2005 (1) TMI 552 - AT - Central Excise

Demand - Clandestine removal - private records maintained by the shift supervisor/workmen in the factory - no corroborative evidence with regard to the purchase of raw materials, manufacture of the final goods and sale of the same - HELD THAT - The Revenue has not examined any purchasers of these goods nor they have examined the shift supervisors/operators who are said to have maintained private records and cleared the clandestinely manufactured goods. There is no evidence of receipt of funds. It has been held in all the cited cases which are extracted above that for confirming demands of clandestine manufacture and its clearance, the department has to produce corroborative evidence with regard to the purchase of raw material and manufacture of final goods and removal of the same clandestinely. Except the packing slips and the private registers maintained by the ship supervisors/operators, there is no other evidence on record. There are no statements to corroborate the receipt of raw material and manufacture of the goods. The department ought to have examined the use of excess electricity, which would have established to some extent the allegations. It is well laid down that private registers and slips maintained by the shift supervisors/operators cannot be a basis for confirming the demands. In view of the well laid down judgments and lack of evidence in this case, the impugned order is set aside and the appeal is allowed with consequential relief, if any.

Summary

Issues:
Challenge to confirmation of demand based on clandestine removal.

Details:
The appellants contested the demand confirmation in OIO No. 3/1998, alleging clandestine removal without sufficient evidence. They argued that the Revenue relied on private records without corroborative proof of raw material purchase, manufacturing, and sale of Cold Rolled Steel Strips Sheets. The appellants maintained that the raw materials were legitimate items supplied by SAIL, and there was no evidence of obtaining them elsewhere for clandestine activities.

The learned Counsel emphasized the lack of corroborative evidence, seizure of clandestinely manufactured goods, and reliance on private registers. Referring to precedents, the Counsel argued that demands cannot be confirmed solely based on private records, as seen in various cases where such confirmations were set aside due to similar lack of evidence.

The learned SDR supported the department's stance, citing private records maintained by workmen and supervisors as evidence of manufacturing and clearance of goods.

Upon review, it was observed that the Revenue's case relied solely on private registers and packing slips without concrete evidence of raw material purchase. The appellants contended that procurement of steel from SAIL, the sole supplier, was essential for manufacturing, making clandestine activities improbable without excess electricity and other raw materials. The lack of evidence regarding input receipt, excess electricity usage, and examination of relevant personnel raised doubts about the clandestine removal allegations. The Tribunal noted the necessity of corroborative evidence for confirming demands related to clandestine activities, emphasizing the establishment of each link in the process. Given the absence of substantial evidence beyond private records, the impugned order was overturned, and the appeal was allowed.

(Operative portion of this Order was pronounced in open Court on conclusion of hearing)