2017 (7) TMI 280 - AT - Central Excise

Clandestine manufacture and removal - the manufactured goods were cleared clandestinely in the guise of trading under the trade invoices on the sole allegation that imported goods did not bear Accentrix brand whereas the goods supplied under the Tarde invoices bore such brand name - It is the claim of the appellant that manufactured goods were cleared bearing this brand name whereas the imported goods did not bear such brand name - Held that - After considering the details of imported goods, the Commissioner upheld the demand in the de-novo proceedings by observing that on comparison of the goods covered by the Bills of Entry as well as trade invoices it emerges that the goods covered by trade invoice were different from the imported goods. He has further recorded that the tax auditor in report 3 CD has not mentioned anything about the appellant being engaged in the trading of the goods. The Department has alleged clandestine clearances on the part of the appellant by adopting the modus operandi of selling goods manufactured in the guise of imported / traded goods. Such a charge will need to be supported by tangible evidence regarding the manufacture of such goods in the factory. Appeal allowed - decided in favor of appellant.

Summary

Issues: Alleged clandestine clearance of manufactured goods under the guise of trading, failure to adhere to remand directions, lack of tangible evidence supporting charges, re-investigation by the Department, discrepancies between imported goods and traded goods, absence of corroborative evidence, reliance on case laws.

Analysis:
1. Alleged Clandestine Clearance: The case involved allegations of clandestine clearance of manufactured goods as trading goods. The appellant was accused of selling manufactured goods without duty payment under the guise of imported/traded goods. The Department claimed that the goods cleared under trading invoices bore a specific brand name not present on the imported goods.

2. Failure to Adhere to Remand Directions: The Tribunal had remanded the matter to the Adjudicating Authority for de-novo adjudication with specific directions. However, the Commissioner did not adhere to these directions, leading to a violation of the remand order.

3. Lack of Tangible Evidence: The Department failed to provide tangible evidence supporting the charges of clandestine manufacture. The absence of concrete proof, such as purchase records of raw materials or dispatch details, weakened the Department's case.

4. Re-Investigation by the Department: The Department attempted to re-investigate the case by seeking fresh information and details of goods imported by the appellant. This approach was deemed legally untenable, as it did not align with the Tribunal's directions for de-novo adjudication based on existing evidence.

5. Discrepancies Between Imported and Traded Goods: The Commissioner upheld the demand based on discrepancies between the goods covered by Bills of Entry and trade invoices. However, mere differences in model numbers or descriptions were not considered sufficient evidence to prove clandestine manufacture.

6. Absence of Corroborative Evidence: The Department failed to provide corroborative evidence, such as dispatch records or material procurement details, to substantiate the allegations. The lack of concrete proof weakened the Department's case against the appellant.

7. Reliance on Case Laws: The appellant relied on case laws emphasizing the seriousness of allegations like clandestine clearance and the necessity of tangible evidence to support such charges. The Tribunal found that the Department's failure to provide substantial proof rendered the impugned order unsustainable.

In conclusion, the Tribunal set aside the impugned order, highlighting the Department's failure to substantiate the allegations with tangible evidence. The lack of concrete proof, discrepancies in goods descriptions, and the absence of corroborative evidence led to the appeal's success in favor of the appellant.