2016 (6) TMI 542 - AT - Central Excise

Clandestine removal - What is the effect of non-production by the Department of the original records RG-1 and RT 12 returns to the Tribunal - statements recorded from the proprietor and the authorized signatory and the loose sheets recovered during such operation - Held that - the Authenticity was doubted due to their non-availability at the time to search and their submission belatedly at the time of recording of statement of proprietor on 01.08.2003. There is no submission by the revenue regarding the fact whether any cross verification with these statutory records were made by the officers during investigation. It is also not clear when these statutory records were taken over or perused by the department. Further, is to be noted while R.g.1 entries were discussed in the Tribunal s order, the authenticity of entries in RT-12 periodical returns were not subjected to analysis. These returns are filed by appellant periodically with the Department. The question of their later manipulation does not arise as the original returns were to be with the Department only. Also the retraction of earlier statements were not made by affidavit or letter but by another statement dated 01.08.2003 recorded under section 14. Since it is the contention of the Revenue that statement recorded under section 14 is admissible as evidence and the contents therein are to be considered to arrive at a decision, it is necessary to take the statement dated 01.08.2003 also as admissible evidence subject to cross verification. Apparently, statement dated 01.08.2003 contradicts the earlier statements of inculpatory nature regarding clandestine removals. However, statement dated 01.08.2003 was made by the proprietor to explain the entries as made in the statutory records and returns in support of his claim about proper accounting and licit clearances. Therefore, in absence of original statutory records it will not be justifiable to arrive at a conclusion about the authenticity of the same. Any conclusion in this regard cannot be made by presumption or by reasoning. Accordingly, we hold that we are not able to arrive at a finding to interfere and to overturn the finding already recorded by the id. Commissioner (Appeals) based on the analysis of the contents of the statutory records. - Decided against the Revenue

Summary

Issues:
1. Effect of non-production of original records on the final outcome of the case.
2. Admissibility of confessional statements and retraction in relation to clandestine removal.
3. Authenticity of statutory records such as RG-1 and RT-12 returns.
4. Cross verification of statutory records during investigation.
5. Analysis of entries in RT-12 periodical returns.
6. Legal significance of retraction of earlier statements.
7. Consideration of statements recorded under section 14 as admissible evidence.

Analysis:

Issue 1: The primary issue in this case revolves around the effect of non-production of original records on the final outcome of the case. The Hon'ble High Court directed the CESTAT to address this question, emphasizing the importance of the original records relied upon by the Appellate Authority.

Issue 2: The case involves the admissibility of confessional statements and subsequent retractions concerning clandestine removal. The Tribunal deliberated on the conflicting opinions within the Division Bench regarding the sustainability of such statements and their impact on the case's final decision.

Issue 3: The authenticity of statutory records, specifically RG-1 register and RT-12 returns, is a crucial aspect of the case. The Tribunal scrutinized the discrepancies surrounding the submission and examination of these records, highlighting the importance of verifying their accuracy in determining the case's outcome.

Issue 4: The lack of information regarding cross verification of statutory records during the investigation raises concerns about the thoroughness of the inquiry. The Tribunal noted the absence of details regarding when these records were accessed or reviewed by the department, indicating a potential gap in the investigative process.

Issue 5: While the RG-1 entries were discussed extensively, the analysis of entries in RT-12 periodical returns was overlooked. This omission raised questions about the completeness of the examination and the possible implications of not scrutinizing all relevant statutory records.

Issue 6: The retraction of earlier statements without formal documentation, such as an affidavit or letter, added complexity to the case. The Tribunal considered the legal implications of such retractions and their impact on the evidentiary value of subsequent statements made under section 14.

Issue 7: The case also addressed the admissibility of statements recorded under section 14 as evidence. The Tribunal evaluated the conflicting statements made by the proprietor and the significance of these statements in relation to the overall argument presented by the Revenue.

In conclusion, the Tribunal dismissed the appeal filed by the Revenue, citing the inability to arrive at a definitive conclusion regarding the authenticity of the statutory records due to their non-production. The decision underscored the importance of thorough verification and examination of all relevant evidence in reaching a justifiable outcome in legal proceedings.