2018 (12) TMI 782 - AT - Central Excise

Clandestine Removal - excess unaccounted quantity of raw-material - Lead Ingots - Kacha Parchi i.e. rough slips - entire case is made out on the basis of voluntary statement of the appellant/ assessee and entries made in note pads and pocket diaries - Held that - These statements of the transporters have not confirmed the transportation of alleged goods. In their statements, the transporters have deposed that they have not maintained any record regarding the goods transported by them and nothing more. These statements in itself do not indicate that the appellant/assessee is engaged in clandestine removal of goods. It has been held in the various decisions that clandestine manufacture and clearance of goods is a very serious charge and required to established by the Revenue. In the case of M/s Continental Cement Company, 2014 (9) TMI 243 - ALLAHABAD HIGH COURT , Hon ble High Court has laid down that there must be clinching evidence for establishing the clandestine clearance and the same cannot be based on assumption and presumption only. No investigations have been conducted by the Department, in the light of the observations made by Hon ble High Court, to make a fool proof case for the clandestine removal of the goods as alleged in the two Show Cause Notices. Seizure of goods - Held that - Only the excess stock has been found in the factory. But the same was not removed and was lying there itself. This in itself will lead into inference that such and intention to remove the goods in a clandestine manner - there could not be any scope of clearance of seized goods without payment of duty. Second SCN - Held that - The same has been issued by and made answerable to Principal Commissioner of Indore and, however, the adjudication was done by the Additional Commissioner without any indication that the Adjudicating Authority has changed during the course of adjudication proceedings. This in itself would have been reason to drop the demand raised by the Show Cause Notice. However, the appellant has not raised this plea in the appeal, and therefore, the same is ignored. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Clandestine removal of goods by the appellant/assessee based on entries in note pads and pocket diaries, demand confirmation by Ld. Commissioner(Appeal) and Revenue's appeal against the dropped demand.

Analysis:
The judgment by the Appellate Tribunal CESTAT New Delhi, delivered by Mr. Bijay Kumar, Member (Technical), pertains to three appeals arising from an Order-in-Appeal dated 29.12.2017. The appellant, M/s Varun Enterprises, engaged in manufacturing lead ingots, faced allegations of clandestine removal of goods based on recovered documents and excess stock found during a search operation. The Additional Commissioner confirmed demands in two Show Cause Notices, leading to appeals. The Ld. Commissioner(Appeal) partially confirmed the demand, prompting appeals from both parties.

The appellant's advocate argued that the demand was based on entries in recovered documents without independent evidence. The Department's calculations were questioned, highlighting lack of inquiry with suppliers, buyers, or transporters. The appellant contended that the demand was confirmed without tangible proof, emphasizing the need for concrete evidence rather than assumptions. The advocate cited case laws to support the appellant's position.

In response, the Revenue supported the confirmed demand but contested the dropped demand, citing the appellant's admission and voluntary payment as evidence of clandestine removal. The Tribunal heard both parties and examined the records to address the issue of clandestine removal. The Department's reliance on voluntary statements and diary entries was scrutinized, emphasizing the need for tangible evidence to prove clandestine activities.

The Tribunal referred to previous judgments emphasizing the necessity of tangible evidence for clandestine removal allegations. It noted the lack of investigations into crucial aspects like excess production details, raw material purchases, dispatch particulars, sale proceeds realization, and power consumption. The Tribunal highlighted that seized goods were provisionally released subject to entry in statutory records, indicating no scope for duty-free clearance.

Regarding the second Show Cause Notice, the Tribunal observed discrepancies in the adjudication authority but dismissed the demand due to lack of raised objections. Ultimately, the Tribunal upheld the appeal filed by the appellant, dismissing the Revenue's appeal. The appellant was entitled to consequential benefits as per law, with the judgment pronounced on 13/12/2018.