2015 (10) TMI 962 - AT - Central Excise

Clandestine removal of goods - Evasion of duty - Held that - In this case, nothing incriminating have been found from the appellant. Moreover, the statement recorded after almost 4 years also does not reveal anything incriminating against the appellant. No investigation was conducted at the end of buyers when the appellant categorically stated that they are not arranging the transport of the goods and only buyers are arranging the transport of goods. In these circumstances, demand is not sustainable merely on the basis of entries made in the transporters register without any corroborative evidence. - As Revenue has failed to produce any corroborative evidence in support of their allegation and relying on the decisions discussed hereinabove, I hold that allegation of clandestine removal of goods is not sustainable against the appellant. Consequently, demand of duty along with interest and imposition of penalty are set aside. - Decided in favour of assessee.

Summary

Issues:
Demand of duty on alleged clandestine removal of goods without payment of duty based on third party records without corroborative evidence.

Analysis:
The appellant, a manufacturer of sponge iron, appealed against an order demanding duty due to alleged clandestine removal of goods without paying duty. The case involved a search at the transporter's end, revealing discrepancies in records between the transporter and the appellant. The appellant's Accounts Manager stated that the goods were sold at the factory gate, with buyers arranging transportation. The show cause notice alleged that the appellant clandestinely removed goods, evading duty. The lower authorities upheld the demand, leading to the appeal.

The appellant's counsel argued that demand was based on third party records without corroborative evidence or investigation at buyers' end. No incriminating evidence was found in the appellant's records. Citing legal precedents, the counsel contended that demand solely on third party records was unjustified. The respondent's representative supported the impugned order.

After hearing both parties, the tribunal noted the lack of incriminating evidence against the appellant. The statement made years later did not implicate the appellant. No investigation was conducted at buyers' end, despite the appellant's claim that buyers arranged transportation. Citing the Allahabad High Court's decision, the tribunal emphasized the need for evidence connecting entries in third party records to the dealer. Referring to another case, the tribunal criticized the lack of interrogation of the recipients of allegedly clandestinely removed goods. The tribunal held that without corroborative evidence, the allegation of clandestine removal was unsustainable.

In conclusion, the tribunal set aside the demand for duty, interest, and penalty against the appellant due to the revenue's failure to provide corroborative evidence. Relying on legal precedents, the tribunal ruled in favor of the appellant, allowing the appeal with consequential relief, if any.