2014 (5) TMI 606 - HC - Central Excise

Clandestine removal retraction of statements - Demand on the note books and pen-drive recovered from the premises of third party, who was a dealer of assessee Lack of evidence - Whether the Customs, Excise & Service Tax Appellate Tribunal, was correct in holding that evidences collected by Departments are admissible evidences only for one offence while the same set of evidences only for one offence while the same set of evidence are insufficient to establish another offense - Held that - in the case of clandestine removal of excisable goods, there needs to be positive evidences for establishing the evasion, though contended by the Revenue. In absence of any material reflecting the purchase of excessive raw material, shortage of finished goods, excess consumption of power like electricity, seizure of cash, etc., the Tribunal noted and held that there was nothing to bank upon except the bare confessional statements of the proprietor and of some of the persons connected with the manufacturing activities and such statements were retracted within no time of their recording. All the appeals are based predominantly and essentially on factual matrix. The Tribunal elaborately and very correctly dealt with the details furnished by both the sides and rightly not sustained the demand of ₹ 1.85 Crores, which had no evidences to bank upon. Confessional statements solely in absence of any cogent evidences cannot make the foundation for levying the Excise duty on the ground of evasion of tax, much less the retracted statements. To the extent there existed substantiating material, Tribunal has sustained the levy. No perversity could be pointed out in the approach and treatment to the facts - No substantial question of law arises - Decided against Revenue.

Summary

Issues:
1. Whether CESTAT was correct in holding there is no evidence of illicit clearance despite suspicion?
2. Whether evidences collected by the Departments are admissible for one offense only?
3. Whether evidences for past clearance were correctly admitted by CESTAT?
4. Whether CESTAT was correct in holding a retracted statement as admissible?

Issue 1:
The case involved challenges against a CESTAT order regarding illicit clearances by a company. The company was found to have made illicit clearances, and various documents were recovered during searches. Statements were recorded but later retracted. The Commissioner issued a show cause notice demanding duty. The Tribunal set aside a portion of the demand, citing lack of positive evidence for evasion. The Tribunal noted the absence of material like excessive raw material purchases or cash seizures to establish evasion. It also highlighted the lack of cross-examination opportunities. The Tribunal concluded that confessional statements alone, without corroborating evidence, were insufficient to sustain the demand of Rs. 1.85 Crores.

Issue 2:
Regarding the remaining amount of Rs. 8.25 lakhs from the transporter's premises, parallel invoices were recovered and confirmed by the transporter's proprietor and independent evidence. The Tribunal upheld this amount as valid. Penalties imposed on individuals based on this material were deemed appropriate and did not require further review.

Issue 3:
The appeals primarily revolved around factual details. The Tribunal thoroughly analyzed the evidence presented by both parties and correctly rejected the demand of Rs. 1.85 Crores due to lack of substantial evidence. Confessional statements alone were deemed insufficient to levy excise duty for tax evasion, especially when retracted. However, the Tribunal upheld the levy based on substantiating material for the remaining amount.

Issue 4:
As the appeals did not raise any substantial question of law, they were disposed of accordingly. The Tribunal's decision was deemed appropriate as no errors or perversity were found in their treatment of the facts presented. The judgment highlights the importance of concrete evidence in tax evasion cases and the necessity for cross-examination to establish the truth.

In summary, the judgment addressed various legal issues related to the evidentiary requirements for establishing tax evasion, the admissibility of evidence, and the significance of corroborating material in such cases. The Tribunal's decision to reject a portion of the demand due to lack of concrete evidence while upholding the remainder based on supporting material demonstrates the critical role of factual substantiation in legal proceedings.