2004 (12) TMI 230 - AT - Central Excise

Clandestine removal production and removal of excisable goods - Evidence - Burden of proof - demand - penalty - HELD THAT - In the absence of any tangible evidence regarding the clandestine receipt of the raw material by the appellants from the suppliers and the manufacture of the finished goods out of that material and clandestine removal of the same to the buyers without payment of duty the uncorroborated statement of Shri Vipul Jain Director of the appellants company could not be made sole basis by holding the appellants guilty of the manufacture and removal of the finished goods without payment of duty during the disputed period. The appellants have rather produced affidavits of some raw material suppliers wherein they had denied of having supplied the raw material to them without the cover of duty paid documents. The evidence of Shri R.D. Gupta Director of a transport company M/s. Vindhvasni Carriers Pvt. Ltd. did not advance the case of the Department to any logical end. No details of the consignees to whom the goods were delivered at the behest of the appellants without the cover of the invoices has been disclosed by them and no statement of any such consignee had been recorded to seek corroboration of their statements. The transporter involved in the alleged dispatches had only disclosed that the goods were transported through them but no consignee to whom the goods were allegedly delivered has come forward to corroborate their version and accept the receipt of the goods through them from the appellants without the cover of the duty paid invoices. The law is well settled that the charge of clandestine removal of the dutiable goods by an assessee has to be proved by the Department by adducing cogent convincing and tangible evidence. Such a charge cannot be based on assumptions and presumptions. The findings of the Tribunal/Court in a particular case in favour of the Department regarding clandestine removal of goods by the assessee based on the evidence brought on record therein cannot be made applicable to another case wherein tangible evidence is missing for proving such a change against the assessee. Thus the charge of clandestine receipt of the raw material manufacture of the final products and clearance of the same in clandestine manner without payment of duty during the period in dispute and the evasion of the duty amount detailed in the show cause notice by the appellants does not at all stand proved. The impugned order of the adjudicating authority is therefore set aside and the appeals of the appellants are accepted with consequential relief if any permissible under the law.

Issues Involved:
1. Allegations of clandestine production and removal of excisable goods.
2. Admissibility and authenticity of computer printouts and peripherals as evidence.
3. Corroboration of statements and evidence presented by the Department.
4. Legal standards for proving clandestine removal of goods.

Summary:

1. Allegations of Clandestine Production and Removal:
The appellants were accused of suppressing production and clandestinely removing excisable goods without payment of duty from December 1988 to July 1999. The allegations were based on the recovery of one hard disc, 10 zip discs, and 16 floppies (peripherals) from their premises, and statements from various individuals, including directors and employees.

2. Admissibility and Authenticity of Computer Printouts:
The appellants disputed the authenticity of the printouts and copied zip discs, claiming they were not allowed access to the peripherals. The Tribunal noted discrepancies in the recovery process and the handling of the peripherals by the Department. The printouts were not produced by the computer during regular use, as required u/s 36-B, and the peripherals were handled without the appellants' presence, raising doubts about their authenticity.

3. Corroboration of Statements and Evidence:
The Tribunal found that the statements of individuals like Ms. Arti Srivastava and Shri Vipul Jain lacked corroboration from tangible evidence. The alleged buyers and suppliers did not support the Department's case, and some retracted their statements during cross-examination. The Tribunal emphasized that the charge of clandestine removal must be supported by cogent and convincing evidence, which was missing in this case.

4. Legal Standards for Proving Clandestine Removal:
The Tribunal reiterated that the charge of clandestine removal cannot be based on assumptions and presumptions. It must be proven with tangible evidence, as established in previous cases like Oudh Sugar Mills Ltd. v. Union of India. The Tribunal found the evidence presented by the Department to be incomplete and inconclusive, acknowledging flaws in the investigation.

Conclusion:
The Tribunal concluded that the charge of clandestine receipt of raw material, manufacture, and clearance of finished goods without payment of duty was not proven. The impugned order was set aside, and the appeals of the appellants were accepted with consequential relief, if any, permissible under the law.

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