2017 (10) TMI 1117 - AT - Central Excise

Clandestine removal - assessee is of the view that stock taking done on the basis of eye estimation - Held that - from nowhere of the panchnama as well as the proceedings it is coming out how the wheighment of the stock was done. Moreover, it has mentioned in the panchnama and the statement of Shri Vijay Gupta that weighment of scrap was done only on approximation basis and the assessee repeatedly asked for supply of the weighement slips which has not been provided to the assessee - As wheighment details has not been produced by the revenue, in that circumstances, it is concluded that the wheighment has been done on eye estimation basis - demand set aside. The demand of ₹ 15,55, 360/- has been confirmed on the basis of the corroborative statement of Shri Vijay Gupta. As other evidence has been produced by the revenue on record to corroborate the clandestine removal of goods, therefore in the light of the decision of the Tribunal in the case of Devender Sandhu Impex Ltd. V/s Commissioner of Central Excise., Ludhiana 2016 (1) TMI 104 - CESTAT NEW DELHI on the basis of statement of Shri Vijay Gupta, the demand is not sustainable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Shortage of inputs found during search
2. Alleged clandestine removal of goods based on statement of Director

Analysis:
1. Shortage of inputs found during search:
The case involved a search conducted at the factory premises of the assessee, revealing a shortage of inputs and excess finished goods. The statement of the Director admitted clearance of goods without payment of duty. The demand of duty was confirmed along with penalties. The Ld. Counsel argued that stock taking was based on eye estimation and presumptions, with no actual weighment done. The Tribunal noted the absence of weighment details provided to the assessee, concluding that the demand cannot be confirmed based on shortage of inputs. Consequently, the demand of ?6,70,766 was set aside.

2. Alleged clandestine removal of goods based on statement of Director:
The demand of ?15,55,360 was confirmed based on the statement of the Director regarding the clearance of goods without duty payment. The revenue contended that weighment was done during investigation, and the Director admitted to the clearance of goods. However, the Tribunal emphasized the lack of corroborative evidence to support the clandestine removal of goods. Citing precedent, the Tribunal set aside the demand, stating that it was not sustainable solely based on the Director's statement. Consequently, the impugned order was set aside, and the appeals by the assessee were allowed, while the appeal by the revenue was dismissed.

In conclusion, the Tribunal ruled in favor of the assessee, setting aside the demands based on the lack of conclusive evidence supporting the allegations of shortage of inputs and clandestine removal of goods. The decision highlighted the importance of corroborative evidence in such cases and emphasized the necessity of proper documentation and procedures during investigations to substantiate claims of duty evasion.