2018 (4) TMI 1454 - 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:
Confirmation of demand of duty, interest, and penalty against the manufacturing unit; Imposition of penalty on the Director of the company.

Analysis:
The judgment involves the confirmation of a demand of duty, interest, and penalty against a manufacturing unit, along with the imposition of a penalty on the Director of the company. The case arose from the recovery of incriminating documents during a search at the factory of another company. The documents indicated the transfer of ingots to the manufacturing unit without payment of duty, as well as clandestine clearance of ingots to a third party. The original adjudicating authority confirmed the demands based on these allegations.

On appeal, the Commissioner (Appeals) partially allowed the appeal, dropping the demand related to the conversion of ingots into TMT bars based on third-party records and statements. However, the demand for clearance of ingots without payment of duty was upheld. The appellant argued that the evidence for both allegations was the same, and since the appellate authority found it insufficient for one charge, it should not have been used for the other. The appellant contended that the entire demand was based on documents from a third party without corroborative evidence.

In the judgment, the Tribunal agreed with the appellant's contention. It noted that the evidence for both allegations was identical, and the third-party records alone were insufficient to confirm the demand for clandestine removal of ingots. The Tribunal referred to previous decisions indicating that third-party records cannot be considered sufficient for upholding charges of clandestine removal. As the Revenue's case lacked corroborative evidence and relied solely on documents from the third party, the Tribunal found the impugned orders unsustainable. Consequently, the Tribunal set aside the orders, allowing both appeals with consequential relief.