2019 (2) TMI 567 - AT - Central Excise

Clandestine removal - MS Bars - demand based upon the recovery of kutcha slips, private ledger and the data available in the computer CPU and pen drive - Held that - The entire case of the Revenue is based upon recovery of the so called incriminating evidence from the residential premises of one of the Directors. They have not adduced any evidence to connect these documents with the activities of the manufacturing unit. No further investigations stand made by them from the persons concerned with the production of the goods in the assessee s factory and their clearances. Further, there is no identification of the transporters or the recipient of the goods, thus establishing that the appellant had actually cleared the goods in a clandestine manner. Though, Revenue is not expected to prove its case of clandestine activities to the hilt but the evidences produced by the Revenue should be, at least, to an extent so as to inspire confidence in the prosecution s case - In the present case, no further investigations except the recovery of certain incriminating documents from the residential premises of the assessee s director read with his retracted statement, stand made. The findings of the clandestine activities cannot be upheld on the said documents, which were not even recovered from the premises of the manufacturing unit and as such has to be treated in the nature of third party documents. The same required corroboration, which the Revenue has failed to. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Alleged clandestine removal of finished goods without payment of duty.
2. Seizure of documents and electronic devices from the residential premises of a director.
3. Confirmation of duty evasion and imposition of penalty.
4. Appeal against the order upholding the duty confirmation and penalty imposition.

Analysis:
Issue 1: The appellant was accused of clandestine removal of finished goods without duty payment based on recovered documents and electronic devices. The director initially admitted to the offense but retracted the statement later. The Revenue alleged duty evasion amounting to ?25,43,832.

Issue 2: Documents and electronic devices seized from the director's residential premises formed the basis of the Revenue's case. However, the appellant argued that the incriminating evidence belonged to a different entity engaged in trading, not manufacturing. They contended that no stock-taking at their premises corroborated the charge of clandestine removal.

Issue 3: The Revenue initiated proceedings to confirm duty evasion, interest, and penalty. The original adjudicating authority upheld the duty confirmation and penalty imposition, a decision affirmed by the Commissioner (Appeals). The appellant challenged this decision, emphasizing that the allegations lacked concrete evidence and were based on assumptions rather than tangible proof.

Issue 4: The appellate tribunal noted that the case against the appellant relied solely on documents seized from the director's residence, without establishing a direct link to the manufacturing unit's activities. Lack of further investigation, failure to identify transporters or recipients of goods, and reliance on third-party documents without corroboration weakened the Revenue's case. Consequently, the tribunal set aside the impugned order, allowing the appeal in favor of the appellant.