2017 (3) TMI 1498 - AT - Central Excise

Penalties - Benefit of doubt - clandestine removal - duty paying documents - Held that - The Revenue has not taken pain to investigate Dharamkanda owners or transporters to establish whether the goods have been weighed or transported. In the absence of any cogent evidence, particularly the buyers of the goods denied the receipt of the goods, the demand against the respondent namely, M/s.Vee Kay Concast Pvt.Ltd. is not sustainable, therefore, benefit doubt goes in favor of the respondents - the charge of clandestine manufacture and removal of the goods is not sustainable in the eyes of law - penalty set aside - appeal dismissed - decided against Revenue.

Summary

Issues:

- Appeal against benefit of doubt given to the respondent in a case involving recovered documents and alleged clandestine removal of goods.

Detailed Analysis:

1. Facts of the Case:
- On a specific tip-off, premises of a respondent were searched, leading to the recovery of incriminating documents, including weighment slips and other records.
- Investigation revealed discrepancies in the documents, with some documents disowned by the respondent.
- Show cause notices were issued alleging clandestine clearance of goods and duty evasion.

2. Arguments by Revenue:
- Revenue contended that the recovered weighment slips were reliable evidence of clandestine removal of goods, as they corresponded with invoices issued by the respondent.
- Claimed that all the recovered documents, especially the weighment slips, were crucial in establishing the alleged wrongdoing.

3. Arguments by Respondents:
- Respondents argued that no thorough investigation was conducted on various aspects, such as the involvement of a third party and verification of goods receipt by buyers.
- Emphasized the lack of concrete evidence linking the respondent to the alleged clandestine activities.

4. Judgment and Analysis:
- The tribunal highlighted the essential elements required to prove clandestine removal of goods, including manufacturing facility, excess electricity consumption, transportation details, and weighment verification.
- Criticized the Revenue for not investigating crucial aspects like the involvement of third parties and verification of goods receipt by buyers.
- Due to the absence of substantial evidence and the denial of goods receipt by buyers, the tribunal ruled in favor of the respondents, upholding the benefit of doubt.
- Consequently, the penalties imposed on the respondents were deemed unsustainable, leading to the dismissal of the Revenue's appeals.

5. Conclusion:
- The tribunal upheld the impugned order, emphasizing the necessity of concrete evidence to establish clandestine activities.
- The lack of thorough investigation and substantial proof led to the benefit of doubt favoring the respondents, resulting in the dismissal of the Revenue's appeals and disposal of the cross objection.

This judgment underscores the importance of thorough investigation and concrete evidence in cases involving allegations of clandestine activities, highlighting the burden of proof on the Revenue to substantiate its claims.