2018 (7) TMI 841 - AT - Central Excise

Clandestine removal - search conducted at the premises of M/s Monu Steels & M/s Gopal Traders - no investigation at the appellant s end except recording of the statement of the Director - Held that - In the present case, the entire endeavour of the Revenue is based upon the documents recovered from the premises of M/s Moun Steels & M/s Gopal Traders read with the statement of their Director and by ignoring the statement of the Director of the present appellant. Tribunal in the case of CCE & ST, Raipur Vs. P.D. Industries Pvt. Ltd. 2015 (11) TMI 455 - CESTAT NEW DELHI held that the allegations based on inquiries e made in the third party s documents of Commission Agent and transporters cannot lead to the fact of clandestine activities. Demand not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues: Allegations of clandestine removal based on third party records, sufficiency of evidence, confirmation of demands, imposition of penalties.

In this judgment by the Appellate Tribunal CESTAT NEW DELHI, the issue revolved around allegations of clandestine removal of final products without duty payment against the appellant, engaged in manufacturing steel ingots. Investigations at dealers' premises led to suspicions, but the appellant denied the charges, stating all clearances were under central excise invoices. The Original Adjudicating Authority confirmed demands and penalties, upheld by the Commissioner (Appeals), prompting the present appeals.

The key contention of the appellant was that the Revenue's case relied solely on search results at dealers' premises, with no direct investigation at the appellant's end except for the Director's exculpatory statement. The appellant argued that the Revenue confirmed demands based on third party records without sufficient corroborative evidence, contrary to the Tribunal's precedents in similar cases. The appellant cited Tribunal decisions emphasizing the insufficiency of allegations based on assumptions and third party records without direct evidence linking to clandestine activities.

The Tribunal's analysis highlighted the lack of direct investigations at the appellant's unit, absence of corroborative evidence on procurement, transportation, and financial transactions, rendering the allegations of clandestine removal unsustainable. Emphasizing the need for concrete evidence beyond third party records, the Tribunal referred to various precedents where similar allegations were dismissed due to insufficient verification and reliance solely on external documents. The Tribunal concluded that the impugned order confirming demands and penalties was unsustainable, ultimately setting it aside and allowing the appeal with consequential relief to the appellants.