2008 (8) TMI 266 - AT - Central Excise

Clandestine removal - Demand confirmed on basis of confessional statement of director that cash transactions were not entered in the books of account held that retraction of such confessional statement not affects its evidential value - held that the confessional statement can be relied upon for the purpose of establishing an offence, unless evidence shows that it was obtained under threat, duress, coercion etc. therefore, demand is justified

Issues Involved:
1. Admissibility and reliance on confessional statements.
2. Corroborative evidence for clandestine removal of goods.
3. Retraction of confessional statements.
4. Calculation and confirmation of duty demand.
5. Imposition and reduction of penalties.

Detailed Analysis:

1. Admissibility and Reliance on Confessional Statements:

The revenue's appeal contended that the confessional statement of the Director, recorded on 15-12-2001 and confirmed on 16-12-2001, admitted cash transactions of Rs. 50 lakhs and Rs. 53 lakhs during the years 2000-01 and 2001-02 respectively. The revenue argued that such a statement, recorded before a Customs officer, is admissible evidence and does not require corroboration, citing the Supreme Court's decision in Illias v. CC, Madras, 1983 (13) E.L.T. 1427 (S.C.). The Tribunal noted that the confessional statement was detailed and specific, referencing various orders and internal documents, indicating it was not made under duress. The Tribunal referred to several Supreme Court judgments, including Commissioner of CCEx., Madras v. Systems & Components Pvt. Ltd., 2004 (165) E.L.T. 136 (S.C.), and K.I. Pavunny v. Asst. Collector (HQ), Central Excise Collectorate, Cochin, 1997 (90) E.L.T. 241 (S.C.), which held that a voluntary confessional statement could form the sole basis for conviction if found truthful.

2. Corroborative Evidence for Clandestine Removal of Goods:

The Commissioner (Appeals) had set aside the order-in-original, stating that the case was based solely on the confessional statement without corroborative evidence such as excess raw material consumption, excess electricity utilization, or maintenance of parallel records. The Tribunal, however, found that the confessional statement was sufficiently detailed and corroborated by internal documents and orders found during the investigation, which supported the claim of clandestine removal.

3. Retraction of Confessional Statements:

The respondent argued that the confessional statement was retracted in May 2002, stating it was made under a depressed state of mind and confusion. The Tribunal noted that the retraction was made several months after the original statement and did not allege any threat or coercion. The Tribunal referred to the Supreme Court's decision in Haroon Haji Abdulla v. State of Maharashtra, 1999 (110) E.L.T. 309 (S.C.), which held that retractions made months later are not credible. The Tribunal concluded that the original statement was voluntary and truthful.

4. Calculation and Confirmation of Duty Demand:

The Tribunal held that the duty demand for the year 2000-2001 was correctly based on the confessional statement, which detailed the cash transactions and unaccounted clearances. However, for the year 2001-2002, the Tribunal agreed with the respondent's plea that the statement should be relied upon in toto and not in parts. Since the confirmation of duty for 2001-2002 was not based on the confessional statement, the Tribunal set aside the demand for that year.

5. Imposition and Reduction of Penalties:

The original adjudicating authority had imposed a combined duty and penalty for both years. The Tribunal remanded the matter back to the original adjudicating authority to bifurcate the duty for the year 2000-2001 and proportionately reduce the penalties imposed on both the company and its director based on the actual duty evaded.

Conclusion:

The Tribunal confirmed the duty demand for the year 2000-2001 based on the confessional statement of the Director, which was found to be voluntary and truthful. The demand for the year 2001-2002 was set aside due to the lack of reliance on the confessional statement. The case was remanded for the limited purpose of bifurcating the duty and proportionately reducing the penalties.

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