2018 (5) TMI 668 - AT - Central Excise

Clandestine removal - the duty demand is made on the search conducted at the business premises of the appellant from where unaccounted goods were found - Held that - From the papers seized from Shri Ajay Singh and his statement, it is evident that he has supplied the raw materials to the appellant as per details. So when Shri Ajay has refused to attend the cross examination then we are of the view that the duty demand should be confined on the basis of the raw materials seized from the appellant s business premises and the same has been done as the shortage of the stock of the finished goods and incriminating documents were found from the business premises of the appellant. The appellant is involved in the evasion of central excise duties. The value of the clearances of unaccounted finished goods were made. Appeal dismissed - decided against appellant.

Summary

Issues:
- Central Excise duty evasion based on third-party search
- Validity of SSI exemption claim
- Allegation of clandestine removal based on search verification
- Reliability of statements and documents seized during search
- Cross-examination opportunity for witnesses
- Justification of duty demand based on seized materials
- Applicability of case laws cited by the appellant
- Decision on the impugned order

Central Excise Duty Evasion Based on Third-Party Search:
The case involved appeals against an order dated 28.07.2017 regarding central excise duty evasion by a manufacturing firm engaged in the production of H.B Wire and Wire Mesh. The evasion was suspected based on a search at the premises of another firm, M/s. Deepak Industries, where incriminating documents indicated unaccounted supply of H.B. Wire to the appellant. The appellant's sole Director was also implicated in the investigation.

Validity of SSI Exemption Claim:
The appellant claimed SSI exemption under notification no. 08/2003-CE and contested the allegation of clandestine removal, arguing that the Department lacked corroborative evidence. The appellant's counsel emphasized the shortage of stock during the search, attributing it to estimation errors and lack of substantial proof for clandestine activities.

Reliability of Statements and Documents Seized During Search:
The Departmental Representative justified the duty demand by highlighting recovered incriminating documents like tally backups and statements from employees implicating the Director in illegal transactions. The Department contended that the retraction of statements was untimely and referenced legal precedents to support their position.

Cross-Examination Opportunity for Witnesses:
The appellant raised concerns about the lack of cross-examination opportunities for witnesses, particularly Shri Ajay Singh, whose refusal to attend cross-examination was noted. The Tribunal considered this refusal in light of the duty demand based on seized raw materials and incriminating documents from the appellant's premises.

Justification of Duty Demand Based on Seized Materials:
The Tribunal concluded that the appellant was involved in central excise duty evasion based on the seized raw materials and incriminating documents found at their premises. The duty demand was upheld, considering the evidence linking the appellant to unaccounted clearances of finished goods.

Applicability of Case Laws Cited by the Appellant:
The appellant's reliance on specific case laws to challenge the impugned order was deemed irrelevant as the Tribunal found the present case to be factually distinct. The decision was based on the facts and circumstances unique to this case.

Decision on the Impugned Order:
After considering both sides and the material on record, the Tribunal upheld the impugned order, dismissing all appeals filed by the appellants. The decision was based on the appellant's involvement in central excise duty evasion supported by seized materials and statements, leading to the sustained duty demand.

In conclusion, the Tribunal found no grounds to interfere with the impugned order, emphasizing the evidence of duty evasion based on the seized materials and documents, ultimately dismissing the appeals.