2017 (8) TMI 700 - AT - Central Excise

Clandestine removal - while remanding the matter back to the adjudicating authority, there was clear-cut directions to the adjudicating authority to decide the issue of clandestine removal in the light of guidelines in Para-14, in the case of Arya Fibers Limited 2013 (11) TMI 626 - CESTAT AHMEDABAD - Held that - none of those guidelines have been followed in this case while alleging the clandestine removal against the appellant - the manufacturing unit of the appellant has never been searched and the case has been made out against the appellant on the basis of documents and laptop recovered from the premises of M/s. Shyam Salona Plywood and M/s. Shiv Shankar Plywood, a third party and the same cannot be relied upon - Admittedly, the Revenue has failed to establish the clandestine manufacture and clearance of the goods by the appellant. Therefore, the demand of duty is not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues: Appeal against the demand of duty based on charges of clandestine removal of goods.

Analysis:
1. Background: The case involves an appeal against an order confirming duty demand on the basis of alleged clandestine removal of goods by the appellants. The matter had been remanded back to the adjudicating authority in a previous round of litigation.

2. Previous Litigation: In the earlier round, the Tribunal had remanded the matter for the adjudicating authority to prove the charges of clandestine removal in accordance with established guidelines and allow cross-examination of witnesses. The witnesses were cross-examined, confirming the charges against the appellants.

3. Factual Basis: The appellant, operating a factory in Chennai, was accused of clearing veneer to other entities based on seized records during investigations at certain premises. A show cause notice was issued, leading to confirmation of duty demand, interest, and penalties on both the appellants.

4. Remand Directions: The Tribunal had directed the adjudicating authority to follow specific guidelines in cases of clandestine removal, emphasizing the need for tangible evidence and proper establishment of illicit activities. However, in the subsequent proceedings, the demand of duty was confirmed without meeting these criteria.

5. Adjudication: The adjudicating authority failed to establish the manufacturing of goods through illicit means and their subsequent removal. Notably, no inquiry was conducted at the appellant's manufacturing unit, and the evidence did not support the charges of clandestine removal.

6. Conclusion: As the guidelines for proving clandestine removal were not adhered to and the charges were not adequately supported by evidence, the Tribunal set aside the impugned orders and allowed the appeals, providing consequential relief to the appellants.

This detailed analysis highlights the procedural history, evidentiary shortcomings, and legal principles applied in the judgment, resulting in the reversal of the duty demand based on charges of clandestine removal of goods.