2011 (9) TMI 440 - AT - Central Excise

Show Cause Notice -Chits cover the clandestine removal - 46 chits were found which contained details like date, consignee s name, destination, description of the goods, weight, number of pieces and bundles, signature of person who supervised the packing and delivery of the goods. - held that - the assessee had given the addresses of 4 customers which also the Revenue failed to investigate. - In view of Sharadha Forge Pvt.Ltd. Vs CCE Rajkot (2004 - TMI - 53453 - CESTAT, WEST ZONAL BENCH, MUMBAI), appeal was allowed.

Summary

Issues involved:
Alleged clandestine removal of goods, admission by the director, verification of customer addresses, authorship of chits, reliance on previous case law, imposition of penalty.

Detailed Analysis:

1. Alleged Clandestine Removal of Goods:
The case involved M/s Citizen Metalloys Ltd manufacturing copper products where chits containing details of goods were found during a visit to the factory. The 2nd appellant admitted to clandestine removal as per the chits, except for 9 chits related to captive consumption. Duty and penalty were imposed based on the findings.

2. Admission by the Director:
The director initially admitted to manufacture and clandestine removal but later contested the claim in response to the Show Cause Notice. The appellant argued that the chits were for internal record-keeping purposes and not necessarily indicative of clandestine activities. The director's statements and the lack of verification of customer addresses were key points of contention.

3. Verification of Customer Addresses and Authorship of Chits:
The appellant highlighted that while addresses of 4 customers were provided, no verification was conducted by the Revenue. Additionally, the authorship of the chits was questioned, as the investigating officers did not trace the authors or conduct a thorough inquiry into their origin, raising doubts about the evidence presented by the Revenue.

4. Reliance on Previous Case Law:
Both sides referenced past judgments to support their arguments. The appellant cited the case of Sharadha Forge Pvt. Ltd. to argue against the sustainability of the demand and imposition of penalties in cases of disputed clandestine removal. The Tribunal, in line with the precedent set by the Shradha Forge Pvt. Ltd. case, found in favor of the appellants due to insufficient evidence and lack of thorough investigation by the Revenue.

5. Imposition of Penalty:
Penalties were imposed on both appellants based on the alleged clandestine removal. The Tribunal's decision to allow the appeal and grant consequential relief to both appellants was influenced by the lack of substantial evidence, failure to verify customer addresses, and the absence of clear authorship of the chits, as highlighted in the Shradha Forge Pvt. Ltd. case.

In conclusion, the Tribunal's decision in this case was guided by the principles established in previous judgments, emphasizing the importance of concrete evidence, thorough verification procedures, and adherence to legal precedents in matters involving alleged clandestine activities and imposition of penalties.