2018 (5) TMI 96 - AT - Central Excise

Clandestine removal - demand based on statements of the buyers which was not retracted immediately, but was retracted subsequently - Held that - reliance placed in the case of COMMISSIONER OF CENTRAL EXCISE Versus OMKAR TEXTILE MILLS PVT. LTD. 2010 (8) TMI 322 - GUJARAT HIGH COURT , where it was held that Demand cannot be raised merely based on statement retracted later without any corroborative material - demand withheld - appeal dismissed - decided against Revenue.

Summary

Issues:
Appeal against the order passed by the Commissioner of Central Excise, Customs - Allegations of clandestine removal of goods without payment of duty - Consideration of factual aspects by the First Appellate Authority - Reliance on confessional statements retracted subsequently - Lack of corroborative evidence - Legal interpretation and application of settled law by the First Appellate Authority - Disposal of cross objection filed by the respondent.

Analysis:
The appeal before the Appellate Tribunal CESTAT Ahmedabad was filed by the Revenue against the order passed by the Commissioner of Central Excise, Customs, Rajkot. The Revenue contended that the First Appellate Authority had set aside the Original Adjudicating Order without considering the factual aspects of the case. The Revenue argued that the respondent had clandestinely cleared finished goods, as indicated by statements of buyers receiving goods without payment of duty and purchases of raw material not recorded in the respondent's books. However, the First Appellate Authority found that the Revenue relied solely on retracted confessional statements without producing any documentary evidence regarding unaccounted raw material or sales of finished goods without bills. The Authority also noted the absence of discrepancies in records, lack of seizure of raw materials or finished goods without bills, and insufficient corroborative evidence to support the allegations of clandestine removal.

The First Appellate Authority's decision was based on legal precedents from the Hon'ble High Court of Gujarat and the Division Bench of the Tribunal. The Authority emphasized that central excise duty cannot be demanded solely on retracted confessional statements without corroborative evidence. The Authority highlighted the lack of documentary evidence, corroborative evidence, and the absence of discrepancies in records or accounts related to raw material and finished goods. The Authority also noted the failure to produce any single corroborative evidence to support the allegations. Consequently, the First Appellate Authority concluded that the demand for central excise duty was not justified and, therefore, the question of imposing penalties did not arise.

The Appellate Tribunal upheld the First Appellate Authority's decision, stating that it correctly appreciated the law and facts of the case. The Tribunal found that the impugned order was legally sound and did not warrant any interference. As a result, the appeal was rejected. Additionally, the cross objection filed by the respondent in support of the Original Adjudicating Order was also disposed of by the Tribunal. The judgment was dictated and pronounced in open court, marking the conclusion of the legal proceedings in this matter.