2019 (12) TMI 1216 - AT - Central Excise

Clandestine removal - MS Ingots - allegation that the appellants were carrying out activities of clandestine clearances in a pre-mediated manner with sole objective of defrauding the Government of its legitimate revenue in the form of Central Excise Duty - demand based on the statement of Shri Pawan Bansal, Director of M/s. Shree Jagdambay Castings Pvt. Ltd. as was recorded on 29.07.2013 - denial of cross-examination - Onus of proof - HELD THAT - It is found that the said statement got subsequently retracted by Shri Pawan Bansal. It is further apparent that though the appellants received the relied upon documents, but they have been aggrieved of those not being legible. Legible copies thereof were insisted but were never made available. Adjudicating Authority below is observed to have ignored the repeated requests of the assessees for the legible documents. Copies of documents though are on record but perusal makes it clear that many of them are not at all legible. Denial of cross-examination - HELD THAT - The denial of coss-examination in the given circumstances is opined to be unfair and unjustified. The order under challenge records that, the case is mainly based on the record of M/s.BRMPL, which is duly corroborated by the statements of directors of BRMPL and the persons who were maintaining the records . But no such record and the corroboration thereof has been specified by the adjudicating authority below. Onus of proof - HELD THAT - The law is well settled that in respect of any allegation of clandestine removal the onus is squarely and solely on the Revenue to prove what it alleges and that onus of the revenue cannot be shifted to the assessee. The assessee cannot be called upon to prove the negative. There is no investigation whatsoever or any proof brought on record by the revenue in regard to the alleged clandestine production and unaccounted removal of excisable goods by the assessee. Mere allegation by the Revenue cannot take the place of proof. There is no iota of evidence apparent on record specifically to the corroboration of the software data recovered during search. There is no compliance of Section 36B of Central Excise Act Sub Clauses (2) (4) prescribes very stringent conditions for Computer Printouts to be a piece of admissible evidence. Not even Section 45A has been resorted as there is no apparent opinion of examiner of electronic evidence - The law is also well settled that the adjudication in a quasi-judicial proceeding must be fair and objective and the authority concerned must act correctly in accordance with law. In the present case the adjudicating authority is opined to have acted solely to confirm demands mechanically with predetermined negative mind because of his bias and prejudice and no willingness to appreciate the facts and records and apply the law correctly. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Allegations of clandestine clearance and evasion of Central Excise Duty
- Imposition of penalties on the appellants
- Legibility of documents and denial of cross-examination
- Sufficiency of evidence and compliance with legal procedures

Analysis:
1. Allegations of Clandestine Clearance and Evasion of Central Excise Duty:
The case involved allegations against the appellants for clandestine clearance of goods to another entity engaged in similar activities. The Department alleged deliberate evasion of Central Excise Duty by the appellants through clandestine activities. The investigation revealed discrepancies in the maintenance of records and financial accounts, leading to the imposition of penalties and demand for duty recovery.

2. Imposition of Penalties on the Appellants:
The initial order confirmed the duty demand and imposed penalties on the appellants. Subsequently, the Commissioner (Appeals) modified the penalties, leading to the appellants challenging the order before the Tribunal. The appellants argued that the penalties imposed amounted to double jeopardy and should be quashed. The Department defended the penalties, stating they were based on sufficient evidence gathered during the investigation.

3. Legibility of Documents and Denial of Cross-Examination:
The Tribunal noted discrepancies in the legibility of documents provided to the appellants and the denial of their request for legible copies. Additionally, the appellants were not granted the opportunity for cross-examination, raising concerns about the fairness of the proceedings. The failure to provide legible documents and allow cross-examination was deemed unfair and unjustified, impacting the validity of the order under challenge.

4. Sufficiency of Evidence and Compliance with Legal Procedures:
The Tribunal highlighted the importance of the Revenue proving allegations of clandestine activities without shifting the burden to the assessee. It emphasized the necessity of proper investigation and evidence to confirm demands. The adjudicating authority was criticized for not following established legal procedures, including the denial of cross-examination and reliance on retracted statements. The lack of corroborative evidence and compliance with legal provisions rendered the impugned order unsustainable, leading to its set aside by the Tribunal.

In conclusion, the Tribunal allowed the appeals, setting aside the impugned order due to procedural irregularities, lack of corroborative evidence, and non-compliance with legal requirements. The judgment emphasized the importance of fair and objective adjudication in quasi-judicial proceedings and highlighted the necessity of following established legal procedures to confirm demands and impose penalties.