2018 (8) TMI 416 - AT - Central Excise

Clandestine removal - MS Ingots - consumption of electricity in excess - Held that - Since the drop of demand qua excess electricity consumption has not been objected on the part of the Department there is no appeal filed otherwise. And that the same has been dropped while relying upon the decision of Hon ble Supreme Court in the case of R.A. Casting Pvt. Ltd. 2008 (6) TMI 197 - CESTAT NEW DELHI the order under challenge is upheld to the said extent. With respect to the remaining part of the levy the case of Revenue is based upon the statement of the representative of M/s. Monu Steels i.e. the third party evidence. The law i.e. as to whether the third party records can be adopted as an evidence for arriving at the findings of clandestine removal in the absence of any corroborative evidence is well established - the Commissioner (Appeals) has committed an error while relying upon third party evidence to confirm the demand qua serious charge of clandestine removal - demand set aside - Since the demand has been set aside the question of imposition of any penalty on any of the Directors of the companies is not at all arise. Appeal disposed off.

Summary

Issues:
Appeal against Order on alleged excess electricity consumption and clandestine removal of MS Ingots.

Analysis:
The case involved two main issues: excess electricity consumption and alleged clandestine removal of manufactured MS Ingots. The Department raised a demand based on these aspects, leading to the present appeals. The adjudicating authority dropped a significant amount of the demand related to excess electricity consumption but confirmed the demand regarding clandestine removal. The appellant argued that the issue of clandestine removal had already been decided and that the dropped demand was not appealed by the Department. The appellant cited relevant case laws to support their contention.

During the hearing, the Department reiterated its grounds for alleging clandestine removal and justified the order on that basis. The Department conceded the dropped demand related to excess electricity consumption, acknowledging that similar matters had been decided by the Tribunal before. The Tribunal considered both parties' arguments and found that since the Department did not object to the dropped demand on excess electricity consumption and did not file an appeal, it upheld the decision to drop that part of the demand. However, regarding the clandestine removal, the Tribunal found the case based on third-party evidence, specifically the representative of M/s. Monu Steels, lacking corroborative evidence.

The Tribunal referred to various judgments, including those by the Hon’ble Allahabad High Court and Tribunal decisions, emphasizing the need for clinching evidence in cases of clandestine removal. It was held that findings of clandestine removal cannot be upheld based solely on third-party documents without substantial evidence. The Tribunal concluded that the Commissioner (Appeals) erred in relying on third-party evidence to confirm the demand related to clandestine removal and set aside the order, allowing the appeals. Consequently, the imposition of any penalty on the Directors of the companies was also set aside since the demand was overturned.