2018 (11) TMI 1147 - HC - Central Excise

Clandestine removal - Principles of Natural justice - CESTAT rejected the appeal without appreciating the facts and evidence before it - Held that - No doubt, the CESTAT has not discuss the evidence as greatly as it normally does and is expected to. What is however evident - from a plain reading of paras 6 to 10 is that the main points, which ultimately led the Commissioner to impose penalty and also inflict duty liability were taken into account. It is of course, desirable that the CESTAT as First Appellate Forum should discuss the evidence in some depth. This Court is of the opinion that upon a total analysis of the circumstances, especially having regard to the statements made by the various parties including the third parties i.e. the sellers of the raw material, the inference drawn by the Commissioner could not have been faulted - questions of law urged by the appellant are purely factual. Appeal dismissed.

Summary

Issues Involved:
1. Justification of CESTAT's rejection of the appeal.
2. Allegations of clandestine removal of goods.
3. Evidentiary value of loose sheets and diaries.
4. Manufacturing capacity of the appellant's factory.
5. Statements and credibility of involved parties.
6. Corroboration of evidence by the Revenue.
7. Appellant's defense and arguments against the findings.

Issue-Wise Detailed Analysis:

1. Justification of CESTAT's Rejection of the Appeal:
The appellant questioned whether the Customs Excise and Service Tax Appellate Tribunal (CESTAT) was justified in rejecting the appeal without appreciating the facts and evidence. The Tribunal upheld the Commissioner's findings, stating that the evidence presented by the Revenue, including documents and statements, sufficiently established the clandestine removal of goods.

2. Allegations of Clandestine Removal of Goods:
The Revenue issued a show cause notice based on materials and statements indicating clandestine removal of goods. The Commissioner’s order-in-original directed the recovery of ?1,57,10,335/- and imposed an equal amount as a penalty. The Tribunal upheld this decision, stating that the appellant had indeed procured raw materials, manufactured wires and cables, and cleared them without paying duty.

3. Evidentiary Value of Loose Sheets and Diaries:
The appellant argued that the loose sheets and diaries did not have evidentiary value. However, the Commissioner and Tribunal found that these documents contained detailed records of raw material procurement and sales, corroborated by bank transactions and statements from suppliers. The Commissioner concluded that these documents were truthful accounts of the appellant’s transactions.

4. Manufacturing Capacity of the Appellant's Factory:
The appellant contended that their factory's capacity was insufficient to produce the alleged quantity of goods. The Commissioner, however, noted that the factory was equipped with sufficient machinery and manpower to manufacture the alleged quantity. This was supported by statements from the proprietor and inspection reports.

5. Statements and Credibility of Involved Parties:
The appellant claimed that statements from the proprietor and his brother were obtained under duress and were unreliable. The Commissioner found that the proprietor had sufficient knowledge of English to understand and sign the statements. The brother’s statements were deemed unreliable as he avoided appearing before the authorities despite multiple summonses.

6. Corroboration of Evidence by the Revenue:
The Revenue's case was supported by corroborative evidence, including statements from raw material suppliers and bank transaction records. The Commissioner found that payments for raw materials and sales proceeds were reflected in the appellant’s bank accounts, supporting the allegations of clandestine removal.

7. Appellant's Defense and Arguments Against the Findings:
The appellant argued that the documents pertained to the business of the proprietor’s brother and not their own. The Commissioner dismissed this claim, noting that the brother’s statements were inconsistent and that the documents clearly related to the appellant’s business. The Tribunal found no merit in the appellant’s arguments and upheld the Commissioner’s findings.

Conclusion:
The High Court concluded that the Tribunal's decision to uphold the Commissioner’s findings was justified based on the totality of evidence and circumstances. The appellant’s arguments were deemed factual and insufficient to overturn the findings. Consequently, the appeals were dismissed.