2015 (10) TMI 1947 - AT - Central Excise

Duty demand - Shortage of goods - Held that - Tribunal in the case of M/s. Tejwal Dyestuff Industries v. CCE, Ahmedabad 2007 (6) TMI 351 - CESTAT, AHMEDABAD has observed that the Revenue Officers, after recording of confessional statement believes that the same has put an end to the investigations and does not carry the matter for further investigation. Though the confessionals statement may be the starting point of investigations but in view of the other evidence available on record and in the absence of the other evidence indicating, clandestine removal, the same cannot be made the sole basis for deciding against the assessee. To the same effect is the decision of the Hon ble Delhi High Court in the case of Commissioner of Income Tax v. Dhingra Metal Works 2010 (10) TMI 29 - DELHI HIGH COURT laying down that though an admission is extremely important piece of evidence, it cannot be said to be conclusive. - No merits in appeal - Decided in favour of assessee.

Summary

Issues:
Clandestine removal based on shortages detected during stock taking and director's statement, reliance on confessional statement as sole evidence, weighment discrepancies, imposition of penalties.

Analysis:
The judgment pertains to a case involving the manufacture of MS Pipes/G.I. Pipes where shortages in raw materials were detected during a visit by Preventive Officers. The appellant was accused of clandestine removal, leading to demands amounting to &8377; 4,10,354. The Director's statement admitting clearance without invoices was a crucial piece of evidence in the proceedings.

The Deputy Commissioner, Central Excise, confirmed the demands, imposed penalties, and upheld by the Commissioner (Appeals), resulting in the present appeal. The Tribunal considered precedents like M/s. Raj Ratan Industries Ltd. and CCE, Meerut-I v. Silvertone Papers Ltd., emphasizing the need for concrete evidence to prove clandestine activities. The appellant disputed the weighment process, highlighting discrepancies in the stock-taking method based on eye estimation.

Regarding the Director's statement, the Tribunal referred to the case of CCE, Kanpur v. Manoj Kumar Pani, stating that reliance solely on confessional statements without concrete evidence is insufficient to prove clandestine activities. The Tribunal also cited M/s. Tejwal Dyestuff Industries v. CCE, Ahmedabad, and a decision of the Delhi High Court, emphasizing that confessional statements are not conclusive evidence and must be supported by other corroborative evidence.

Ultimately, the Tribunal found no merit in the impugned order, setting it aside and allowing the appeal with consequential relief to the appellant. The judgment highlights the importance of substantial evidence in proving allegations of clandestine removal, cautioning against relying solely on confessional statements without additional supporting proof. The decision serves as a reminder of the legal standards required to establish such serious accusations in excise matters.