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2013 (3) TMI 160 - AT - Central ExciseClandestine removal of final products without payment of duty - Held that - Charges made by the revenue for non payment of duty required to be proved by the way of sufficient evidences but in the present case the Revenue has solely relied upon the recovery of certain photocopies of the bills from the trading unit as also on the statement of the Director, accepting the clandestine removal. Apart from the above, there is no other evidence showing clandestine manufacture and removal of the final products. As decided in Commissioner of Income Tax v. Dhingra Metal Works (2010 (10) TMI 29 - DELHI HIGH COURT) though a confessional statement is important piece evidence but it cannot be held to be conclusive. As such the sole reliance of the revenue on the statement of Sh. Agarwal without any other evidence to reflect upon the clandestine activities of the respondent is not proper and just - in favour of assessee.
Issues: Allegation of clandestine removal without sufficient evidence.
Analysis: 1. Background: The case involves an appeal by the revenue against the order of the Commissioner of Central Excise regarding alleged duty evasion by a manufacturing unit and a trading unit. The manufacturing unit, engaged in the production of certain goods, was accused of clearing goods without payment of duty to the trading unit, which then passed on the goods to customers with Cenvat credit. 2. Initiation of Proceedings: The revenue initiated proceedings against all three respondents based on a Show Cause Notice proposing a demand of Rs. 2,71,483 along with interest and penalties. The original Adjudicating Authority confirmed the demand against the manufacturing unit and imposed penalties on the trading unit and the Director. 3. Decision of Commissioner (Appeals): The Commissioner (Appeals) set aside the impugned order and allowed the appeal, leading to the revenue filing the present appeal. The Commissioner (Appeals) observed that the allegation of clandestine removal was based on photocopies of invoices and lorry receipts, creating suspicion but not constituting concrete evidence. 4. Analysis of Commissioner (Appeals) Decision: The Commissioner (Appeals) emphasized that suspicion, even if grave, cannot serve as evidence, citing legal precedents. The Commissioner highlighted that photocopies are not considered genuine documents by the Department, and clandestine removal requires positive proof, which was lacking in this case. The Commissioner noted the absence of corroborative evidence and emphasized the need for the Department to establish the veracity of documents and conduct a thorough investigation. 5. Grounds of Appeal by Revenue: The Revenue relied on legal judgments to support their argument for confirming the demand based on possibilities and cited Tribunal decisions upholding demands related to clandestine removal. 6. Decision of Appellate Tribunal: The Tribunal analyzed the charges of clandestine removal against the respondents and emphasized the requirement of sufficient evidence to prove such allegations. The Tribunal noted that the Revenue primarily relied on photocopies of bills and a statement from the Director, lacking substantial evidence of clandestine activities. 7. Legal Precedent: The Tribunal referenced a recent Delhi High Court decision emphasizing that a confessional statement is significant but not conclusive evidence. In the absence of substantial evidence beyond the statement, the Tribunal found no grounds to support the revenue's allegations of clandestine activities. 8. Final Decision: The Tribunal rejected all three appeals filed by the revenue, affirming the decision of the Commissioner (Appeals) due to the lack of concrete evidence supporting the allegations of clandestine removal. The Tribunal emphasized the importance of establishing verifiable evidence in cases of duty evasion allegations. This detailed analysis of the judgment showcases the progression of the case, the key legal arguments, and the ultimate decision based on the insufficiency of evidence to substantiate the allegations of clandestine removal.
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