2017 (3) TMI 290 - AT - Central Excise

Clandestine Removal - Fake invoices - Held that - As it is admitted fact that the goods have been manufactured by the job workers which has been cleared by the appellants on the strength of fake/parallel invoices, therefore, the job workers are the manufacturer of the goods cleared on the strength of parallel/fake invoices. In that case if any duty is to be demanded, the same was required to be demanded from the job worker being manufacturer which is not the case. No other evidence has been brought on record by the revenue. In that circumstances, the charge of clandestinely removal of goods is not sustainable against the appellants - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against duty, interest, and penalty imposition based on parallel invoices/fake invoices.

Analysis:
The case involved M/s HGI Automotives Pvt. Ltd. and M/s Haryana General Industries appealing against duty, interest, and penalty imposition due to alleged clandestine removal of goods using parallel invoices/fake invoices. The appellants supplied energy meter and two-wheeler parts to OEM buyers and utilized job workers for manufacturing. The Revenue alleged goods were cleared without duty payment based on recovered parallel invoices. The appellants disputed the allegations, highlighting proper procedures followed with job workers and challenging the reliability of the recovered invoices.

The Revenue based its case on 229 recovered invoices, mainly signed by an ex-employee, Sh. R. Nand Kumar, dismissed by the appellant. The Tribunal found discrepancies in the Revenue's evidence, noting the lack of disclosure on invoice sources and the unreliability of photocopies provided. Citing precedents, the Tribunal deemed the recovered parallel invoices insufficient to sustain duty demands, ultimately leading to the non-imposition of penalties on the appellants.

The Tribunal further emphasized the absence of evidence supporting allegations of excess raw material procurement or clandestine removal of goods. It noted the regular audits conducted without discrepancies and accepted documentation of goods manufactured through job workers. Referring to a previous order, the Tribunal highlighted the acceptance of job workers' role in manufacturing and clearing goods, absolving the appellants of the charge of clandestine removal. Consequently, the impugned order was set aside, and the appeals were allowed with any consequential relief.

In conclusion, the judgment centered on the lack of concrete evidence supporting the Revenue's claims, emphasizing the importance of reliable documentation and proper procedures in duty-related cases. The Tribunal's decision highlighted the necessity of establishing clear sources and facts to substantiate allegations, ultimately leading to the dismissal of duty demands and penalties against the appellants.