2017 (12) TMI 1435 - AT - Central Excise

Clandestine removal - statement of some of the supplier of fabric were recorded who admitted that they are receiving processed fabric without payment of excise duty and some of the supplier denied the receipt of goods without payment of duty - Held that - Certain documents were resumed but there is no independent witnesses to say that these documents have been recovered from the premises of the appellant. Therefore, in the absence of panchnama, the documents recovered from the possession of the appellant cannot be relied upon as a piece of evidence as per the supplementary instructions. Further, the revenue has relied upon the various statements of suppliers and the appellant. Although, some of the statements have been retracted but apart from that, the statements were not examined in chief during the course of adjudication in terms of Section 9D of the Central Excise Act, 1944. Therefore, same cannot be relied upon. Demand not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against duty demand, clandestine removal of goods, reliance on recovered documents, retracted statements, examination of statements during adjudication, corroborative evidence, confessional statements, presence of independent witnesses during search.

Analysis:
The appellants challenged an order demanding duty of ?49,38,938 along with interest and penalty for alleged clandestine removal of goods. The investigation revealed private records indicating clandestine activities, supported by statements from employees and fabric suppliers. The appellants contested the reliance on recovered documents due to lack of independent witnesses during the search and retracted statements. The Counsel argued that without corroborative evidence, demands cannot be confirmed, citing legal precedents. The Revenue, however, emphasized the validity of confessional statements despite retractions, citing legal judgments.

Upon review, the Tribunal found the absence of independent witnesses during the search compromised the reliability of recovered documents. The reliance on statements, including confessions, was deemed insufficient as they were not examined in chief during adjudication, aligning with legal precedents. The Tribunal referenced a case where a confessional statement alone was insufficient for duty demands without corroborative evidence. Consequently, the demand against the appellants was deemed unsustainable.

The Tribunal overturned the impugned order, allowing the appeals due to the lack of certified documents by independent witnesses and the insufficiency of confessional statements without supporting evidence. The decision was based on the principles of evidence reliability and legal precedents, ultimately setting aside the duty demand and providing consequential relief to the appellants.