2016 (12) TMI 780 - AT - Central Excise

Clandestine removal - clearance of 92.200 M.T. of Sponge Iron to the appellant without issuing Central Excise invoices - Held that - I find that the proceedings were initiated against the other assessees on the basis of search and enquiry with reference to activities of Indian Steels, Raipur. The Tribunal in the case of M/s. Raipur Forgings Pvt. Ltd. & Ors. vs. CCE Raipur-I 2016 (2) TMI 763 - CESTAT NEW DELHI , where it was held that It is essential to have some piece of corroboration for such a clandestine activity other than the sole evidence of general admission statement of the Director or /partner and the appeal was allowed - In view of the above decision, I am of the view that the impugned orders can not be sustained - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
- Alleged duty evasion by the appellant company in the manufacture and clearance of M.S. Ingots without issuing Central Excise invoices.
- Validity of demand raised by the adjudicating authority based on third party evidence.
- Corroboration of evidence and statements provided by the appellant company during the investigation.
- Comparison with a similar case involving M/s. Raipur Forgings Pvt. Ltd. & Ors. and its impact on the current judgment.

Analysis:
- The case involved allegations of duty evasion by the appellant company in the manufacture and clearance of M.S. Ingots without issuing Central Excise invoices. The officers of the DGCEI visited the business premises of another company, M/s. Indian Steel, and seized records indicating the transfer of Sponge Iron to the appellant without proper documentation. The adjudicating authority confirmed the duty demand, interest, penalties, and confiscation of goods against the appellant.

- The main contention raised was the validity of the demand raised by the adjudicating authority based on third party evidence. The appellant argued that the demand was solely based on third party evidence without proper corroboration from their own records. The statement provided by the appellant company's director was deemed un-corroborated, questioning the basis of the demand.

- The issue of corroboration of evidence and statements during the investigation was crucial. The Tribunal referred to a similar case involving M/s. Raipur Forgings Pvt. Ltd. & Ors., where the Tribunal emphasized the need for corroborative evidence in cases of alleged clandestine activities. The Tribunal highlighted that mere admission statements by directors or partners, without further verification or corroboration, may not be conclusive evidence, especially in cases involving complex manufacturing processes and unaccounted clearances.

- The comparison with the case of M/s. Raipur Forgings Pvt. Ltd. & Ors. played a significant role in the judgment. The Tribunal in that case allowed the appeal, emphasizing the lack of corroboration and the need for additional evidence beyond admission statements. Drawing parallels, the Tribunal in the current judgment concluded that the impugned orders could not be sustained, and subsequently allowed the appeals filed by the appellants based on the precedent set by the earlier case.

This detailed analysis of the judgment highlights the key issues, arguments presented, and the Tribunal's decision based on the evidence, corroboration, and legal precedents cited during the proceedings.