2018 (4) TMI 354 - AT - Central Excise

Clandestine removal - shortage of goods - case of appellant is that that they had sought cross-examination of all the persons which has not been granted to them - principles of Natural Justice - Held that - the allegation of clandestine removal was not merely based upon the statement of Shri Vishal Gupta or the excise clerk, Shri Ankush Patil or the transporter, but were made on the basis of seized records and parallel invoices for which no proper explanation could be offered by the said persons. In such view of the fact, the denial of cross examination has not led to any denial of natural justice to the Appellant. The shortages of the finished goods and the inputs recorded clearly point out to the fact that the Appellant was removing the goods clandestinely - Since the records relied upon by the Revenue show transportation of goods, in that situation, it is obvious that clearances were made in the names of fictitious persons. It is absolutely clear that the Appellant resorted to manipulative tactics on clearance of goods. From the modus operandi and confession made by other appellant, it is clear that all other appellants were knowingly indulged in the act of clandestine removal of goods, hence the charge of abating the evasion of duty is established against them - appeal dismissed - decided against appellant.

Summary

Issues:
1. Clandestine removal of goods under parallel set of invoices.
2. Allegations of maintaining improper records, receiving inputs clandestinely, and under-reporting workers.
3. Denial of cross-examination rights to the appellants.
4. Demand of duty and penalties upheld by the Commissioner (Appeal).

Analysis:
1. The case involves the clandestine removal of goods by the appellant company using parallel invoices and slips. The investigation revealed discrepancies in records, including the use of invoices from a closed trading firm and unaccounted expenses. Statements from involved parties and seized documents supported the allegations. The demand for duty and penalties was based on concrete evidence of clandestine activities.

2. Apart from clandestine removal, the appellant was found to have maintained improper records, received inputs without proper documentation, and showed fewer workers than actually employed. Payments to workers and foremen were made in cash from the proceeds of clandestine activities. Shortages in finished goods and unaccounted raw materials further indicated irregularities in the appellant's operations.

3. The appellants had requested cross-examination of individuals whose statements were relied upon, but this was denied by the authorities. The tribunal found that the denial did not violate natural justice as the allegations were supported by seized records and parallel invoices. The involvement of the appellant's director in clandestine activities and the lack of contradictory evidence justified the denial of cross-examination.

4. The Commissioner (Appeal) upheld the demand for duty and penalties, which was supported by evidence such as seized documents, statements from involved parties, and the modus operandi of the clandestine activities. The tribunal affirmed the decision, stating that the appellants knowingly participated in the evasion of duty and upheld the impugned order, rejecting the appeals filed by the appellants.

This detailed analysis highlights the key issues of clandestine removal, improper record-keeping, denial of cross-examination rights, and the confirmation of duty demands and penalties in the legal judgment.