2017 (1) TMI 228 - AT - Central Excise

Clandestine clearance - unaccounted stock - forced statements - The stock of Copper ingots as well as Copper wire rods were seized on the ground that these were unaccounted - Confiscation - Interest - Penalty - Held that - From the records of the deposition during cross examination it clearly emerges that the original statement has been recorded by the Revenue authorities under duress. During cross examination Shri S K Chopra has also given different interpretation of the figures contained in two recovered slips. If the later explanation is taken into account the entire duty demand becomes unsustainable. The allegation of clandestine clearance is to be established by the Revenue on the basis of tangible evidence. Before sustaining the allegations the same needs to be corroborated and supported by detailed investigation. We find that no investigation has been conducted into the procurement of additional raw material required for manufacture of such huge quantity of goods alleged to have been clandestinely cleared - Nothing has been brought on record regarding payment received for such clandestinely cleared goods. Some cash has been seized from the residence of Director which is alleged to be the sale proceeds of clandestinely cleared goods. Once the allegation of clandestine clearance is not sustained there is no justification to confiscate the seized goods and currency - Appeal allowed.

Summary

Issues:
1. Duty demand confirmation along with interest and penalties under various sections.
2. Confiscation of seized goods and cash.
3. Allegations of unaccounted copper ingots and wire rods.
4. Scrutiny of seized records and reliance on slips for duty demand.
5. Dispute regarding interpretation of figures in the slips.
6. Allegations of violation of principles of natural justice.
7. Discrepancies in the valuation for working out demand.
8. Allegations of reliance on retracted statements.
9. Lack of detailed investigation to support duty demand.
10. Allegations of clandestine clearance without concrete evidence.
11. Seizure of goods and cash without sufficient justification.

Analysis:
1. The appeals were filed against the order confirming duty demand of a significant amount, penalties, and confiscation of seized goods and cash. The duty demand was based on unaccounted copper ingots and wire rods found during a search, along with seized records and statements from individuals connected to the company.

2. The appellant disputed the interpretation of figures in the seized slips, alleging that the Revenue's calculations were based on retracted statements. They highlighted discrepancies in the valuation method used for the duty demand and raised concerns about the lack of detailed investigation to support the allegations.

3. The appellant also raised issues of violation of natural justice, pointing out that cross-examination was allowed for only one individual. They contested the allegations of clandestine clearance, emphasizing the need for concrete evidence to support such claims.

4. The Tribunal found the evidence presented by the Revenue insufficient to sustain the duty demand. They noted that the duty demand was primarily based on two slips and supporting statements, which were retracted during cross-examination, leading to doubts about the reliability of the evidence.

5. The Tribunal emphasized the importance of corroborating allegations of clandestine clearance with detailed investigations and tangible evidence. They highlighted the lack of evidence regarding procurement of raw materials, consignees, transporters, and payments related to the alleged clandestine clearance.

6. Ultimately, the Tribunal set aside the impugned order, allowing the appeals. They concluded that the duty demand and confiscation of seized goods and cash were not justified due to the lack of substantial evidence and investigations to support the allegations of clandestine activities.