2015 (11) TMI 1239 - AT - Central Excise

Duty demand - Clandestine clearances of the goods - Held that - The statement of the buyer is corroborative with the records maintained by the buyer in their factory. The Central Excise officers seized a note book from the premises of the buyer maintained by their accountant. They have also seized daily reports from the premises of the buyer. The entire demand of duty was calculated on the basis of the seized records recovered from the premises of the buyer - no material recovered from the premises of the appellant company. The cross examination of the buyer and broker are not allowed and therefore, the contention of the Learned Authorised Representative cannot be accepted. The Learned Authorised Representative strongly relied upon the decision of the Tribunal in the case of Shalini Steel Pvt Ltd Vs CCE, Hyderabad - 2010 (3) TMI 700 - CESTAT, BANGALORE . In that case, the Central Excise officers recovered various documents from the premises of assessee, which was not seriously disputed by the assessee. In this contest, the Tribunal observed that the value of documents could not be lost in absence of cross examination of the employee. The said case law could not be applicable in the present case. - impugned order cannot be sustained and it is set aside - Decided in favour of assessee.

Summary

Issues:
1. Clandestine clearances based on seized documents.
2. Rejection of retraction of statements by Appellant No 2.
3. Lack of evidence from premises of the appellant company.
4. Necessity of cross examination for establishing truth.
5. Legal precedents on clandestine removal and evidentiary value.

Analysis:

1. The case revolves around clandestine clearances of goods by the Appellant Company, based on documents seized from the buyer's premises and statements from a broker. The demand of duty was calculated using these seized records, leading to penalties imposed on the company and its director.

2. The rejection of the retraction of statements made by Appellant No 2 was a key issue. While the Commissioner (Appeals) alleged the retraction was influenced by the company's advocate, the judge found this reasoning unsubstantiated and emphasized the importance of evidence over assumptions.

3. The lack of evidence from the appellant company's premises was highlighted. The judge noted that relying solely on documents from an outsider without corroborating evidence at the company's premises was insufficient to prove clandestine removal.

4. The necessity of cross examination for establishing the truth was a crucial point. The judge emphasized that in cases like this, where allegations are based on statements and documents from third parties, cross examination of relevant individuals such as buyers and brokers is essential.

5. Legal precedents on clandestine removal and evidentiary value were cited to support the decision. The judge referred to previous cases where confessional statements alone were deemed insufficient to levy excise duty, emphasizing the need for tangible evidence to substantiate allegations of clandestine activities.

In conclusion, the impugned order was set aside, and both appeals filed by the appellants were allowed based on the insufficiency of evidence and the importance of cross examination in establishing the truth in cases of clandestine removal.