2015 (10) TMI 696 - HC - Central Excise

Duty demand - Clandestine removal of goods - Held that - Tribunal noted that the confessional statements were retracted by the noticee. He had made statement before the notary and such affidavit was filed before the adjudicating authority at the time of personal hearing and also relied on the reply to the show cause notice. The adjudicating authority did not advert to this retraction but simply relied on such statements. The Tribunal also noted that as per the certificate of the Chartered Accountant, installed capacity of the manufacturing unit was 20 MT per day which would not justify production over and above the declared clearance leading to the belief of clandestine removal - entire issue is based on appreciation of evidence on record. The Tribunal having given its consideration and come to the factual findings, no question of law arises - Decided against Revenue.

Summary

Issues:
- Allegations of clandestine removal of goods without payment of excise duty
- Confessional statements and their retraction
- Installed capacity of the factory and production justification

Allegations of Clandestine Removal:
The case involved Tax Appeals filed by the Revenue challenging a judgment of the Tribunal that allowed the appeals of the respondents-assessees, reversing the adjudication orders. The allegations were related to clandestine removal of goods without payment of excise duty. The adjudicating authority relied on various materials, including a confessional statement of one of the respondents, along with statements from buyers and suppliers of raw materials. Despite the assessee's claim that the factory's installed capacity did not exceed 20 MT per day, the adjudicating authority confirmed duty demand, interest, and penalties based on the allegations in the show cause notice requiring production capacity exceeding the declared limit.

Confessional Statements and Retraction:
The Tribunal reversed the orders on the grounds that the confessional statements were retracted, which the adjudicating authority failed to consider. The noticee retracted the statement before a notary, and the affidavit of retraction was submitted during the personal hearing and in response to the show cause notice. The Tribunal highlighted the lack of consideration by the adjudicating authority regarding this retraction. Additionally, a certificate from a Chartered Accountant confirmed the factory's installed capacity as 20 MT per day, indicating that production exceeding the declared clearance was not justified, casting doubt on the alleged clandestine removal.

Installed Capacity and Production Justification:
Upon reviewing the adjudicating authority's order, it was noted that the authority did not address the retraction of the confessional statement by one of the noticees. Despite any grievances regarding the retraction, the authority was required to address this development, especially since the affidavit of retraction was presented during the hearing. The High Court observed that the issue at hand primarily revolved around the evaluation of evidence on record. As the Tribunal had made factual findings after due consideration, the High Court concluded that no question of law arose, ultimately dismissing the Tax Appeals.

This detailed analysis of the judgment showcases the key issues of allegations of clandestine removal, the significance of confessional statements and their retraction, and the crucial aspect of factory's installed capacity in justifying production levels, all of which were thoroughly examined and addressed in the legal proceedings leading to the dismissal of the Tax Appeals.