2011 (7) TMI 600 - AT - Central Excise

Clandestine removal of goods - deficiency of corroborative evidence on record - Held that - Department has placed reliance on the statement of the employees during the initial proceedings. It is also noticed that no statement of managing director or director of the appellants, company was recorded. The department is relying on the contents of some loose sheets which the respondent has stated that these are not part of books of accounts and the maker of these loose sheets is not identified in the examination. In case of clandestine removal the prime consideration is corroborative evidence on record which is found missing in the present case. Therefore no infirmity in order and accordingly the Revenue s appeal is dismissed.

Summary

Issues:
1. Alleged clandestine removal of excisable goods involving central excise duty.
2. Reliance on employee statements and lack of corroborative evidence.
3. Rejection of penalty against the assessee by the Assistant Commissioner.
4. Appeal filed by Revenue against the Order-in-Appeal upheld by Commissioner (Appeals).
5. Lack of appearance by respondents during the hearing.

Analysis:
1. The case involves an appeal by the Revenue against the Order-in-Appeal passed by the Commissioner of Central Excise, Raipur, concerning the alleged clandestine removal of excisable goods involving central excise duty and education cess. The respondents, engaged in manufacturing sponge iron, M.S. Ingot, and TMT Bars, were availing cenvat credit under the Cenvat Credit Rules, 2004. The show cause notice issued to the respondents detailed the alleged duty evasion, which was later decided by the Assistant Commissioner, dropping the penalty against the assessee. Subsequently, the Revenue filed an appeal before the Commissioner (Appeals), who also rejected the departmental appeal, leading to the second appeal before the Tribunal.

2. During the proceedings, the Revenue relied on statements of certain employees but failed to record statements from key individuals like the Sr. Manager in charge of production and the Deputy Manager for the despatch department. The statement of the Sr. Manager (Accounts) indicated a lack of involvement in production and clearance of excisable goods. Additionally, no statement from the managing director or director of the company was recorded. The department's reliance on loose sheets, not part of the official books of accounts, and lacking identification of the maker, raised doubts about the evidence's credibility. The absence of corroborative evidence crucial in cases of clandestine removal led the Tribunal to find no infirmity in the impugned order, resulting in the dismissal of the Revenue's appeal.

3. The lack of appearance by the respondents during the hearing further highlighted the one-sided nature of the proceedings, with only the Revenue presenting its case. Despite the serious allegations of duty evasion, the absence of key statements and credible evidence weakened the Revenue's position, ultimately leading to the dismissal of their appeal by the Tribunal. The decision underscores the importance of thorough investigation and substantiated evidence in cases involving allegations of clandestine activities to ensure a fair and just legal process.