Revenue Must Prove Clandestine Clearance with Corroborative Evidence Beyond Uncross-Examined Director Statement

CESTAT Ahmedabad allowed the appeal of a 100% EOU against customs duty recovery and penalties for alleged clandestine clearance of short found goods. The tribunal held that Revenue failed to provide corroborative evidence beyond the director's statement, which was not cross-examined under section 9D of Central Excise Act, 1944. No investigation was conducted with the transporter or alleged buyers. The tribunal emphasized that Revenue must discharge the burden of proof with sufficient evidence to establish probability of goods removal, citing precedents including Vikram Cement case. The demand was deemed unsustainable and the impugned order was set aside.

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Issues:
1. Shortage of imported Polyster Filament yarn found during physical verification.
2. Allegation of clandestine clearance of goods without payment of duty.
3. Show cause notice issued for recovery of customs duty and penalties.
4. Arguments regarding lack of investigation and evidence by the revenue.
5. Time-barred demand of customs duty.
6. Burden of proof on revenue and requirement of corroborative evidence.
7. Parameters to prove clandestine removal of goods.
8. Lack of evidence against the appellant and failure to establish the case by revenue.
9. Setting aside of the impugned order and allowing the appeals.

Analysis:
The case involved the appellant, a manufacturing unit, facing allegations of a shortage of imported Polyster Filament yarn during a physical verification, leading to suspicions of clandestine clearance without payment of duty. The revenue issued a show cause notice for recovery of customs duty and penalties, which was upheld in previous orders. The appellant argued that the revenue failed to investigate the buyers and agents involved in the alleged clearance, and the demand was time-barred. The appellant relied on legal precedents to support their contentions.

The Tribunal carefully examined the submissions from both sides and found that the revenue lacked corroborative evidence to support the allegations of clandestine clearance. It emphasized the burden of proof on the revenue to establish the case beyond doubt, citing legal precedents. The Tribunal highlighted the necessity of tangible evidence and proper investigation to prove clandestine removal, as outlined in established parameters. Notably, the Tribunal noted the absence of evidence against the appellant and the failure of the revenue to meet the required standard of proof.

Ultimately, the Tribunal set aside the impugned order, ruling in favor of the appellants and allowing the appeals with consequential relief as per the law. The judgment underscored the importance of fulfilling the burden of proof and presenting substantial evidence in cases involving allegations of clandestine activities. The decision emphasized the need for thorough investigation and adherence to legal standards to substantiate claims of duty evasion or clandestine removal of goods.

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