2017 (12) TMI 153 - AT - Central Excise

Clandestine removal - 40.02 MT of Kamanies - Detention of stock and finished goods - confiscation - As the said appellant could not produce the documents showing the lawful possession of the stock the same were detained for further investigation - Held that - the entire case of the Revenue is based upon the said statement of Shri Dixit which is in the nature of third party s statement. The same required cross-examined as also examination in chief to establish the correctness of the same. It is well settled law that adverse findings cannot be arrived at against the assessee based upon the statement of co-accused without any corroborative evidence. There is admittedly no corroboration to the effect that such 40 MT of Kamanies were manufactured in the factory of Raghuveer Rolling Mills - demand set aside. Revenue has not able to produce any evidence to show that such un-recording in their statutory records was with an intention to evade the payment of duty or to clear the gods without payment of duty. In any case it is well settled that the raw materials cannot be confiscated on the ground of their non entry in the record. Revenue s entire case is based upon the statement of the proprietor of the appellant which is to the effect that such non-entries were made with an intention to clear the goods without payment of duty. The said deponent has not been put to cross-examine or to examine in chief - confiscation set aside - penalty also set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Confirmation of demand of duty on seized goods
Confiscation of goods and imposition of penalty
Cross-examination of statements and corroborative evidence

Confirmation of demand of duty on seized goods:
The case involved M/s Raghuveer Rolling Mills, a manufacturer of Iron Flats and Tractor Leaves/Kamanies, where a search was conducted resulting in the detention of stock of input and finished goods. The authorities alleged that the goods were cleared without payment of duty. Statements were recorded indicating non-updating of records and clandestine procurement of raw materials. The demand of duty of ?2,00,357 was confirmed by the Additional Commissioner, along with penalties and confiscation of goods. The appellant contended that the demand was based on eye estimation without actual weighment and lacked tangible evidence. The Commissioner (Appeals) upheld the decision, but the Appellate Tribunal found no justifiable reason to uphold the demand. It emphasized the need for corroborative evidence and cross-examination, citing relevant case laws.

Confiscation of goods and imposition of penalty:
Regarding the confiscation of excess raw materials and finished goods, the Tribunal noted discrepancies in stock records but found no evidence of intentional evasion of duty. The Revenue's case relied on statements without proper cross-examination. The Tribunal referenced legal precedents to establish that unrecorded goods in the factory premises cannot be confiscated solely based on lack of entry in records. It concluded that there was no justification for the confiscation of goods. Similarly, the Tribunal found no merit in the confiscation of goods at M/s Dixit Iron Stores or the imposition of penalties on the involved parties.

Cross-examination of statements and corroborative evidence:
The Tribunal highlighted the importance of cross-examination and corroborative evidence when relying on statements, especially those of co-accused individuals. It emphasized that adverse findings cannot be made solely based on statements without supporting evidence. The Tribunal referenced various legal decisions to support its stance on the necessity of corroborative evidence in such cases. Ultimately, the impugned order was set aside, and both appeals were allowed with consequential relief to the appellants.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT ALLAHABAD covers the issues of confirmation of demand of duty on seized goods, confiscation of goods and imposition of penalty, and the importance of cross-examination of statements and corroborative evidence in such cases.