2019 (6) TMI 1191 - AT - Central Excise

Clandestine removal - MS Ingots - shortage of stock and finished goods - demand based on third party evidences - HELD THAT - Since the sole challenge to the order is its reliance upon third party evidence, it is necessary to check the evidentiary value of the third party evidence. There is no other evidence or document in the form of stock verification of the raw-material of the appellant and the material supplied to M/s. PIL nor any evidence about usage of any transportation by the appellants for transporting the alleged quantity of raw-material to M/s.PIL. In absence thereof the documents recovered from M/s.PIL cannot be held against the appellant. The order confirming the recovery has no legal basis to sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
Alleged clandestine removal of goods, reliance on third party evidence, evidentiary value of third party evidence.

Analysis:
The case involved the manufacturers of MS ingots facing allegations of clandestine procurement and removal of goods. Central Excise Officers found discrepancies in stock during an inspection at the premises of another company, leading to a show cause notice for recovery of Central Excise duty against the manufacturers. The appellants contested the recovery, arguing that no direct evidence linked them to the alleged activities, relying on case laws to support their stance. The Department, however, defended the recovery based on incriminating documents recovered from the other company, indicating the appellants' involvement in supplying unaccounted raw-material. The Tribunal considered the evidentiary value of third party evidence, citing relevant case laws to establish that findings of clandestine removal must be supported by more than just third party documents.

The Tribunal noted the absence of additional evidence linking the appellants directly to the alleged activities, such as stock verification or transportation records. Without such corroborative evidence, the reliance on documents recovered from the other company was deemed insufficient to uphold the recovery against the manufacturers. Consequently, the Tribunal set aside the order confirming the recovery, ruling in favor of the appellants based on the lack of legal basis to sustain the recovery. The appeal was allowed, and the order was pronounced in open court on 24/06/2019.