2013 (11) TMI 777 - AT - Central Excise

Clandestine removal of goods Held that - Following Takshila Spinners v/s CCE 2001 (5) TMI 79 - CEGAT, NEW DELHI - No enquiry has been made from the transporter regarding truck number and the transporter did not produce any records as stated by him in his statement - The statement was recorded after a gap of 4 years in the absence of the assesse - The assessees were not given opportunity to cross examine the transporter despite making specific request - It was alleged in the show cause notice that goods under cover of proforma GRs were transported to M/s Uttam Cottage Industries Calcutta and no duty was paid - But the firm was not interrogated to know the facts - absence of Adjudication based on the statements only of witnesses who could not be cross-examined, coupled with total lack of any corroborative evidence, not sustainable as legally statements of such persons who failed to submit themselves for cross-examination could not be accepted or taken into evidence. Undervaluation of Papers Lack of evidence Held that - Following CCE Meerut v/s Raman Ispat (P) Ltd. 2000 (7) TMI 118 - CEGAT, NEW DELHI - Allegations in show cause notice based on a private note book seized from the factory premises -No evidence collected in support of the alleged receipt of inputs and the presumed manufacture in excess of the recorded figures Writer of the diary not examined - Proceedings were rightly dropped by the Commissioner on the ground that the department collected no material to prove the authenticity of the seized private note books and for failing to trace/examine material witnesses - the charge of undervaluation is not sustainable. Extended period of limitation Held that - The word willful is omitted before the word suppression or mis-statement in the notice to show case, the extended period is not invokable Relying upon Cosmic Dye Chemical V/s CCE 1994 (9) TMI 86 - SUPREME COURT OF INDIA - for the longer period to apply, the term suppression or mis-statement must be qualified by the immediately preceding word wilful - the preceding words are omitted in the show cause notice, extended period is not invokable - Decided against Revenue.

Summary

Issues:
1. Shortage of finished goods involving duty and cess
2. Allegations of clandestine removal of goods
3. Allegations of under-valuation of finished goods
4. Extended period of five years invokability

Shortage of finished goods involving duty and cess:
The case involved the discovery of a shortage of finished goods during a visit by Central Excise officers, leading to the admission and payment of duty by the respondents. The subsequent scrutiny of records revealed alleged under-valuation of goods cleared during specific periods, resulting in a significant duty evasion amount. The original adjudicating authority confirmed the demands and imposed penalties, which were partially upheld by the Commissioner (Appeals). While the shortage was accepted by the respondents, the allegations of under-valuation and clandestine removal were disputed.

Allegations of clandestine removal of goods:
The adjudicating authority found evidence of clandestine removal of goods to a specific entity based on discrepancies in documentation and a transporter's statement. However, the appellate authority questioned the validity of the evidence, highlighting procedural lapses such as lack of cross-examination of the transporter and failure to inquire from the receiving entity. The appellate authority concluded that the charge of clandestine removal was not sustainable, emphasizing the importance of corroborative evidence and proper examination of witnesses.

Allegations of under-valuation of finished goods:
Regarding the under-valuation allegations, the adjudicating authority relied on recovered price lists and statements to establish the case. However, the appellate authority scrutinized the evidence in detail, noting discrepancies in the documentation and lack of corroborative evidence from buyers. The appellate authority highlighted the absence of cross-examination of relevant individuals and emphasized the necessity of proving excess recovery from buyers. Citing legal precedents, the appellate authority concluded that the charge of under-valuation was not substantiated, especially considering the procedural shortcomings in the investigation.

Extended period of five years invokability:
The appellants contested the invokability of the extended period of five years, arguing that the term "willful" was omitted before "suppression or misstatement" in the show cause notice. Relying on legal judgments, the appellants asserted that the extended period was not applicable in the absence of the term "willful" in the notice. The appellate authority agreed with the appellants, holding that the extended period was not invokable based on the wording of the notice. This issue was crucial in determining the timeline for assessing the alleged violations and liabilities.

In conclusion, the appellate tribunal, led by Smt. Archana Wadhwa and Shri Rakesh Kumar, analyzed the various issues raised in the appeal comprehensively. The judgment delved into the specifics of the allegations, scrutinized the evidence presented, and emphasized procedural fairness and legal principles in adjudicating the case. Ultimately, the tribunal rejected the Revenue's appeal, upholding the findings and decisions of the Commissioner (Appeals) based on the detailed examination and legal interpretations provided in the judgment.