2018 (10) TMI 4 - AT - Central Excise

Clandestine removal - third party evidences - demand raised is based on the entries found in a diary recovered from one Sh. S. K. Pansari, Prop. of M/s Monu Steel a consignment agent - Held that - 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 - It stand held in various judgements that the findings of clandestine removal cannot be upheld based upon only the third party documents, unless there is clinching evidence of clandestine manufacture and removal of the goods. Demand do not sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Central Excise duty demand and penalty confirmation against the appellant.
2. Reliance on third party documents for clandestine clearance charges.
3. Admissibility of third party records as evidence without corroborative evidence.

Analysis:
1. The appeals were filed against orders confirming Central Excise duty demands and penalties. The adjudicating authority confirmed a demand of &8377; 4,13,226/- and imposed a penalty of &8377; 25,000/- on the appellant, dropping a demand of &8377; 13.29 crore. Another appeal involved a demand of &8377; 73,318/- and an equal penalty, with a dropped demand of &8377; 16,40,67,139/-.

2. The Central Excise duty demands were based on a common investigation by officers, relying on a diary recovered from a consignment agent and statements from various individuals. The directors of the appellant did not admit to clandestine clearance, and the consignment agent did not appear for cross-examination. Despite lack of admission, the demands were confirmed based on the directors' alleged acknowledgments.

3. The appellant argued that the Revenue's case relied solely on third-party documents and statements without corroborative evidence. Similar cases based on diary entries were allowed by the Tribunal due to insufficient evidence. The law requires more than third-party evidence for findings of clandestine removal, citing relevant judgments.

4. The charge of clandestine clearance was not supported by the directors' statements or the consignment agent's diary. Precedents established that clandestine removal findings cannot rely solely on third-party documents. Considering similar cases, the Tribunal set aside the impugned orders and allowed the appeals, emphasizing the need for clinching evidence in such matters.