2018 (3) TMI 1479 - AT - Central Excise

Clandestine removal - It has been alleged that the appellant company had cleared the goods using Tax Invoice of M/s. V. S. Ispat. It has further alleged that they have cleared the finished goods using the Tax Invoice and Challans of the Trading unit situated at Dankuni Hooghly - Held that - the Adjudicating authority mainly proceeded on the basis of the clarification of the Palsit Toll Plaza. It is seen that the Investigating Officers had not made any enquiry from the Transporter - There are demand of duty on the basis of loose slips on removal of goods to Guwahati DLF Limited M/s. Super Diamond Nirman Limited M/s. B. G. Shirke Pune etc. The Tribunal in the case of North West Switch Gear Ltd Vs. Commissioner of Central Excise Delhi 2014 (3) TMI 50 - CESTAT NEW DELHI held that the charge of clandestine removal is a serious allegation. Thus it has to be established by some positive and cogent evidences. The demand of duty along with interest and imposition of penalty cannot be sustained and it is set aside - appeal allowed - decided in favor of appellant.

Issues Involved:
1. Allegation of clandestine removal of goods.
2. Demand of duty based on loose slips and other documents.
3. Evidentiary value of documents and statements.
4. Compliance with procedural requirements for weighment and clearance of goods.
5. Onus of proof on the department to establish clandestine removal.

Detailed Analysis:

1. Allegation of Clandestine Removal of Goods:
The appellant was accused of clandestinely removing goods without payment of duty, based on documents and statements recovered during a search operation. The central issue was whether the goods were cleared from the factory or a godown, and whether the appellant had complied with excise regulations.

2. Demand of Duty Based on Loose Slips and Other Documents:
The demand of duty was primarily based on loose slips recovered from the appellant's factory premises. The appellant argued that these slips had no evidentiary value and were merely rough estimates. The adjudicating authority, however, proceeded on the basis of these slips and other documents, raising a demand of ?48,61,356.00.

3. Evidentiary Value of Documents and Statements:
The appellant produced various documents, including tax invoices, transporter's certificates, and sales tax returns, to substantiate that the goods were cleared from a godown and not the factory. The adjudicating authority relied heavily on a report from Palsit Toll Plaza and statements recorded during the investigation. However, the tribunal noted that the investigating officers did not make any inquiries from the transporter, and the appellant's evidence was not adequately considered.

4. Compliance with Procedural Requirements for Weighment and Clearance of Goods:
The appellant contended that the weighment slips were issued for checking the weighment machine and should not be the basis for demanding duty. The adjudicating authority observed that the appellant did not follow the prescribed procedure for weighment and clearance of goods, but the tribunal found that the appellant had produced sufficient evidence to support their case.

5. Onus of Proof on the Department to Establish Clandestine Removal:
The tribunal emphasized that the onus lies with the department to establish the charge of clandestine removal with positive and cogent evidence. Mere assumptions and presumptions are insufficient. The tribunal referred to various case laws, reiterating that allegations of clandestine removal must be supported by concrete evidence, such as excess raw material procurement, higher power consumption, or corroborative statements from transporters and buyers.

Conclusion:
The tribunal found that the adjudicating authority had confirmed the duty demand based on assumptions and presumptions without substantial evidence. The appellant had provided sufficient documentation to support their claims, which were not adequately considered by the lower authorities. Consequently, the tribunal set aside the impugned order, allowing the appeal and providing consequential relief to the appellant. The tribunal reiterated that serious charges like clandestine removal must be established with clear and corroborative evidence, not merely on the basis of loose slips or unverified statements.

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