2015 (7) TMI 1098 - AT - Central Excise

Recovery of duty alongwith interest and imposition of penalty - Clandestine removal of MS ingots - 10 consignments of MS ingots weighing 150MT, involving central excise duty of ₹ 4.92,464/- was cleared by the appellant to M/s. Ranbir Steel Industries without payment of central excise duty - Held that -the demand of duty was confirmed based on the assumption and presumption only and in the absence of any positive evidence of clandestine removal of goods without payment of duty, the charge of clandestine removal cannot be levelled against the appellant. Thus, the central excise duty confirmed by the authorities below along with interest and imposition of penalty under Section 11 AC of the Central Excise Act, 1944 is not legal and proper. Therefore, the impugned order is set aside. - Decided in favour of appellant with consequential relief

Summary

Issues Involved:
Clandestine removal of MS ingots, Cross-examination of witnesses, Evidence of transportation, Imposition of penalty without corroborative evidence.

Analysis:

Clandestine Removal of MS Ingots:
The appeal dealt with the issue of clandestine removal of MS ingots by the appellant to M/s. Ranbir Steel Industries without payment of central excise duty. The central excise officials found slips indicating such removals, leading to the initiation of proceedings against the appellant. However, the Tribunal observed discrepancies in the statements of involved parties and lack of concrete evidence to prove the clandestine removal. The Tribunal emphasized the importance of corroborative evidence and held that the demand based solely on assumptions and presumptions is not valid. Consequently, the central excise duty, interest, and penalty imposed were deemed improper, and the appeal was allowed in favor of the appellant.

Cross-Examination of Witnesses:
During adjudication proceedings, the appellant requested cross-examination of key witnesses, including the gatekeeper and the manager of the company. However, the Department failed to produce these witnesses for cross-examination, rendering their statements inadmissible as legal evidence. The Tribunal highlighted the necessity of producing witnesses for cross-examination to establish the credibility of their statements. The lack of cross-examination further weakened the case against the appellant, contributing to the decision in favor of the appellant.

Evidence of Transportation:
The Department failed to provide any statement from the transporter to prove the clandestine transportation of goods to the appellant's factory. Additionally, there was a lack of other supporting evidence such as payment receipts or excess consumption records to substantiate the claim of clandestine removal. The Tribunal emphasized the importance of concrete evidence in proving allegations of clandestine activities. Without such evidence, the charge of clandestine removal could not be upheld against the appellant.

Imposition of Penalty Without Corroborative Evidence:
The Tribunal noted that the proceedings against the appellant were initiated based on third-party records without sufficient corroborative evidence. Relying solely on such records without additional proof of clandestine removal was deemed insufficient for judicial scrutiny. A precedent case was cited to emphasize that demands cannot be raised solely on records seized from third parties without corroborative evidence. Consequently, the imposition of penalty under Section 11 AC of the Central Excise Act, 1944 was considered unjustified, leading to the setting aside of the impugned order in favor of the appellant.

This detailed analysis of the judgment highlights the key issues of clandestine removal, cross-examination, evidence of transportation, and the imposition of penalty without sufficient corroborative evidence, leading to the ultimate decision in favor of the appellant.