2018 (5) TMI 1655 - AT - Central Excise

Clandestine removal - shortage of raw material and finished goods - the sole basis for demanding the duty is the diary and loose paper sheets from Shri Mohammed Nazirooddin Sheikh - Held that - The fact remains that he was working for the appellant for supervising the production as well as supplying the labour. Shri Mohammed Nazirooddin Sheikh was also having other clients for providing similar services. In the loose papers and diary the names of other clients were mentioned. Except this evidence no other corroborative documents have been collected by the Department. Neither the suppliers of the raw material nor any buyer of the finished goods were found or examined by the Department. Clandestine removal is a very serious charge which has not been proved by the Department and no corroborative evidence was there except the loose papers which are still ambiguous as the names of the other clients were mentioned in the papers. No shortage was found pertaining to the raw material or finished goods - demand cannot sustain - Decided in favour of assessee.

Summary

Issues: Alleged clandestine removal based on diary and loose papers

Analysis:
The case involved an appeal against an Order-in-Original alleging clandestine removal of goods based on a diary and loose papers found during a search at the appellant's premises. The Department contended that the diary indicated clandestine activities by a supervisor, but the appellant argued that no shortage of goods was found during the search. The Department's case relied solely on the diary seized from the supervisor, who denied the allegations. The appellant pointed out discrepancies in the Department's case and highlighted that the supervisor had other clients for similar services.

The Tribunal noted that apart from the diary, no corroborative evidence was presented by the Department. The names of other clients mentioned in the papers raised doubts about the allegations. Additionally, no suppliers of raw materials or buyers of finished goods were identified or examined. The surrender of a sum of money by the Director was also mentioned, with the appellant claiming it was done under compulsion. The Tribunal emphasized that clandestine removal is a serious charge requiring substantial evidence, which was lacking in this case.

Referring to a judgment by the Hon'ble High Court of Allahabad, the Tribunal stressed the need for concrete evidence in cases of clandestine removal. The Court highlighted various aspects that need to be investigated to establish such charges, none of which were adequately addressed by the Department in this case. Ultimately, the Tribunal set aside the impugned order, emphasizing the lack of proof for the serious charge of clandestine removal.

In conclusion, the Tribunal found that the Department failed to establish the case of clandestine removal convincingly, especially considering the seriousness of the charge. Therefore, the appeals were allowed, and the impugned order was set aside.