2018 (4) TMI 1452 - AT - Central Excise

Clandestine removal - demand based on third party records and statements - Held that - the issue i.e whether third party records can be held to be sufficient for clandestine removal is the subject matter of various decisions of the Tribunal and it has been repeatedly held that the third party records cannot be considered sufficient for upholding the charges of clandestine removal - demand not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Confirmation of demand of duty against the manufacturing unit.
2. Imposition of penalty on the Director of the company.
3. Allegation of receiving ingots without payment of duty.
4. Allegation of clandestinely clearing ingots to another company.

Analysis:
The judgment by the Appellate Tribunal CESTAT NEW DELHI involved the confirmation of a demand of duty against a manufacturing unit along with the imposition of penalties. The case revolved around M/s Indian Ispat Works Pvt. Ltd., engaged in manufacturing ingots and TMT bars, where incriminating documents were found during a search at M/s Pankaj Ispat Ltd. It was alleged that ingots were sent to the manufacturing unit without duty payment and ingots were clandestinely cleared to M/s Pankaj Ispat Ltd. The original adjudicating authority confirmed these demands, leading to appeals. The Commissioner (Appeals) dropped part of the demand but upheld the clearance of ingots without duty payment. The appellant argued that the evidence for both allegations was the same, based on third-party records and statements, which were deemed insufficient by the appellate authority for one allegation. The Revenue contended that admission by M/s Pankaj Ispat required confirmation of the demand.

The Appellate Tribunal agreed with the appellant's argument that the evidence for both allegations was identical, emphasizing that third-party records alone are insufficient for confirming demands related to clandestine removal. Citing precedents, the Tribunal highlighted that third-party records lack corroboration and cannot solely uphold charges of clandestine removal. Referring to a recent decision, the Tribunal emphasized the inadequacy of evidence solely based on documents recovered from M/s Pankaj Ispat. Consequently, the Tribunal found the impugned orders unsustainable and set them aside, allowing both appeals with consequential relief. The judgment underscored the necessity of corroborative evidence and the insufficiency of third-party records in establishing charges of clandestine activities.