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2017 (2) TMI 618 - AT - Central ExciseClandestine removal - duty paying invoices - goods not covered by invoices - Held that - the evidences i.e papers/ records found from the third party i.e M/s Super Trading cannot be a basis for holding clandestine removal by M/s Hira Enterprise in absence of any corroboration from assessee s side and thus demand cannot be made against M/s Hira Enterprise - in case of goods found at the premises of M/s Super Traders alleged to have been cleared from the factory of M/s Hira Enterprises without payment of duty and wherein confiscation of goods and imposition of penalties upon the assessees were ordered by the adjudicating authority, the Commissioner (Appeals) dropped the charges vide OIA dt. 27.11.2006 holding that there is no evidence that M/s Hira Enterprise has cleared unaccounted excess production. The allegations against M/s Hira Enterprise of removal of goods clandestinely are not sustainable and no demand can be made against them - appeal allowed - decided in favor of assessee.
Issues Involved:
1. Demand of ?31,50,575/- and penalties imposed on M/s Hira Enterprises, Shri Aslam Hashambhai Tamboli, and Shri Mohammed Arshad. 2. Revenue's appeal against dropping of demand of ?77,90,388/-. Issue 1: Demand of ?31,50,575/- and Penalties Imposed The case revolves around the alleged clandestine removal of goods by M/s Hira Enterprises. The revenue officers conducted searches at the premises of M/s Hira Enterprises and their dealer, M/s Super Trading, which led to the recovery of documents suggesting the clearance of goods without proper invoices. Statements from key individuals, including Shri Mohd. Arshad and Shri Aslam Hashambhai, indicated discrepancies in the invoiced quantities versus actual quantities received and sold. The adjudicating authority confirmed a demand of ?31,50,575/- based on these findings, asserting that the details in the records seized from M/s Super Trading were not covered by invoices from M/s Hira Enterprises, thus indicating clandestine removals. However, the adjudicating authority dropped a larger demand of ?77,90,388/- due to insufficient evidence proving the sale of goods in excess of the invoiced quantity. The assessees contested the demand, arguing that the adjudicating authority's reliance on the chits from M/s Super Trading was inconsistent, as these documents were previously deemed unreliable for the larger dropped demand. They emphasized that M/s Super Trading dealt with multiple manufacturers, and the seized documents did not exclusively pertain to M/s Hira Enterprises. The assessees also highlighted the lack of corroborative evidence directly linking the alleged clandestine activities to M/s Hira Enterprises. Upon review, the Tribunal found that the evidence presented, primarily the statements and documents from M/s Super Trading, was insufficient to conclusively prove clandestine removal by M/s Hira Enterprises. The Tribunal noted the absence of any incriminating evidence from M/s Hira Enterprises' premises and the lack of independent corroboration. Consequently, the Tribunal allowed the appeals filed by M/s Hira Enterprises, Shri Aslam Hashambhai Tamboli, and Shri Mohd. Arshad, setting aside the demand and penalties. Issue 2: Revenue's Appeal Against Dropping of Demand of ?77,90,388/- The Revenue's appeal challenged the adjudicating authority's decision to drop the demand of ?77,90,388/-. The Revenue argued that the statements and seized documents from M/s Super Trading clearly indicated that M/s Hira Enterprises had cleared goods without payment of duty. They cited various judgments to support their position that the seized records and statements were sufficient to establish clandestine removal. However, the Tribunal reiterated its findings from the assessees' appeal, emphasizing the lack of direct evidence from M/s Hira Enterprises' premises and the absence of corroborative documentation. The Tribunal highlighted that the investigation did not uncover any records or evidence from M/s Hira Enterprises that could substantiate the alleged excess clearances. The Tribunal also referenced previous decisions, including the CESTAT's final order from 2008, which upheld the Commissioner (Appeals)'s decision to drop similar charges of clandestine removal against M/s Hira Enterprises. In light of these considerations, the Tribunal dismissed the Revenue's appeal, concluding that the charges of clandestine removal against M/s Hira Enterprises were not sustainable. Conclusion: The Tribunal allowed the appeals filed by M/s Hira Enterprises, Shri Aslam Hashambhai Tamboli, and Shri Mohd. Arshad, setting aside the demand of ?31,50,575/- and associated penalties. The Tribunal also dismissed the Revenue's appeal against the dropping of the demand of ?77,90,388/-, reaffirming that the charges of clandestine removal were not substantiated by sufficient evidence. All appeals were disposed of accordingly.
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