2022 (5) TMI 649 - AT - Central Excise

Clandestine removal - MS Ingots - MT TMT Bar - MT Sponge Iron - unsubstantiated third party records - corroborative evidences or not - demand alongwith penalty - HELD THAT - The demand have been confirmed against the appellants with penalty in a mechanical manner. Further there is lack of sufficient evidences or corroborative evidences in support of the allegations of the Revenue. This Tribunal in similar facts and circumstances in the case of M/S. RAMNIWAS ISPAT PVT. LTD., MR. RAKESH JALAN VERSUS C.C.E., RAIPUR 2018 (7) TMI 521 - CESTAT NEW DELHI under similar facts and circumstances of alleged clandestine clearance to Pankaj Ispat, have allowed the appeal holding that demand and penalty is not sustainable on the basis of the third party evidence, in absence of any corroborative evidence/ admission on the part of the assessee. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Alleged clandestine removal of goods, confirmation of demand with penalty, absence of corroborative evidence, mechanical manner of confirming demand, failure to examine witnesses, applicability of precedent decisions.

Analysis:
1. The case involved allegations of clandestine removal of goods by the appellants to another company during a search conducted at the premises of the said company. The discrepancies found during the search, including unaccounted purchase and sale of finished goods, led to the issuance of a show cause notice by the Revenue.

2. The Revenue relied on statements and documents from the premises of the other company to support the allegations of clandestine removal. However, the appellants contested the demand, arguing that it was based on unsubstantiated third-party records without any admission from them or their officers. The appellants also pointed out the lack of examination or investigation of their records by the Revenue.

3. The appellants further contended that the demand and penalty were confirmed in a mechanical manner without proper application of mind by the Revenue. They emphasized the serious civil consequences of such allegations and demanded corroborative evidence to support the charges of clandestine removal.

4. In support of their arguments, the appellants cited a precedent decision by the Tribunal in a similar case, where the demand and penalty were not sustained solely based on third-party evidence without any corroborative evidence or admission from the assessee.

5. Additionally, the appellants highlighted the failure of the Revenue to examine its witnesses during the adjudication proceedings, which they argued was a violation of the mandate of the Act. This failure to comply with the legal requirements was deemed by the appellants as a basis for setting aside the demand raised.

6. After considering the contentions of both parties, the Member (Judicial) found that the demand was confirmed against the appellants in a mechanical manner without sufficient evidences or corroborative evidences to support the allegations of the Revenue. Relying on the precedent decisions of the Tribunal, the Member allowed both appeals, setting aside the impugned order and granting consequential benefits to the appellants.

7. The judgment, delivered on 13.05.2022 by the Appellate Tribunal CESTAT New Delhi, underlined the importance of substantiated evidence and proper examination of witnesses in confirming demands related to alleged clandestine activities, ensuring fair adjudication and upholding legal standards in such matters.