2020 (6) TMI 224 - AT - Central Excise

Clandestine removal - MS Flat - demand based on loose papers recovered during search, the physical verification of stock, its weighment and the admission of the director M/s Balajee - absence of corroborative evidences - HELD THAT - The most important aspect of the whole case is that in the show cause notice there is no statement of any person, employee or director of the appellant company which can show that the impugned loose papers/ rough papers recovered from the factory of appellant are actually related to the clearance made by the Appellant. Moreover the revenue officer did not find the author of said loose paper/rough paper, there is no any other evidence available to corroborate the charge of the show cause noticee. The department did not verify the contents of the said loose papers with any alleged buyer of the said goods or recorded the statements of the said buyers or transporters who transported the said goods. In the absence of such corroborative evidence, no reliance can be placed on the said loose papers/rough papers. Further no evidence has been placed on record to show that excess raw materials were purchased or there was excess power consumption to corroborate the fact that there was clandestine removal. To prove the allegation of clandestine sale, further corroborative evidence was also required but no investigation was conducted by the Department - there is no evidence to support the allegations against the appellants. The adjudicating authority below has wrongly confirmed the demand despite there was no evidence to prove the alleged clandestine removal of goods by the appellants - appeal allowed - decided in favor of appellant.

Summary

Issues: Alleged clandestine removal of goods without payment of duty.

Analysis:
1. Facts of the Case: The appellant, engaged in manufacturing various steel products, was suspected of engaging in clandestine removal of excisable goods. A search conducted on their premises revealed discrepancies in stock, leading to a demand for payment of duty on alleged removed goods.

2. Contentions of the Appellant: The appellant argued that the discrepancies in stock were due to sectional weight calculation and not clandestine removal. They cited the statement of their director explaining the stock differences and relied on judgments emphasizing the need for concrete evidence in such cases.

3. Department's Position: The department relied on physical stock verification, recovered loose papers, and the director's statement accepting stock shortages as evidence of clandestine removal. They contended that no further corroborative evidence was required.

4. Judicial Analysis: The Tribunal observed that the show cause notice lacked crucial statements or evidence linking the loose papers to actual clearances. It highlighted the absence of investigations into excess production, raw material purchases, dispatch details, and other crucial aspects to prove clandestine removal.

5. Legal Precedents: The Tribunal referenced various legal precedents emphasizing the need for concrete evidence in cases of alleged clandestine removal. It noted that mere stock discrepancies or duty payments without protest are insufficient to establish guilt.

6. Final Decision: Considering the lack of substantial evidence linking the discrepancies to clandestine removal, the Tribunal set aside the demand for duty payment. It concluded that the department failed to discharge the burden of proving the alleged misconduct, leading to the allowance of the appeals.

This detailed analysis showcases the legal intricacies involved in the judgment, emphasizing the importance of concrete evidence in cases of alleged clandestine removal to establish guilt conclusively.