2021 (8) TMI 702 - AT - Central Excise

Clandestine Removal - M.S. Ingots and TMT Bars - supply of unaccounted raw materials - reliance placed upon third party evidences - evidentiary value of the third party evidence - corroborative evidences or not - HELD THAT - There is no other evidence or documents in the form of stock verification of the raw-materials of the appellant, and the materials supplied to M/s.PIL, nor any evidence about usage of any transportation by the appellants for transporting the alleged quantity of raw materials to M/s.PIL. In absence thereof the documents recovered from M/s.PIL cannot be held against the appellant - It is well settled law that there has to be some concrete evidence which would show clandestine manufacture of goods, as was reiterated by Tribunal, Delhi, in the case of C.C.E. S.T. -RAIPUR VERSUS P.D. INDUSTRIES PVT. LTD. 2015 (11) TMI 455 - CESTAT NEW DELHI . The impugned order confirming the recovery has no legal basis to be sustained - Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Alleged clandestine procurement, production, and clearance of M.S. Ingots and T.M.T. Bars.
2. Involvement of multiple parties in evasion of central excise duty.
3. Challenge to the reliance on third-party evidence in the case.

Analysis:
1. The case involved allegations of clandestine activities related to the procurement, production, and clearance of M.S. Ingots and T.M.T. Bars by M/s. Super Iron & Steel Private Limited. Central Excise Officers conducted investigations at the premises of M/s. Pankaj Ispat Ltd., revealing significant shortages of materials and incriminating documents. The investigation uncovered unaccounted raw material procurement and production, implicating various parties in the evasion of central excise duty.

2. The appellant's name appeared in the seized records of M/s. PIL as a supplier of M.S. Ingots and TMT Bars, leading to a show cause notice for the recovery of central excise duty, interest, and penalties. The Asstt. Commissioner initially dropped the proceedings, but the Department appealed. The Commissioner (Appeals) allowed the appeal, prompting the appellant to challenge the decision before the Tribunal.

3. The appellant argued against the reliance on third-party evidence, emphasizing the lack of direct investigations or corroborative evidence linking them to the alleged activities. The Department, however, defended the use of incriminating documents recovered from M/s. PIL to establish the appellant's involvement in supplying unaccounted raw materials. The Tribunal analyzed relevant case law on the evidentiary value of third-party records in cases of clandestine activities.

4. Considering the lack of concrete evidence linking the appellant to clandestine activities, such as stock verifications, transportation records, or direct proof of raw material supplies, the Tribunal found the reliance on third-party documents insufficient to uphold the recovery demand. Citing established legal principles, the Tribunal emphasized the need for tangible evidence to prove clandestine activities, highlighting the absence of thorough investigations by the Department in crucial aspects.

5. Consequently, the Tribunal set aside the impugned order, ruling that it lacked a legal basis to be sustained. The appeal was allowed, granting the appellant consequential benefits. The judgment highlighted the necessity of substantial evidence to support allegations of clandestine activities and reaffirmed the importance of thorough investigations in such cases.

This detailed analysis of the judgment highlights the issues involved, the arguments presented by the parties, the Tribunal's assessment of the evidence, and the ultimate decision rendered in favor of the appellant based on the insufficiency of evidence linking them to the alleged clandestine activities.