2014 (11) TMI 202 - AT - Central Excise

Shortage in stock - Clandestine manufacture and removal of goods - Held that - adjudicating authority himself has held that Panchnama so recorded, cannot be relied upon as the same was found to be recorded by unfair means. If the drawal of Panchnama was itself doubtful, the entire case booked by preventive branch cannot be allowed to stand on its own legs. What falls in part, cannot be upheld in whole. Inasmuch as the adjudicating authority himself has disbelieved the story of investigation and drawal of Panchnama, the allegations of shortages and resultant clandestine removal cannot be upheld. As rightly observed by Commissioner (Appeals), the various statements recorded by the officers during the course of investigation being corroborative of each other, would constitute evidence against the assessee in the normal course, but such general norms cannot be accepted in the present case, inasmuch as the Panchnama itself has not been accepted by the original adjudicating authority. specific findings of Commissioner (Appeals) do not stand rebutted by Revenue in their memo of appeal - Revenue has no case regarding clandestine removal of goods - Following decision of CCE Ahmedabad-I vs. Mukesh Industries Limited 2008 (8) TMI 667 - CESTAT, AHMEDABAD - Decided in favour of assessee.

Summary

Issues:
1. Appeal against Order-in-Appeal dated 31.01.2008
2. Demand of duty based on investigations and Panchnama
3. Appeal filed by Revenue before CESTAT
4. Clandestine manufacturing and removal of processed fabrics
5. Appeal against OIO passed by Adjudicating authority
6. Statements recorded by Central Excise officers as evidence
7. Setting aside of orders by the appellate authorities

Analysis:

1. The appellant filed an appeal against Order-in-Appeal No. 11/2008/AHD-I dated 31.01.2008, issued by the Commissioner (Appeals) Ahmedabad. The first appellate authority had set aside the Order-in-Original (OIO) No. 11/Add. Comm/2006 dated 16.03.2007/12.04.2007 passed by the adjudicating authority.

2. The demand of duty amounting to &8377;21,10,410/- was based on investigations initiated on 25.05.2001, and a Panchnama recorded certain shortages in the factory premises of the appellant. The adjudicating authority confirmed a demand of &8377;2,50,474/-, setting aside the demand of &8377;18,57,936/-. The Commissioner (Appeals) later set aside the confirmation of the demand of &8377;2,50,474/- as well. The Revenue, dissatisfied with the decisions, filed an appeal before CESTAT, which was dismissed.

3. The appellant argued that the case had already been decided in their favor by CESTAT in a previous order dated 28.08.2008, which had not been appealed against by the Revenue. Therefore, they contended that the present appeal should be allowed.

4. The case involved allegations of clandestine manufacturing and removal of processed fabrics, leading to the demand of duty. The adjudicating authority confirmed a part of the demand but dropped the remaining amount due to concerns over the reliability of the Panchnama recorded during the search operation. The Revenue challenged these decisions, leading to the present appeal.

5. The Commissioner (Appeals) observed that the Panchnama was not reliable and that the statements recorded during the investigation were retracted, casting doubts on the entire case. The Revenue argued that the statements should be considered as evidence, citing a Supreme Court judgment. However, the Commissioner upheld the decision to set aside the demands.

6. The bench analyzed the facts and found that the Revenue had no case regarding clandestine removal of goods. The observations made by the Commissioner (Appeals) were deemed valid, and the appeal filed by the Revenue was rejected. The bench noted that the Revenue had not appealed a previous order on the same facts, indicating that no appeal could be sustained on the same grounds in another proceeding.

7. Ultimately, the appeal filed by the appellant was allowed, setting aside the Order-in-Appeal dated 31.01.2008/14.02.2008, with consequential relief as deemed necessary.