2005 (2) TMI 612 - AT - Central Excise

Clandestine manufacture and removal - Evidence - procurement of unaccounted raw materials and production and clearance of unaccounted finished products - HELD THAT - Revenue has established the relationship between supplier of the unaccounted raw material and the appellants who are alleged to have manufactured the finished products and cleared them without payment of duty. The transporter who transported the goods has also been found out. Investigation has also revealed that the money for purchase of raw materials was deposited in Karur Vysya Bank. Details of Bank transactions have also been gathered. Thus evidence against the appellants is overwhelming. No doubt CEGAT in its remand order directed the adjudicating authority to give opportunity for cross-examination of all the witnesses and come to a conclusion. The fact that many of the witnesses did not turn up for cross-examination cannot be any reason for dropping the proceedings. It is also seen that statements which indicated admission of clandestine manufacture and removal have been retracted after a very long time. The adjudicating authority without critical examination has accepted the retractions. This action does not appear to be correct. Adjudicating authority should have given opportunity to the Revenue to present their case also. This also has not been done. Therefore without expressing any view on the merits of the case we are of the considered opinion that the case is required to be remanded to the original authority for de novo adjudication. Original authority shall give notice to all the witnesses for appearing before him for cross-examination by the appellants.

Summary

Issues:
Alleged procurement of unaccounted raw materials and production and clearance of unaccounted finished products by M/s. Anjaneya Steel Rolling Mills (M/s. ASRM), Trichy.

Detailed Analysis:

Issue 1: Alleged Clandestine Activities
The Revenue filed an appeal against the order by the Commissioner of Central Excise, Trichy, regarding the alleged procurement of unaccounted raw materials and production and clearance of unaccounted finished products by M/s. ASRM. Investigations revealed that M/s. ASRM received unaccounted MS ingots from M/s. Elango Industries Ltd. (M/s. EIL) and used them for manufacturing finished products clandestinely. Statements by various individuals supported these allegations, and documentary evidence of clandestine removal of goods was found. The Commissioner confirmed duty demand and imposed penalties under the Central Excise Act, 1944. On appeal, the Tribunal remanded the case for de novo consideration to allow for cross-examination and a more effective defense by the appellants.

Issue 2: Lack of Corroborative Evidence
During the de novo proceedings, it was argued that the case lacked corroborative evidence beyond statements and failed to prove clandestine activities conclusively. Witnesses' non-appearance for cross-examination was highlighted, and no incriminating evidence was found at the residence of M/s. ASRM's Managing Partner. The Commissioner, noting the absence of corroborative evidence, dropped the proceedings, leading to the Revenue's grievance over the order.

Issue 3: Overwhelming Evidence by Revenue
The Revenue contended that the case was supported by overwhelming evidence beyond statements, including admissions by key individuals at M/s. EIL and M/s. ASRM, bank transactions, and transportation details. The Tribunal emphasized the difficulty in establishing a complete chain of activities in clandestine operations but acknowledged the Revenue's efforts in linking raw material suppliers to finished product manufacturers. The Tribunal found the evidence against the appellants to be substantial and remanded the case for further adjudication to consider all aspects and counterpoints effectively.

In conclusion, the Tribunal emphasized the importance of a thorough adjudication process, including cross-examination, consideration of all evidence, and addressing retractions effectively. The case was remanded for a more comprehensive review to ensure fairness and a proper examination of all relevant aspects.