2011 (4) TMI 466 - AT - Central Excise

Clandestine removal - Evasion of duty - Personal penalty - search and seizure - allegation of unaccounted production and clandestine removal - The Commissioner has answered the charge of clandestine removal of goods against the appellants on the basis of capacity of machines installed by the appellants in their factory, the electricity generated by gensets, number of labourers employed by the appellants in the factory and raw materials consumed during the relevant period. All the findings in these regards have been arrived at essentially on the basis of statements of the deponents read with contents of hisaba book, kachcha challans, loose sheets and GRs of the transporters stated to have been recovered in the course of investigation. - difference iof opinion - matter referred to larger bench.

Issues Involved:
1. Clandestine removal of goods
2. Illegality of search and seizure
3. Credibility of documentary evidence
4. Retraction of statements
5. Burden of proof and standard of evidence
6. Penalty and confiscation

Detailed Analysis:

1. Clandestine Removal of Goods:
The case against the appellants primarily revolves around the clandestine removal of goods by M/s. Kuber Tobacco Products Pvt. Ltd. (KTPPL) and M/s. Kuber International (India) (KI). The Commissioner based the findings on the capacity of machines, electricity consumption, labor employed, and raw materials used. The total production capacity was inferred from the number of machines and their operational shifts. The findings were supported by seized documents like hisaba books, kachcha challans, and loose sheets, which purportedly documented the clandestine activities. However, the Tribunal emphasized the need for concrete and tangible evidence to establish such serious charges.

2. Illegality of Search and Seizure:
The appellants challenged the legality of the search and seizure, arguing procedural lapses such as the absence of detailed descriptions in the panchnama, failure to record the time of search, and improper handling of seized documents. Despite these contentions, the Tribunal held that even if the search and seizure were illegal, the evidence obtained could still be admissible if it was relevant and not tampered with, as supported by precedents like State represented by Inspector of Police vs. N.M. T. Roy Imakulate.

3. Credibility of Documentary Evidence:
The credibility of the seized documents was a major issue. The appellants argued that the documents were not properly authenticated, the author was not identified, and there were interpolations. The Tribunal found significant procedural lapses in the panchnama, which cast doubt on the authenticity of the documents. The documents were not sealed properly, and there was no clear description of where they were found. The Tribunal concluded that these lapses undermined the credibility of the evidence.

4. Retraction of Statements:
The statements of key individuals, including Shri Mool Chand Malu and Shri Vikas Malu, were retracted. The Tribunal noted that retractions must be examined for voluntariness and truthfulness. In this case, the retractions were considered belated and unsupported by evidence of coercion or inducement. The Tribunal emphasized that mere retraction does not invalidate a statement if it was initially given voluntarily.

5. Burden of Proof and Standard of Evidence:
The Tribunal reiterated that the burden of proving clandestine removal lies heavily on the department and must be established with cogent evidence. The standard of proof in such cases is preponderance of probabilities, not beyond reasonable doubt. The Tribunal criticized the Commissioner for relying on assumptions and presumptions without concrete evidence, such as actual verification of machine capacity and raw material procurement.

6. Penalty and Confiscation:
The Commissioner had imposed significant penalties and ordered the confiscation of land, building, and machinery. The Tribunal upheld the imposition of penalties under Rule 209A and Section 11AC but reduced the quantum for several individuals, considering their roles and the extent of their involvement. The Tribunal also upheld the confiscation orders but remanded the matter for re-quantification of penalties under Section 11AC.

Conclusion:
The Tribunal found substantial procedural and evidentiary lapses in the case presented by the department. The credibility of the documentary evidence was seriously questioned, and the retracted statements were not sufficiently corroborated. The Tribunal allowed the appeals, set aside the impugned orders, and provided consequential relief to the appellants. The matter was remanded for re-quantification of penalties where applicable.

← Previous Next →