2017 (10) TMI 79 - AT - Central Excise

Clandestine removal - copper wires, falling under Chapter 74 of the Central Excise Tariff Act, 1985 - penalty - Held that - the Appellant had recorded the stock particulars of the finished goods in the statutory records, the same cannot be confiscated and redemption fine cannot be imposed on the Appellant - On perusal of case records, the Appellant had produced the records/documents to show that the goods were not removed in the clandestine manner. However, such documents and explanation furnished by the Appellant have not been considered by the authorities below and the adjudged demand was confirmed solely based on the allegations levelled in the SCN - prudence and justice require that confessional statement should not be made sole ground from proving guilt. Thus, guilt should be established beyond reasonable doubt on the basis of material/evidence available on record. The Department has not established its case satisfactorily in support of clandestine removal of goods - demand withheld. As regards confiscation of finished goods in the case of Appellant No.2, the ld. Commissioner (Appeals) has upheld the confiscation, stating that the goods were not accounted for and no documentary evidences with regard to the legitimate possession of the same were produced - Held that - Since, the Department has taken the divergent views regarding maintenance of records; confiscation of finished goods cannot be upheld in absence of proper substantiation. Thus, the impugned order upholding confiscation of finished goods is not legally sustainable. Further, the documents/records / explanation furnished by the appellant with regard to alleged clandestine removal of goods have not been addressed properly by the authorities below. Without any independent corroborative evidence of the buyer of the goods, mode of transport, method of receipt of sale proceeds etc., the statement recorded from the supervisor Shri Satish Kashyap alone, cannot be relied upon to support clandestine manufacture and clearance of the finished goods - demand withheld Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Confiscation of finished goods and imposition of penalties under Central Excise Act, 1944 and Central Excise Rules, 2002.
2. Adjudication order dated 31.01.2014 and appeals filed before the Commissioner (Appeals).
3. Appeal before the Tribunal against the impugned orders dated 05.06.2014.

Analysis:

Issue 1: Confiscation of finished goods and imposition of penalties
The case involved allegations of clandestine removal of goods leading to confiscation of finished goods and imposition of penalties under the Central Excise Act, 1944 and Central Excise Rules, 2002. The Appellant No.1 contested the confiscation of finished goods, arguing that statutory records evidenced the presence of goods in the factory premises. The Tribunal noted discrepancies in the stock position of finished goods detected by the Department and the Appellant's explanation for delayed document production. It was observed that the Department failed to provide sufficient evidence of clandestine removal beyond a confessional statement, which was deemed weak. The Tribunal emphasized the need for tangible and corroborative evidence to establish guilt beyond reasonable doubt, ultimately concluding that the adjudged demand could not be confirmed against Appellant No.1.

Issue 2: Adjudication order and appeals
Following the Adjudication order dated 31.01.2014, all Appellants filed appeals before the Commissioner (Appeals), resulting in partial modifications to the adjudication order. The Commissioner set aside confiscation of certain goods and reduced redemption fines and penalties imposed under the Central Excise Rules, 2002. Subsequently, appeals against the modified orders were filed before the Tribunal. The Appellants presented arguments challenging the confiscation of finished goods and duty demands, emphasizing proper maintenance of statutory records and lack of corroborative evidence supporting the allegations of clandestine removal.

Issue 3: Appeal before the Tribunal
The appeals before the Tribunal contested the impugned orders dated 05.06.2014, focusing on the legality of confiscations and penalties imposed. The Tribunal examined the case records, considered submissions from both sides, and analyzed the evidence presented. It was noted that the Department's reliance on confessional statements without substantial corroborative evidence was insufficient to uphold the confiscation of goods. The Tribunal emphasized the importance of proper substantiation and independent evidence in cases of alleged clandestine activities. Ultimately, after detailed analysis and discussions, the Tribunal found no merits in the impugned orders and allowed the appeals in favor of the Appellants, setting aside the confirmed demands.

This detailed analysis of the legal judgment highlights the key issues, arguments presented by the parties, and the Tribunal's reasoning leading to the decision in favor of the Appellants.