2018 (2) TMI 1436 - AT - Central Excise

Clandestine removal - case of Revenue is that the respondents have maintained two sets of invoices in order to remove finished products without payment of duty - Held that - It is brought out from records that other than four numbers of invoices, no other double set of invoices were unearthed during the investigation. The statement of the buyers whose name is mentioned in the double set of invoices were recorded by the department. All of them have stated that they have no idea about such invoices and that they have received only duty paid goods. The department has not ventured to verify and find out whether the quantity covered in the alleged second set of invoices were actually raised in the factory of the recipients - the department has not conducted any investigation for unaccounted raw material for the huge clandestine clearance alleged against the respondent. So also there is no evidence for flow back of funds. The entire case is built on mere suspicions of officers without any documentary evidence. Appeal dismissed - decided against Revenue.

Summary

Issues:
Alleged evasion of Central Excise duty through clandestine removal of goods by maintaining two sets of invoices, discrepancy in invoices leading to suspicion of unaccounted clearances, imposition of penalty and interest, appeal against the demand of duty, Commissioner (Appeals) setting aside the demand, lack of evidence for clandestine clearance, delay in investigation and evidence collection.

Analysis:
The case involved allegations of evasion of Central Excise duty by maintaining two sets of invoices for the clearance of goods. The officers discovered discrepancies in the invoices during an investigation, leading to suspicions of unaccounted clearances. Statements from key individuals, including the authorised signatories of the company and sister unit, were recorded to gather evidence. The appellant was accused of manufacturing and clearing goods without proper accounting, resulting in the evasion of duty. A Show Cause Notice was issued, demanding duty payment along with interest and penalties. The Original Authority confirmed the demand, but the Commissioner (Appeals) later set aside the demand of interest and penalties.

The Revenue contended that the respondents were involved in clandestine removal of goods without duty payment, supported by the maintenance of two sets of invoices. The Authorised Signatory admitted to clearing materials under both sets of invoices, and the sister unit confirmed receiving goods without invoices or duty payment. The Revenue argued that the Commissioner (Appeals) erred in setting aside the demand based on this evidence.

In response, the respondent's counsel argued that despite the investigation revealing only four alleged parallel invoices, there was no concrete evidence of goods being cleared without duty payment. Statements from buyers mentioned in the invoices confirmed receiving only duty-paid goods. The appellant maintained proper sales invoices, and the sister unit explained the receipt of substandard goods without invoices, categorizing them as rejections. The lack of evidence for clandestine clearance of finished goods was emphasized by the respondent.

The Tribunal analyzed the evidence and observed that apart from the four identified invoices, there was no substantial proof of unaccounted goods clearance. The lack of verification regarding the quantity raised at the recipients' factory and absence of corroborative evidence raised doubts on the allegations. The Commissioner (Appeals) rightly set aside the demand due to insufficient evidence of clandestine clearance, emphasizing the seriousness of such accusations. The Tribunal dismissed the department's appeal, highlighting the need for cogent evidence to support allegations of clandestine clearance and referencing relevant legal precedents.

In conclusion, the Tribunal found the case lacking in substantial evidence to prove the alleged evasion of Central Excise duty through clandestine clearance. The decision to dismiss the appeal was based on the absence of concrete proof and the failure to establish the accusations beyond mere suspicions. The importance of thorough investigations and the necessity for supporting evidence in such serious charges were underscored in the judgment.