2013 (12) TMI 108 - AT - Central Excise

Bailing slips recovered from third party Sufficient proof for clandestine removal or not Held that - Apart from the bailing slips there is no evidence on record corroborating the allegation of the Revenue- the assessee admitted having written 56 bailing slips but clarified that the same were in relation to the goods traded by him in his personal capacity - there is nothing on the said bailing slips connecting them to the appellant - There is also virtually no other evidence to reflect upon the clandestine manufacture and clearance by the appellant - allegation of clandestine removal is required to be arrived at on the basis of sufficient and positive evidence and the onus to produce such allegation is on the Revenue - The allegations cannot be sustained on the basis of documents recovered from a third person without any corroboration in material particular s from independent source - There was no justification for confirmation of demand against the appellant based upon such documents produced by a third person and having no nexus or link with the appellant order set aside Decided in favour of Assessee.

Summary

Issues:
- Allegation of clandestine removal of final product based on bailing slips
- Shortage of processed Corduroy cloth involving duty
- Admissibility of evidence and onus of proof on Revenue
- Confirmation of demand of duty and imposition of penalty

Issue 1: Allegation of clandestine removal of final product based on bailing slips

The appellant was engaged in processing velvet/Cotton Corduroy cloth, and a demand of duty was confirmed against them along with penalties based on allegations of clandestine removal of their final product. The Revenue relied on bailing slips provided by a third party, Shri Jagmohan Singh, indicating removal of processed fabric by the appellant without payment of duty. However, it was noted that the clandestinely removed fabric was not recorded in the records of the third party. The Tribunal emphasized that allegations of clandestine removal must be supported by sufficient and positive evidence, and the onus to prove such allegations lies with the Revenue. In this case, the Tribunal found that there was no direct evidence connecting the bailing slips to the appellant, and without corroborating evidence, the allegations could not be sustained. Consequently, the Tribunal set aside the order confirming the demand against the appellant.

Issue 2: Shortage of processed Corduroy cloth involving duty

During a visit to the appellant's factory, a shortage of processed Corduroy cloth involving duty was discovered, which the appellant admitted and deposited the dues. This admission by the appellant indicated their acknowledgment of the shortage and their willingness to comply with the duty payment requirements. This issue was separate from the allegations of clandestine removal based on bailing slips and was resolved through the appellant's admission and payment of the dues.

Issue 3: Admissibility of evidence and onus of proof on Revenue

The Tribunal highlighted the importance of sufficient and positive evidence in establishing allegations of clandestine removal. In this case, the Revenue's case relied heavily on bailing slips provided by a third party, which the appellant's representative admitted to writing some of but clarified that they were related to personal transactions, not the processing of goods from the appellant's factory. The Tribunal emphasized that allegations of clandestine removal cannot be solely based on documents from a third party without independent corroboration. The onus of proving such allegations rested on the Revenue, and in the absence of concrete evidence linking the appellant to the alleged clandestine removal, the Tribunal found no justification for confirming the demand of duty and penalties.

Issue 4: Confirmation of demand of duty and imposition of penalty

The original adjudicating authority and the Commissioner (Appeals) had confirmed the demand of duty and imposed penalties on the appellant based on the allegations of clandestine removal. However, the Tribunal, after considering all the evidence and arguments presented, concluded that the Revenue's case lacked sufficient corroborating evidence to support the allegations. Therefore, the Tribunal set aside the impugned order confirming the demand and penalties, providing consequential relief to the appellant.

In conclusion, the judgment by the Appellate Tribunal CESTAT NEW DELHI addressed multiple issues, including the reliance on bailing slips for allegations of clandestine removal, the discovery of a shortage of processed Corduroy cloth involving duty, the importance of admissible evidence and the onus of proof on the Revenue, and the confirmation of demand of duty and imposition of penalty. The Tribunal emphasized the need for concrete evidence to support allegations of clandestine removal and ultimately ruled in favor of the appellant due to the lack of sufficient evidence linking them to the alleged misconduct.