2017 (8) TMI 701 - 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 confirmed duty demand based on charges of clandestine removal of goods.
- Adjudication following remand with directions to establish charges of clandestine removal.
- Failure to follow established guidelines for proving clandestine removal.
- Lack of evidence linking appellant to clandestine activities.
- Appeal allowed with consequential relief.

Analysis:
The case involved an appeal against a confirmed duty demand due to alleged clandestine removal of goods. In a previous round of litigation, the matter was remanded back to the adjudicating authority to establish the charges of clandestine removal following specific guidelines. These guidelines required tangible evidence such as excess raw materials, unaccounted finished goods, sale to identified parties, and other crucial factors to prove clandestine activities. However, in the remand proceedings, the demand of duty was again confirmed without adhering to these guidelines. The appellant argued that the investigation was based on seized records from a third party, and no direct evidence linked them to clandestine activities. The appellant's manufacturing unit was never searched, and the evidence from the seized laptop was questioned for its veracity. Ultimately, it was held that the Revenue failed to establish the clandestine manufacture and clearance of goods by the appellant, rendering the duty demand unsustainable. Consequently, the impugned order was set aside, and the appeals were allowed with any consequential relief.

This judgment highlights the importance of following established guidelines and providing concrete evidence to prove charges of clandestine activities. It underscores the necessity for a direct link between the accused party and the alleged clandestine actions, emphasizing the need for tangible proof beyond mere assumptions or inferences. The decision serves as a reminder of the burden of proof on the Revenue to substantiate allegations thoroughly, especially in cases involving serious charges like clandestine removal of goods. The judgment ultimately upholds the principle of fairness and evidentiary standards in adjudicating matters of duty demands based on clandestine activities, ensuring that decisions are based on concrete evidence and adherence to legal guidelines.