2015 (2) TMI 1077 - AT - Central Excise

Duty demand - Clandestine removal of goods - Held that - Charges of clandestine removal are required to be proved by the Revenue by production of sufficient, positive and tangible evidence. The same cannot be confirmed on the basis of doubts and assumptions and presumptions. It is seen that the Revenue has mainly relied upon the entries made in seized Register. It is not disputed that the said Register was not being maintained by the respondent in the ordinary course of their business but was a private Register being maintained by the respondent s employee Shri Nayak. The first obligation on the part of the Revenue was to examine Shri Nayak and record his statement, seeking clarifications in respect of the entries. For the reasons best known to the Revenue officers, this has not been done. - The adjudicating authority had, in compliance with the said directions of the Tribunal, issued summons to various deponents of the statements, who did not appear for the same. As such, he has proceeded to examine the said statements. The adjudicating authority has recorded that the said statements of the holder of bank account, counting clerk, despatch clerk and contractor, etc., are not inculpatory in nature inasmuch as neither of the statements of the said deponents have admitted any misdeed on the part of the company. Statement of Shri Ashok Mittal, Managing Director of the Company has also not accepted the fact of clandestine removal of the goods. Companies are in no way connected with the assessee company and there is nothing on record to show that they were fictitious firms and the consideration for sale of the goods by the said firms travelled to the assessee. The adjudicating authority has examined the said plea of the assessee and has categorically recorded that the goods cleared under their invoices were rib bars of 8 mm and 25 mm whereas the goods being manufactured by them were from 10 - 20 mm and they do not have machinery to manufacture the said goods. In the absence of any evidence to rebut the findings of the Commissioner, I find no reasons to interfere in the same - In the absence of any other evidence to show that the high power consumption was on account of excess manufacture of goods, he has come to a finding that there is not even preponderance of probabilities as regards the excess manufacture of the goods. - Decided against Revenue.

Summary

Issues:
- Allegations of clandestine activities
- Confirmation of demand of duty
- Imposition of penalties
- Validity of evidence
- Examination of statements
- Existence of trading companies
- Power consumption analysis
- Legal basis for charges

Analysis:
The case involves allegations of clandestine activities against the respondents engaged in manufacturing steel products. Central Excise Officers conducted examinations and recovered a private register, Register No. 7, reflecting potential removal of final products without duty payment. Subsequent investigations led to the issuance of a show-cause notice confirming a duty demand of Rs. 49,73,205/- and imposing penalties on various individuals and the company. The Commissioner's order was set aside by the Tribunal, remanding the matter for fresh consideration due to lack of conclusive evidence and procedural lapses. In the de novo proceedings, the Commissioner dropped the demand and vacated the show-cause notice, prompting the Revenue's appeal.

The Tribunal emphasized the Revenue's burden of proof in clandestine cases, requiring concrete evidence beyond doubts. The reliance on Register No. 7 without proper investigation and failure to examine the register's author critically weakened the Revenue's case. The absence of inculpatory statements from key individuals and the lack of cross-examination opportunities further undermined the allegations. The contention regarding trading companies not linked to the respondents was refuted based on the nature of goods traded and the absence of machinery for their manufacture. Additionally, the analysis of power consumption during the relevant period did not conclusively indicate excess production, aligning with legal precedents mandating strong, corroborative evidence.

The adjudicating authority's decision to reject the Revenue's appeal was based on the insufficiency of evidence and the failure to establish charges of clandestine removal convincingly. The judgment highlighted the necessity of robust evidence inspiring confidence in the Revenue's case, which was lacking primarily due to the sole reliance on Register-7 entries without additional corroboration. Ultimately, the Commissioner's findings favored the respondents, leading to the dismissal of the Revenue's appeal.