2016 (2) TMI 104 - AT - Central Excise

Clandestine removal - cross examination of the buyers and brokers - Held that - The allegation of the clandestine removal cannot be established merely on the basis of the statement of the buyers and brokers and the documents recovered from the buyer without any enquiry of the assessee. It is also noted the statement of the partner of the assessee is un-corroborative nature. In any event, the cross examination of the buyers and brokers were not allowed. So, the case of M/s Shiv Sakti Ingots Pvt. Ltd. (2015 (11) TMI 1239 - CESTAT AHMEDABAD) would be applicable in the present appeal. In view of the above discussions, the impugned order cannot be sustained. So, the penalty imposed on the partner of the assessee is unwarranted. - Decided in favour of assessee

Summary

Issues:
1. Clandestine removal of goods based on third-party statements and records.
2. Admissibility of evidence from private records of buyers.
3. Cross-examination of buyers and brokers for establishing truth.
4. Legal precedents on clandestine removal cases and evidentiary value of confessional statements.

Analysis:
1. The case revolved around the alleged clandestine removal of goods by the assessee, based on statements and records of third parties, specifically the buyer and broker. The Central Excise Officers initiated proceedings against the assessee based on information obtained from the private records of the buyer. The demand of duty was confirmed without conducting any direct enquiry at the assessee's premises, solely relying on third-party evidence.

2. The appellant argued that the entire case was built on the statements of the buyer and broker, without allowing cross-examination to verify the accuracy of the claims. The Tribunal highlighted a similar case where the demand of duty was set aside due to lack of concrete evidence and corroboration. The reliance on private records of buyers without direct evidence from the assessee's premises was deemed insufficient to establish clandestine removal.

3. The issue of cross-examination emerged as crucial for establishing the truth in the case. The appellant contended that denial of cross-examination of buyers and brokers hindered the fair assessment of the situation. Legal precedents were cited to emphasize the importance of corroborative evidence and the necessity of allowing cross-examination to ensure a just determination of the matter.

4. The Tribunal referred to various legal judgments and precedents regarding cases of clandestine removal and the evidentiary value of confessional statements. The decisions highlighted the need for tangible evidence, such as excess raw materials, actual removal of goods without duty payment, and links between recovered documents and manufacturing activities. The importance of corroborative evidence and the limitations of solely relying on confessional statements were underscored.

In conclusion, the Tribunal set aside the impugned order, ruling in favor of the appellant and rejecting the penalty imposed on the partner of the assessee. The judgment emphasized the necessity of concrete evidence, corroboration, and fair procedures such as cross-examination to establish allegations of clandestine removal effectively.