2019 (6) TMI 869 - AT - Central Excise

Clandestine removal - demand based on the loose sheets recovered from the appellant s factory as well as on the basis of weighment records of the weighbridge belonging to the appellant - proper investigations not carried out - HELD THAT - The Department has not conducted any investigation other than recovery of these loose sheets and weighment record, from any of the buyers, suppliers, transporters etc. - also no investigation has been conducted by the Department for the forward and backward linkages of clandestine activities alleged to have been committed by the appellant - appeal allowed - decided in favor of appellant.

Summary

Issues:
Confirmation of demand against the appellant based on seized goods and loose sheets recovered from the factory.

Analysis:
The case involved two appeals against the Order-in-Appeal confirming the demand against the appellant and its Director based on two Show Cause Notices. The appellant, engaged in steel re-rolling products, had goods seized and faced allegations of exceeding turnover and clandestine clearance. The appellant argued against imposition of redemption fine and penalty, citing SSI exemption and lack of statutory records. They challenged the stock verification method and excessive fines imposed. The appellant disputed duty confirmation for specific years, questioning the evidence and authenticity of weighment slips. Transporters' certificates were produced to support the claim that the goods did not belong to the appellant. The appellant contended that the loose sheets pertained to trading activities, not clandestine clearances.

The Departmental Representative upheld the impugned order, leading to a detailed hearing. The issue revolved around confirming the demand based on seized goods and weighment records without further investigation. The Tribunal referenced precedents emphasizing tangible evidence requirements for clandestine activities. It noted the lack of forward and backward linkages investigation by the Department, as highlighted in the Arya Fibers case. The Tribunal cited the Continental Cement Company case, emphasizing the need for corroborative evidence and thorough investigation to prove clandestine activities. It critiqued the Department's failure to examine various aspects like production details, raw material purchase, and sale proceeds realization. The Tribunal concluded that the impugned order was unsustainable due to insufficient evidence and lack of thorough investigation, ultimately allowing both appeals filed by the appellants.

In conclusion, the Tribunal set aside the impugned order, highlighting the necessity for tangible evidence and thorough investigation to establish clandestine activities. The decision emphasized the importance of corroborative evidence and proper examination of various aspects to prove allegations effectively. The appellants' arguments against the imposition of fines and duty confirmation were considered in light of the insufficient evidence presented by the Department, leading to the allowance of both appeals with consequential benefits.