2018 (4) TMI 292 - AT - Central Excise

Clandestine removal - corroborative evidences - third party evidences - the entire case of the Revenue is based upon the result of the search conducted at the premises of M/s.New Tech Ispat Pvt. Ltd. and there was no investigation at the appellant s end except recording of the statement of the Director, which is exculpatory - Held that - the entire endeavor of the Revenue is based upon the documents recovered from the premises of M/s. New Tech Ispat Pvt. Ltd. read with the statement of their Director and by ignoring the statement of the Director of the present appellant. Tribunal s decision in the case of Abha Power & Steel P. Ltd. 2018 (1) TMI 365 - CESTAT NEW DELHI relied upon, wherein under the identical circumstances, the demand of duty made on the basis of the third party s records were set aside by following the Tribunal s earlier order in the case of Rudra Ventures Pvt. Ltd. 2016 (3) TMI 1173 - CESTAT CHANDIGARH . It was held in the said order that in the absence of any investigations conducted at the assessee s unit and in absence of any corroborative evidence of procurement of raw materials, transportation of the goods, flow back of money, etc., allegations of clandestine removal based on mere assumptions and presumptions are not sustainable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Confirmation of duty demand against M/s. Dadu Steel & Power Ltd. and penalty imposition; Penalty imposition on Shri Santosh Agarwal, Director of the manufacturing unit.

Analysis:
The judgment pertains to the confirmation of duty demand against M/s. Dadu Steel & Power Ltd. and the imposition of penalties, including on Shri Santosh Agarwal, Director of the manufacturing unit. The appellant, engaged in steel ingot manufacturing, faced allegations of clearing final products without duty payment, based on investigations at M/s. New Tech Ispat Pvt. Ltd. The appellant denied clandestine removal, asserting clearances under central excise invoices. The Original Adjudicating Authority's decision, upheld by the Commissioner (Appeals), led to the present appeals.

The appellant argued that the Revenue's case relied solely on M/s. New Tech Ispat Pvt. Ltd.'s search results, lacking direct appellant investigations. The Revenue, without referencing the appellant's statement, based the demand on the third party's records, challenging the sufficiency of corroborative evidence. The appellant cited a Tribunal decision in Abha Power & Steel P. Ltd., emphasizing the need for direct investigations and corroborative evidence to sustain clandestine removal charges.

Referring to various Tribunal decisions, the appellant highlighted the necessity of substantial evidence beyond third-party records to establish clandestine activities. The Tribunal's precedent emphasized the insufficiency of mere assumptions or presumptions without concrete proof like procurement details, money flow, or transportation specifics. In the absence of extensive verification, recovery of private records or a Director's statement alone was deemed inadequate to prove clandestine removal.

The judgment concluded that the Revenue's case solely relied on M/s. New Tech Ispat Pvt. Ltd.'s documents and Director's statement, neglecting the appellant's Director's statement. Consequently, the orders confirming demands and imposing penalties were deemed unsustainable. The Tribunal set aside the impugned orders, allowing both appeals with consequential relief to the appellants. The decision emphasized the importance of direct investigations and substantial evidence to uphold allegations of clandestine removal, in line with established legal principles.

The judgment, delivered by Hon'ble Smt. Archana Wadhwa, Member (Judicial), on April 6, 2018, provides a detailed analysis of the legal principles surrounding duty demand confirmation, penalty imposition, and the necessity of corroborative evidence in cases of alleged clandestine activities, ensuring a fair and just adjudication process.