2016 (4) TMI 838 - SC - Central Excise

Clandestine removal of Polyester Texturised Yarn - Whole case is founded on the statement of the authorised officer of the respondent without verification of any other independent evidence - Respondents submitted that it had produced the technical opinion of the chartered engineer which has been analysed by the High Court in extenso that there has been no differential quantity and hence, the question of clandestine removal does not arise. Held that - the revenue should have been afforded an opportunity to counter the technical report filed by the assessee by filing its technical report, for the whole controversy hinges upon the differential quantity and if there is any differential quantity, the issue of removal would arise. Regard being had to the same, the order passed by the High Court and that of the tribunal is set aside and the mater is remitted to the tribunal to permit the Revenue to file a technical report. If the tribunal forms the view that there has to be further technical opinion, it may call for it or it may permit the parties to adduce further evidence to substantiate the plea. We may hasten to clarify that while dealing with the matter, the tribunal shall not take into consideration the statement of the authorised officer alone. If there will be any differential quantity on the analysis of the aforesaid aspects, then the said statement can be pressed into service. - Decided in favour of revenue

Summary

Issues:
1. Legal acceptability of the common order dated 14.07.2010 passed by the High Court of Judicature for Gujarat at Ahmedabad disposing Tax Appeal Nos.1410-1412 of 2009.

Analysis:
The Supreme Court granted leave to appeal the common order of the High Court concerning the clandestine removal of Polyester Texturised Yarn (PTY). The High Court agreed with the Customs Excise and Service Tax Appellate Tribunal's (CESTAT) view that there was no clandestine removal based solely on the statement of the authorised officer of the respondent. The tribunal's decision relied on the technical opinion of a chartered engineer submitted by the respondents, and the revenue's case was primarily built on the authorised officer's statement without independent verification. The Supreme Court noted that such reliance on a single statement without additional evidence was insufficient for acceptance.

The respondents argued that they provided a technical opinion from a chartered engineer, which the High Court accepted, showing no differential quantity to support the claim of clandestine removal. However, the Supreme Court emphasized that the revenue should have had the opportunity to contest this technical report by submitting its own, especially since the issue of clandestine removal hinged on the presence of a differential quantity. Consequently, the Supreme Court set aside the High Court and tribunal orders, remitting the matter back to the tribunal to allow the Revenue to file a technical report and present further evidence if necessary. The tribunal was instructed not to rely solely on the authorised officer's statement and to disregard any insistence on pre-deposit of dues for the appeal hearing.

In conclusion, the appeals were allowed to the extent of setting aside the previous orders and remitting the matter for further examination. No costs were awarded in this case.