2017 (10) TMI 125 - AT - Central Excise

Clandestine removal - processed fabrics - the documents retrieved from the premises of Kumbharamji Jaluram Verma on 30.12.97 is the foundation of the allegation against the Respondent, as search of their factory premises, on the very same day, neither revealed any discrepancy in the stock of goods nor any incriminating document was also found in their factory premises - Held that - even though the said documents mentioned various information but the same had not been analysed through proper investigation to ascertain its correctness by the Revenue, therefore, the entries could not be authenticated. Therefore, the entries thereunder remain to be established that the same pertain to the Respondent and the quantity of goods recorded could have been cleared from the factory of the Respondent without payment of duty - Revenue has not carried out investigation properly even though show cause notice was issued much after detection/retrieval of the documents from the residential premises of Shri Kumbharamji Jaluram Verma. It is difficult to digest that there has been no proper attempt also by conducting discreet inquiry/investigation to ascertain the alleged fact of evasion of duty to the tune of around one crore by the department and the investigation was carried out in a hopeless manner for which the officers responsible need to be reprimanded and at least there should be a mandatory procedure in carrying out investigation based on the principles of law settled, instead of leaving to the whims and pleasures of the investigating officers entrusted with the job of protecting public interest and revenue - appeal dismissed - decided against Revenue.

Summary

Issues:
Alleged clandestine removal of processed fabrics without duty payment based on documents and statements.

Analysis:
1. The Revenue filed an appeal against the Order-in-Original alleging the removal of processed fabrics without duty payment. The documents retrieved from a contractor's premises formed the basis of the allegation.

2. The Revenue argued that there were overwhelming evidences supporting clandestine removal, including documents seized and statements collected. They contended that the adjudicating authority erred in dropping the demand, emphasizing the significance of the seized papers and statements.

3. The Respondent's advocate countered, stating that apart from one statement, there was no concrete evidence to prove the alleged removal of fabrics without duty payment. They highlighted discrepancies in witness statements and lack of corroborative evidence.

4. After hearing both sides, the Tribunal observed that the Revenue failed to establish that the entries in the seized documents pertained solely to the Respondent's unit. The Tribunal noted the absence of independent corroborative evidence and reliance on a single statement.

5. The Tribunal found that the Revenue's attempt to identify buyers from the seized documents was inconclusive due to insufficient investigation. It criticized the lack of detailed inquiry and proper analysis of the seized papers to authenticate the alleged removal of goods without duty payment.

6. Ultimately, the Tribunal upheld the lower authority's decision to set aside the demand, citing the Revenue's failure to conduct a thorough investigation. It criticized the inadequate investigative efforts and emphasized the necessity of following proper procedures in such cases.

This detailed analysis of the judgment highlights the key arguments presented by both parties, the Tribunal's assessment of the evidence, and the ultimate decision based on the inadequacy of the Revenue's investigation efforts.