2018 (4) TMI 361 - AT - Central Excise

Clandestine removal - the demand of duty against the respondent were primarily based upon the loading advice, test certificates (Joint Analysis Report) as also certain loose records and the documents recovered from their factory - input-output ratio - Held that - on being questioned as to whether further investigations were carried out by the Revenue to show the procurement of the raw materials, the actual manufacture of the good and their clearances from the factory and as to whether the identity of the buyers, was found and investigations made at their end, ld. DR has not been able to draw the attention to any of such evidences. It is an established law that the clandestine removal charges are required to be upheld by referring to the tangible and positive evidences and the same cannot be arrived at on the basis of assumptions and presumptions or doubts. Appeal dismissed - decided against Revenue.

Summary

Issues: Alleged clandestine removal of goods, imposition of penalties under Central Excise Act

Analysis:
1. Alleged Clandestine Activities: The case involved the respondent, engaged in manufacturing Sponge Iron, facing allegations of clandestine activities leading to the initiation of proceedings based on incriminating records. The Revenue alleged suppression of production and clandestine removal of goods, resulting in a demand of duty and penalties.

2. Investigation and Evidence: The Revenue's case relied on loading advice, test certificates, and documents recovered from the factory, along with input-output ratio analysis to support the claim of clandestine activities. The statement of a production shift incharge was also considered inculpatory.

3. Decision of the Commissioner (Appeals): The Commissioner (Appeals) set aside the order confirming the demand and penalties, citing the requirement of tangible and affirmative evidence to prove clandestine removal. The Commissioner emphasized the need for concrete evidence beyond assumptions and presumptions, drawing on legal precedents and court decisions.

4. Judicial Precedents: The Commissioner highlighted the principle that clandestine removal must be proven beyond doubt with clear, corroborative evidence, not just assumptions. Referring to judicial authorities, the Commissioner emphasized the necessity of tangible proof to sustain charges of clandestine activities.

5. Lack of Substantiating Evidence: The Revenue, in the appeal, failed to provide further investigations or concrete evidence regarding raw material procurement, manufacturing process, or buyer identities. The absence of such crucial evidence weakened the Revenue's case.

6. Legal Position: The judgment reiterated that charges of clandestine removal require solid evidence, not mere assumptions. Upholding the Commissioner's decision, the Tribunal emphasized the importance of tangible proof and rejected the Revenue's appeal, affirming the benefit extended to the respondent based on legal principles and precedents.

In conclusion, the Tribunal upheld the Commissioner (Appeals) decision, emphasizing the necessity of concrete evidence to prove allegations of clandestine activities, and rejecting the Revenue's appeal due to the lack of substantial proof supporting the charges.