2018 (6) TMI 239 - AT - Central Excise

Clandestine removal - multiple invoices - the demand is mainly based upon photocopies of alleged parallel invoices seized from the premises of ex-employee of the Appellant unit Shri Suresh Rakhunde who in his statement stated that the said photocopies pertained to the clearances of goods - Appellant has contended that such fake invoices were fabricated by their ex-employee and no goods were cleared by them under such invoices. Held that - Though the department has investigated the transporters and buyers of the goods, however they did not find copy of single original copy of such invoice from any of the buyers inspite of the fact that as the invoices showed 73 buyers of such goods. Thus in absence of any affirmation or evidence from the buyers of the goods the demand cannot be confirmed on the basis of photocopies of parallel invoices seized from the ex-employee or the transporter - no reason has been given as to why Shri Rakhunde has stored the photocopies of such parallel/ multiple invoices and for what purpose. He was neither instructed by the owner of the unit nor he was maintaining any record. Further except these photocopies no record was found. The photocopies are not corroborated with any evidence in the form of accounting records or any independent corroborative evidence from the Appellant s premises or from any other place. Even the show cause notice does not bring out any statement of drivers/ truck owners/ who allegedly consigned such goods. It is not even appearing as to how they have received freight for such transportation and from whom. The above assertions made by the Appellant gives credence to the arguments of the Appellant that merely based upon uncorroborated photocopies of invoices whose veracity itself is highly doubtful, the demand against the Appellant would not sustain. As regard allegation that the Appellant cleared Low carbon Ferro Manganese under the cover of invoice of High Carbon Ferro Manganee, we find that the allegation is based upon the goods seized during transportation and statement of some of the buyers who allegedly stated that High Carbon Ferro Manganese cannot be used to manufacture welding electrodes - the Appellant has challenged the test report on the ground that it is not known as to from where the samples were drawn and what were the goods sent for testing - there is no reason to deny the claim of the Appellant as it is not forthcoming as to from where the samples were withdrawn and whether the samples were withdrawn in presence of Appellant - the test report cannot be relied upon. The revenue has not been established the charges of clandestine removal against the Appellant by any cogent and tangible evidence. The charges are based solely upon third party statements and alleged photocopies of fake/ multiple invoices with no corroboration with any independent evidence - duty demand with penalty do not sustain - Confiscation also not sustainable - appeal allowed - decided in favor of appellant.

Issues Involved:
1. Allegations of clandestine removal and undervaluation of goods.
2. Credibility of evidence, including statements and documents seized.
3. Reliability of statements obtained under alleged coercion.
4. Validity of demand and penalties imposed based on uncorroborated evidence.
5. Confiscation of goods and vehicles.

Detailed Analysis:

1. Allegations of Clandestine Removal and Undervaluation of Goods:
The appellant, M/s Vipra Metal Powder, was accused of issuing multiple invoices for the removal of finished goods and undervaluing goods by misrepresenting high-value Low Carbon Ferro Manganese (LCMF) as lower-value High Carbon Ferro Manganese (HCMF). The officers intercepted a vehicle carrying goods labeled as low-value items, which were found to be high-value items. The director of the appellant unit admitted to undervaluation in his statement.

2. Credibility of Evidence:
The case relied heavily on photocopies of invoices seized from an ex-employee's residence and statements from transporters and buyers. The appellant argued that these documents were not relied upon in the show cause notice and that the statements from buyers and the ex-employee were not credible. The tribunal found that the demand could not be confirmed based on uncorroborated photocopies of invoices and unsupported statements from third parties.

3. Reliability of Statements Obtained Under Alleged Coercion:
The appellant contended that the statement of the director was obtained under coercion and duress, making it unreliable. The tribunal noted that uncorroborated statements obtained under duress could not be used to fasten duty liability. The tribunal cited precedents where statements alone, without corroborative evidence, were deemed insufficient to establish clandestine removal.

4. Validity of Demand and Penalties Based on Uncorroborated Evidence:
The tribunal found that the entire case was based on uncorroborated photocopies of invoices and unsupported statements. It was noted that the department did not find any original copies of the alleged fake invoices from any buyers. The tribunal emphasized that documentary evidence should prevail over oral evidence and that the demand could not be sustained without tangible evidence of clandestine removal.

5. Confiscation of Goods and Vehicles:
The tribunal held that the confiscation of goods and vehicles was not sustainable due to the lack of credible evidence. The tribunal referenced the case of Premium Packaging Pvt. Ltd. and other similar cases where uncorroborated statements and loose documents were deemed insufficient for proving clandestine removal.

Conclusion:
The tribunal concluded that the revenue had not established the charges of clandestine removal against the appellant by any cogent and tangible evidence. The charges were based solely on third-party statements and alleged photocopies of fake/multiple invoices with no corroboration from independent evidence. Consequently, the tribunal set aside both the impugned orders, allowing the appeals with consequential reliefs, and dismissed the confiscation of goods and vehicles.

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