of reliable evidence. The demand for duty and penalties on ... Clandestine removal of goods - pre-judged SCN - Recovery of chit and clearance of the goods mentioned established or not - major demand is based on the entries in the private record recovered from the third party - authenticity of documents could be proved by adducing evidence or not - corroboration of statements - penalties on appellant - HELD THAT:- On going through the Chit, it is found that if the said Chit has been recovered during the investigation from Shri Partha Banerjee, there is no authentication of the said Chit as neither it bears any signature of punchas nor any name of the officer who has seized the above said documents. Therefore, the said Chit is deemed to be a fictitious one as Shri Partha Banerjee has joined the services with the appellant in the month of August, 2009 whereas this Chit is bearing entries from June, 2009 to December, 2009 and it is also fact on record that he was not allowed to make any statement in his own handwriting, therefore the allegation that the Chit shows clandestine clearance of goods is not established as per the said Chit - the demand on the basis of Chit is not sustainable. It is found that the goods were received from Railway Authorities, which has been properly accounted for by the appellant - it is further noted that it is alleged that the appellant has removed 27653.657 MT of sponge iron on the basis of the loose slips recovered from the premises of M/s Sen Brothers Enterprises - on going through the said documents, but the Revenue has failed to establish that who is the author of the said documents and entries therein. Only the Author of the documents can say about the contents of the documents. Those documents were not recovered from the premises of the appellant. The documents recovered from the premises of the third party cannot be the basis to allege the clandestine removal of the goods. The Revenue has not come up with any conclusive evidence to establish the clandestine clearance of goods in question - the demand has been raised on the basis of documents recovered from the third party premises whose Author is not known and from the person to whom the documents have been recovered have retracted the statements in cross-examination as stated, these documents do not belong to the appellant . Moreover, there is nothing on record for procurement of excess raw materials, electricity consumption, transportation of goods of such huge quantity of goods from whom the goods were sold out. The allegation of clandestine removal of goods is not sustainable against the appellants. Therefore, no demand is sustainable - the said demand confirmed against the appellant is set aside. Penalties - HELD THAT:- As the demand against M/s Sen Ferro Alloys Private Limited is not sustainable, penalties on the appellants are not sustainable. The impugned order and the demand of duty and imposition of penalties on the appellants are set aside - Appeal allowed. Issues Involved:1. Allegation of clandestine removal of goods.2. Validity of evidence based on the chit recovered from the General Manager.3. Validity of evidence based on private records recovered from a third-party premises.4. Adequacy of corroborative evidence for the charges.Summary:1. Allegation of Clandestine Removal of Goods:The appellants were accused of clandestine removal of goods based on a search conducted on 12.05.2010, which led to the recovery of certain documents, including a chit and private records from a third-party premises, M/s Sen Brothers Enterprises. The show-cause notice issued on 06.05.2011 demanded duty amounting to Rs.6,28,08,613/- based on these documents.2. Validity of Evidence Based on the Chit Recovered from the General Manager:The Tribunal found that the chit recovered from the General Manager, Shri Partha Banerjee, lacked authentication as it did not bear any signatures of punchas or the name of the officer who seized it. Furthermore, the chit contained entries from June 2009 to December 2009, while Banerjee joined the company in August 2009. Therefore, the demand based on this chit was deemed unsustainable.3. Validity of Evidence Based on Private Records Recovered from a Third-Party Premises:The private records recovered from M/s Sen Brothers Enterprises were not considered reliable as the Revenue failed to establish the author of these documents. The Tribunal noted that documents recovered from a third-party premises cannot be the basis for alleging clandestine removal of goods without corroborative evidence.4. Adequacy of Corroborative Evidence for the Charges:The Tribunal emphasized the need for conclusive evidence to establish clandestine removal, including proof of procurement of raw materials, consumption of electricity, transportation of goods, and identification of buyers. The Revenue did not provide sufficient evidence in these areas. The Tribunal cited several precedents, such as *Star Alloys & Chemicals Pvt. Ltd.*, *Raipur Forgings Pvt. Ltd.*, and *Triveni Engineering & Industries Ltd.*, to support the requirement for corroborative evidence.Conclusion:The Tribunal held that the allegations of clandestine removal were not substantiated by reliable evidence. Consequently, the demand for duty and the imposition of penalties on the appellants were set aside. The appeals were allowed with consequential relief.Pronouncement:The judgment was pronounced in the open court on 27.07.2023.