2024 (9) TMI 1616 - AT - Customs

100% EOU - clandestine clearance of the short found goods - no corroborative evidences or not - recovery of customs duty and penalties - HELD THAT - It is found that no corroborative evidence has been relied upon by the Revenue regarding the clandestine clearance of the short found goods from the factory premises of the appellant and also no investigation has been made by the department from the transporter and the buyer to whom such goods were alleged to be sold by the appellant. The burden of proof is on the revenue to establish their case beyond doubts and it is required to be discharged effectively and also the allegation of clandestine removal solely made on the basis of statement of the director without any corroborative evidence is not sustainable as held in the case of M/S. VIKRAM CEMENT (P) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE KANPUR 2012 (11) TMI 777 - CESTAT NEW DELHI . The said decision was confirmed by the Hon ble Allahabad High Court in the case of COMMISSIONER VERSUS SUNIL KUMAR GUPTA 2013 (11) TMI 1557 - ALLAHABAD HIGH COURT . Admittedly nothing has been brought on record with corroborative evidence to allege clandestine removal against the appellant. Therefore we are of the view that demand against appellant is not maintainable by simply relying upon the statement of Shri Vijyendra Kanhaiyalal Arya director of the Appellant who has also not been cross examined as mandated under section 9D of the Central Excise Act 1944. It is found that neither investigation has been made by the department from the agent Shri Nathabhai Agrawal and Abhishek Market Ring Road Surat through whom goods were alleged to be cleared by the appellant and nor their statements were recorded by the department to establish their case. Further the onus has to be discharged by the Revenue with the production of sufficient evidence which may lead to the probability of having removed the goods as held in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS M/S. ABS METALS (P) LTD. 2016 (9) TMI 940 - CESTAT NEW DELHI . There are no merit in the impugned order - the impugned order is set aside - appeal allowed.

Summary

Issues:
1. Shortage of imported Polyster Filament yarn found during physical verification.
2. Allegation of clandestine clearance of goods without payment of duty.
3. Show cause notice issued for recovery of customs duty and penalties.
4. Arguments regarding lack of investigation and evidence by the revenue.
5. Time-barred demand of customs duty.
6. Burden of proof on revenue and requirement of corroborative evidence.
7. Parameters to prove clandestine removal of goods.
8. Lack of evidence against the appellant and failure to establish the case by revenue.
9. Setting aside of the impugned order and allowing the appeals.

Analysis:
The case involved the appellant, a manufacturing unit, facing allegations of a shortage of imported Polyster Filament yarn during a physical verification, leading to suspicions of clandestine clearance without payment of duty. The revenue issued a show cause notice for recovery of customs duty and penalties, which was upheld in previous orders. The appellant argued that the revenue failed to investigate the buyers and agents involved in the alleged clearance, and the demand was time-barred. The appellant relied on legal precedents to support their contentions.

The Tribunal carefully examined the submissions from both sides and found that the revenue lacked corroborative evidence to support the allegations of clandestine clearance. It emphasized the burden of proof on the revenue to establish the case beyond doubt, citing legal precedents. The Tribunal highlighted the necessity of tangible evidence and proper investigation to prove clandestine removal, as outlined in established parameters. Notably, the Tribunal noted the absence of evidence against the appellant and the failure of the revenue to meet the required standard of proof.

Ultimately, the Tribunal set aside the impugned order, ruling in favor of the appellants and allowing the appeals with consequential relief as per the law. The judgment underscored the importance of fulfilling the burden of proof and presenting substantial evidence in cases involving allegations of clandestine activities. The decision emphasized the need for thorough investigation and adherence to legal standards to substantiate claims of duty evasion or clandestine removal of goods.