2019 (8) TMI 959 - AT - Central Excise

Clandestine removal - demand based on diaries/private records allegedly recovered from the premises of the broker Mr. Himanshu Nandlal Jagani and Shri Yogesh R. Sanghvi - corroborative evidences or not - Cross-examination not granted - HELD THAT - The entire case was made out on the basis of search conducted with the third party which is the broker and the records recovered the from the broker. The records of the broker bearing some entries related to some of the goods. Some statement was recorded from the broker. Despite the appellant requested for cross examination, the lower authorities have rejected the request. In the present case, the entire evidence was relied upon are documents recovered from the brokers and their statement. In this case, no evidence was found with M/s Bansal Casting Pvt. Ltd. It was incumbent on the Ld. Commissioner to grant the cross examination of the broker as it is mandatory under section 9D. Without cross-examination of the evidence, their statements cannot be relied upon. Since in the present case witnesses, i.e. brokers and transporters were not allowed for cross examination, their statements cannot be relied upon. In such a case, the only evidence left is the diaries/private records of the brokers. Since the statements cannot be relied upon, these records in isolation has no evidentiary valued particularly when the same was not corroborated with the statutory records of the appellant. Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Alleged clandestine removal of goods without payment of duty.
2. Reliance on third-party records and statements.
3. Rejection of cross-examination requests.
4. Lack of corroborative evidence.

Detailed Analysis:

1. Alleged Clandestine Removal of Goods Without Payment of Duty:
The case revolves around the appellant, engaged in manufacturing rolled products like TMT bars, allegedly clearing goods clandestinely without paying duty. The Revenue issued a show cause notice demanding Central Excise duty of ?33,90,573/- along with interest and penalties. The Adjudicating Authority confirmed the demand and imposed penalties on M/s Bansal Casting Pvt. Ltd. and its directors. The Commissioner (Appeals) upheld the order but reduced the penalties on individuals. The appellants contested the decision, arguing that the demand was based on uncorroborated third-party records.

2. Reliance on Third-Party Records and Statements:
The appellants argued that the demand was confirmed solely on diaries and private records seized from brokers, which did not match the statutory records of M/s Bansal Casting Pvt. Ltd. They cited the Tribunal's decision in Arya Fibres Pvt. Ltd. vs. CCE, emphasizing that clandestine removal cannot be established without corroborative evidence such as buyer statements, transportation records, and excess raw material or electricity consumption. The Revenue contended that the records recovered from brokers tallied with the statutory records, justifying the demand.

3. Rejection of Cross-Examination Requests:
The appellants requested cross-examination of the brokers whose statements were relied upon, but the lower authorities rejected the request. The Tribunal highlighted that without cross-examination, the statements could not be relied upon, referencing the judgment in Rama Shyama Papers Ltd. vs. Commissioner of C.Ex., Lucknow. The Tribunal emphasized that the liability cannot be based on third-party documents without corroborative evidence and cross-examination.

4. Lack of Corroborative Evidence:
The Tribunal noted that no evidence was found with M/s Bansal Casting Pvt. Ltd. and no investigation was conducted to identify buyers or confirm receipt of payments for the alleged clandestine removal. There was no evidence of excess raw material procurement or electricity consumption. The Tribunal referenced several judgments, including Vishva Traders Pvt. Ltd. vs. CCE and Sulekhram Steels Pvt. Ltd. vs. CCE, where demands were set aside due to lack of corroborative evidence and cross-examination.

Conclusion:
The Tribunal concluded that the Revenue failed to establish the case of clandestine removal beyond doubt. The evidence relied upon was insufficient, as it was based on third-party records without corroboration and cross-examination. The impugned order was set aside, and the appeals were allowed, emphasizing the need for tangible evidence and adherence to legal procedures in establishing clandestine removal cases.

(Pronounced in the open court on 21.08.2019)

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