2024 (4) TMI 721 - AT - Central Excise

Clandestine Removal - corroborative evidences or not - entire demand has been raised on the basis of three private unauthenticated seized documents from the office of M/s. EFPL - penalty - HELD THAT - Although it is the claim of the Revenue that truck numbers are mentioned on the said documents which were involved in clandestine removal of goods no investigation was conducted with regard to the truck owners or drivers to find out as to whether those vehicles were used by the appellant for clandestine removal of the goods in support of the allegation of clandestine clearance. Further no evidence has been produced by the Revenue with regard to excess purchase and payment thereof. No evidence in the form of excess consumption of electricity was brought on record. Moreover no payment for clandestine removal of the goods by illicit means has been brought on record. Mere documents recovered from the premises of a third party cannot be the basis to allege clandestine removal of goods - Moreover it has not been ascertained as to who was maintaining those documents and who had kept these documents in the premises of M/s. EFPL. Therefore the Revenue has failed to establish their case of clandestine removal of the goods in question particularly in view of the decision in the case of M/S. CONTINENTAL CEMENT COMPANY VERSUS UNION OF INDIA OTHERS 2014 (9) TMI 243 - ALLAHABAD HIGH COURT wherein the Hon ble High Court of Allahabad has observed we are of the opinion that when there is no extra consumption of electricity purchase of raw materials and transportation payment then manufacturing of extra goods is not possible. No purchase of raw material out side the books have been proved. Penalty - HELD THAT - As there is no corroborative evidence available on record in support of the charge of clandestine removal of the goods the demand of Central Excise Duty is not sustainable against the appellant. As the demand of duty is not sustainable consequently no penalty can be imposed on the appellants. The impugned order is set aside - appeal allowed.

Summary

Issues Involved:
The issues involved in the judgment are the demand of Central Excise Duty against the main appellant for alleged clandestine removal of goods and the imposition of penalties on all the appellants.

Facts and Arguments:
The case involved a search at various premises where records were seized, and statements of directors were recorded. A Show Cause Notice was issued alleging clearance of goods without payment of duty based on recovered documents. The appellants contested the demand, arguing that the documents were unauthenticated and lacked corroborative evidence. They emphasized the need for positive evidence for allegations of clandestine removal. The appellant also challenged the invocation of the extended period of limitation.

Decision and Reasoning:
The Tribunal examined the documents recovered and found the Revenue failed to establish clandestine removal. It noted the lack of evidence regarding truck owners, excess purchases, electricity consumption, or payments for alleged removals. The Tribunal cited precedents emphasizing the need for tangible evidence in cases of clandestine removal. As no corroborative evidence was found, the demand of Central Excise Duty was deemed unsustainable, leading to the allowance of the appeals and the setting aside of the impugned order. Consequently, no penalties were imposed on the appellants.

Significant Precedents:
The judgment referred to various case laws to support the argument that mere entries in unauthenticated documents without corroborative evidence are insufficient to allege clandestine removal of goods. Notable cases included K. Rajagopal v. Commissioner of Central Excise, Portland Cement (I) Ltd. v. Commissioner of Central Excise, and Continental Cement Co. v. Union of India.

Separate Judgment:
The judgment was delivered by the Appellate Tribunal CESTAT KOLKATA, with members Shri Ashok Jindal and Shri K. Anpazhakan presiding over the case. The Order was pronounced in the open court on 17.04.2024.