2019 (2) TMI 671 - HC - Central Excise

Clandestine manufacture and removal - maintenance of authentic records - corroborative evidences - reliance placed in private records - Held that - The entire show cause notice has been based on bilties/GRs claimed to have been recovered from M/s Vinod Forwarding Agency, Kanpur. It further reveals that the goods transported by M/s Vinod Forwarding Agency, name of the manufacturer, have not been stated on the alleged GRs and its brand name and it was only presumed by the Revenue that wherever no names/brands were mention of Rajshree ( Brand name, M/s K.P. Pan Flavours) is established, the said bilties/GRs should be treated as if the said goods were booked by the respondent-assessee - The record further reveals that the statements of various persons were recorded under duress and all the submissions made therein were retracted by the witnesses and during the cross examination they had also stated that the statements were recorded under pressure by the officers. The Tribunal after perusal of the records and materials available has recorded findings of fact that the Revenue were using GRs repeatedly for framing charges against various assessees of manufacturers of Gutkha without connecting the GRs with the goods manufactured by the particular assessee on the basis of particulars of goods stated in the GRs. It was also noticed by the Tribunal in the impugned order that there was no investigation conducted about procurement of raw material of allegedly clandestinely cleared goods - The Tribunal has also come to the conclusion that there is no question of clandestine removal of goods without payment of duty. Moreover the bilties/GRs which were recovered from the transporter, M/s Vinod Forwarding Agency and were lying with the Revenue were being used for issuing show cause notice without conducting any investigation. There is no infirmity in the impugned order - appeal dismissed - decided against appellant.

Summary

Issues:
1. Alleged clandestine manufacture and removal of final product.
2. Authenticity of records in illegal activities.
3. Reliability of private records as corroborative evidence.

Analysis:
1. The case involved an appeal against an order passed by the Customs, Excise and Service Tax Appellate Tribunal regarding alleged clandestine manufacture and removal of Gutkha by the respondent assessee. The Revenue authorities based their case on documents recovered during a search, claiming that the Gutkha was transported without payment of Central Excise duty. However, the respondent provided a detailed reply refuting the allegations, stating that no documents were seized from their premises suggesting clandestine removal. The Tribunal found that the Revenue failed to establish the connection between the recovered documents and the respondent's activities, leading to the dismissal of the demand for duty, interest, and penalty.

2. The Tribunal noted that the Revenue's case relied heavily on bilties/GRs recovered from a transporter, M/s Vinod Forwarding Agency, without proper verification of the goods' origin or manufacturer. Additionally, statements recorded under duress were retracted by witnesses, casting doubt on the authenticity of the evidence presented by the Revenue. The Tribunal highlighted the lack of investigation into the procurement of raw materials for the allegedly clandestinely cleared goods, further undermining the case against the respondent.

3. Regarding the use of private records as corroborative evidence, the Tribunal found that the Revenue repeatedly used the same bilties/GRs to frame charges against multiple manufacturers without establishing a clear link between the documents and specific goods. This lack of thorough investigation and reliance on insufficient evidence led the Tribunal to conclude that there was no substantiated proof of clandestine removal of goods without duty payment. Consequently, the Tribunal upheld the appeal, dismissing the Revenue's claims and ruling in favor of the respondent assessee.

In conclusion, the High Court dismissed the appeal by the Revenue, upholding the Tribunal's decision in favor of the respondent assessee. The Court found no legal errors in the Tribunal's findings of fact, emphasizing the lack of evidence connecting the recovered documents to the alleged clandestine activities. The judgment serves as a reminder of the importance of thorough investigation and substantiated evidence in cases involving tax liabilities and alleged illegal activities.