2002 (9) TMI 746 - AT - Central Excise

Summary

Issues:
Appeal against duty confirmation and penalties for clandestine manufacture and removal of polyester yarn without payment of duty.

Analysis:
The appeals were filed against an order confirming duty with penalties for alleged clandestine manufacture and removal of polyester yarn without payment of duty. The company, engaged in manufacturing polyester yarn, was accused of receiving raw material clandestinely and removing finished goods without proper documentation or payment of duty. Penalties were also proposed for the Managing Director and Director (Incharge) of the company responsible for day-to-day affairs, along with the company that supplied the raw material. The appellants contested the allegations, denying clandestine activities. However, the Commissioner upheld the duty and penalties based on evidence from a company official, Shri B.M. Gupta.

The main contention raised by the appellants was the lack of reliable evidence to prove clandestine activities. They argued that the evidence relied upon was insufficient and inadmissible, primarily based on the testimony of Shri B.M. Gupta. The appellants claimed that Gupta's statements were unreliable as he resiled from his confessional statement, failed to submit to cross-examination, and lacked corroboration for his claims. The Tribunal agreed that Gupta's evidence lacked legal value and credibility, emphasizing the importance of cross-examination and corroboration in such cases.

Furthermore, the Tribunal highlighted the absence of corroborative evidence to support Gupta's claims. Statements from other officials and documents like bill discounting records were deemed insufficient to substantiate the allegations of clandestine activities. The lack of physical evidence, such as unaccounted goods in factory premises or incriminating documents, further weakened the case against the appellants. The Tribunal emphasized the legal principle that reliance cannot be placed on uncorroborated evidence, especially when witnesses fail to undergo cross-examination.

In conclusion, the Tribunal set aside the Commissioner's order confirming duty and penalties, ruling that the evidence presented was insufficient and inadmissible. The appeals of the appellants were allowed, granting them consequential relief as permissible under the law. The judgment highlighted the importance of credible evidence, corroboration, and adherence to legal procedures in establishing allegations of clandestine activities in excise matters.