2017 (8) TMI 157 - AT - Central Excise

Clandestine Removal - the charge of clandestine removal is mainly based on a note-book recovered from the premises of the appellant. In the Show-cause notice it has been alleged that the said note-book appears to be maintained by Shri Arun Kr.Das Manager (Operations) of the Appellant Company - Held that - the appellant from the very beginning disowned the said note-book. It is noticed that the handwriting of the said note-book is of Shri Arun Kumar Das as claimed by the visiting Central Excise Officers could have been examined by the handwriting expert which was not done. Further the Commissioner (Appeals) observed that Shri Arun Kumar Das was summoned under Section 14 of the Central Excise Act 1944 to give evidence but he did not turn up. It is seen from the order of the Commissioner (Appeals) that Shri Arun Kumar Das was summoned by Summon dated 21.05.2004 and thereafter neither any further summon was issued nor any proceeding was initiated against the said person under the provisions of law. It is not clear as the investigating officer recovered the said Note-book from the appellant s factory then why there was no attempt to record statement of the said person. The appellant disowned the seized Note-book. There is no material available on record that the said Note-book was maintained by Shri Arun Kumar Das and no further investigation was conducted - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against Order-in-Appeal No.13/Bol/2008 dated 21.07.08 passed by Commr. of Central Excise (Appeals), Kolkata.

Analysis:
The appellant, a manufacturer of Pig Iron, faced allegations of clandestine removal of goods based on a note-book recovered during a visit by Central Excise Officers to their factory. The note-book, allegedly maintained by the Manager (Operation), showed discrepancies in production quantities. The demand of duty, interest, and penalties were confirmed by the Adjudicating Authority and upheld by the Commissioner (Appeals). The appellant contended that discrepancies were not found in stock during the visit and challenged the reliance on the note-book as insufficient evidence for clandestine removal. The Tribunal noted that the appellant disowned the note-book, and crucially, the handwriting was not verified by an expert. The Commissioner (Appeals) failed to take further action when the Manager was summoned but did not appear, raising doubts about the evidence.

The Tribunal emphasized that clandestine removal charges cannot solely rely on internal records like note-books without corroborative evidence. Citing the case of Gupta Synthetics Ltd. Vs. Commr. of Central Excise, it outlined the criteria for establishing clandestine activities, including tangible evidence like excess raw materials, unaccounted finished goods, and links between documents and production activities. The Tribunal stressed the need for substantial proof beyond internal records for duty demands. The appellant's disavowal of the note-book and lack of further investigation weakened the Revenue's case, leading to the appeal being allowed, and the impugned order set aside.

The Tribunal's decision highlighted the importance of concrete evidence in cases of clandestine activities, cautioning against relying solely on internal records for duty demands. The judgment underscored the necessity for tangible proof such as excess raw materials, unaccounted goods, and links between documents and production activities to establish clandestine removal charges. The failure to verify handwriting, lack of expert examination, and absence of further investigation when key individuals were summoned raised doubts about the evidence presented, ultimately leading to the appeal being allowed and the impugned order set aside.