2013 (6) TMI 84 - HC - Central Excise

Clandestine removal - entries in Note Book - double clearance on the same set of invoice by changing the time of preparation/removal on the said invoices. - held that - The revenue had sought to make additions only on the basis of certain entries in the note book which they were not able to corroborate from any other independent evidence. The action of the department was on the basis of suspicion alone. Law does not permit additions to be made on that basis. The revenue is required to substantiate with certain material that there has been an attempt to evade excise duty. In the light of the findings recorded by the Tribunal which have not been shown to be erroneous or perverse, no question of law much less substantial arises for consideration in this appeal. - Decided against the revenue.

Summary

Issues:
- Whether the Tribunal correctly rejected reliance on entries in the "note book" as evidence of clandestine removal of excisable goods.
- Whether there was sufficient corroborative evidence to prove clandestine removal of goods and evasion of Central Excise duty.

Analysis:

Issue 1:
The appellant, the revenue, challenged the Tribunal's decision to not accept the entries in the "note book" as evidence of clandestine removal of excisable goods. The respondent company was found to have clandestinely cleared steel ingots without payment of duty. The revenue contended that the authorities erred in not considering the entries in the note book as evidence of evasion. However, the Tribunal found no merit in the appeal. It noted that suspicion alone cannot replace evidence. The private records maintained by certain individuals were not deemed reliable, as their connection to the evasion was not established. The Tribunal emphasized the lack of meaningful investigation by the department to corroborate the entries in the private records. It highlighted the absence of admissions by authorized persons of the company regarding unaccounted production and clandestine removal, indicating a failure to gather necessary evidence.

Issue 2:
The second issue revolved around the sufficiency of corroborative evidence to prove clandestine removal of goods and duty evasion. The Tribunal's findings indicated that no material evidence was presented by the revenue to conclusively establish clandestine removal by the assessee. The lack of discrepancy in stock during a visit to the respondent's premises and the absence of seized consignments without proper excise documents weakened the revenue's case. The Tribunal emphasized that additions based solely on suspicion were impermissible under the law. It stressed the revenue's obligation to substantiate claims of duty evasion with concrete evidence. As the Tribunal's findings were not shown to be erroneous or perverse, the appeal was dismissed, indicating no substantial question of law for consideration.

In conclusion, the judgment highlighted the importance of concrete evidence and proper investigation to establish clandestine removal of goods and duty evasion. The decision underscored the necessity for corroborative evidence beyond mere suspicion to support allegations in excise duty cases.