2024 (6) TMI 374 - AT - Central Excise

Clandestine removal without preparing proper invoices/bills - cross examination of the witnesses not allowed - demand based on presumption and assumption - HELD THAT - It is evident on the face of the record that duty demand was confirmed by the Learned Commissioner on the basis of entries and records available in diary seized as per Sr. No. 13 of Annexure A to Panchanama which is admittedly not written by any of the partners but by Shri Triloki, ex-employee of Appellant. On plain reading of the statement of Shri Triloki dated 04.09.2012 we find that in reply to question No. 10 he stated that the data mentioned in Book No. 8,9,12 14 are of the orders received from the customers and the details of Book No. 13 are the details which were dictated by Shri Sureshbhai. The details recorded in the dairies were only showing type of machines and number of machines. The said diaries nowhere shown the details of transaction value, rate, details of buyers, details of transporter etc.. The entries made in the said diaries may create a doubt but it cannot take place of evidence. Merely on the basis of said diaries, or on mere statements of some persons, may even be responsible officials of the manufacturer or even of its Directors/partners who were not even permitted to be cross-examined, demand of clandestine removal of the goods is not sustainable. The clandestine manufacture and removal of excisable goods is to be proved by tangible, direct, affirmative and incontrovertible evidences - in the instant case, no such clinching or corroborative evidences to the effect have been brought on record. In the absence of corroborative evidence, on the fact in the present case the charge of clandestine clearance cannot be leveled against the assessee. The allegation of clandestine removal is also based on the computer printouts seized at Serial No. 1 of the Annexure A to Panchnama dated 09.08.2011 containing certain details of sale transaction, outstanding amount etc. - As per the Section 36B of the Act one of the conditions for the computer printout to be an admissible evidence is that the said printout should have been produced by the computer during the period over which the computer was used regularly to store or process information for the purposes of any activities regularly over that period by the person having lawful control over the use of the computer - the Learned Commissioner has not examined these aspects. Therefore, such computer printouts are not eligible to be used as evidence. The evidences produced by the Revenue for sustaining the duty demand has not been corroborated by detailed investigation. The allegation of clandestine manufacture and clearance cannot be sustained on the basis of such flimsy evidences - the impugned order is set aside - appeal allowed.

Summary

Issues involved: Duty demand based on clandestine removal of excisable goods, reliance on seized documents and statements, denial of cross-examination, valuation based on laptop printouts, interpretation of Notification No. 8/2003-CE.

The Appellate Tribunal CESTAT Ahmedabad heard appeals against an order passed by the Principal Commissioner of Central Excise, Customs, and Service tax, Rajkot, regarding duty demand on the appellant, a manufacturer of Diamond Polishing machines. The appellant was accused of clandestine removal of goods and wrongly availing benefits under Notification No. 8/2003-CE. The duty demand, interest, and penalty were confirmed by the Adjudicating Authority. The appellant challenged the order before the Tribunal.

The appellant's representative argued that the duty demand was based on unreliable documents and statements, specifically challenging the basis for the demand on certain seized diaries. The appellant also requested cross-examination of witnesses, which was denied by the Adjudicating Authority. The valuation of goods and reliance on laptop printouts for demand calculation were also contested. The representative highlighted that the duty demand was not based on the brand name issue under Notification No. 8/2003-CE.

The Revenue's representative supported the Adjudicating Authority's findings and opposed the appellant's arguments.

After considering the contentions and evidence, the Tribunal found that the duty demand was primarily based on unreliable seized diaries and statements, lacking corroborative evidence of clandestine removal. The denial of cross-examination violated principles of natural justice. The laptop printouts did not meet the legal criteria for admissibility. Consequently, the Tribunal set aside the impugned order, allowing the appeals with consequential relief.

The Tribunal's decision was pronounced on 06.06.2024.