2016 (5) TMI 383 - HC - Central Excise

Clandestine production and removal of goods - Allegation on the basis of 62 reconstructed challans - Held that - the Tribunal, in the impugned order, noted that the case of clandestine removal is based predominantly on 62 reconstructed copies of delivery challans-cum-proforma invoices. Such challans were, however, neither original nor xerox copies. There was no identification of the author of these challans. Thus, reconstructed challans were not recovered from the premises of the assessees. Even Commissioner (Appeals) had found that 20 of these reconstructed documents were fake. In the challans, neither the vehicle number nor the name of the transporter was mentioned. No investigation was undertaken by the department to corroborate the contents thereof by recording the statements of the transporters. No confirmatory statements of the buyers were available on the record. Duty demanded - Held that - the Tribunal, observed that due to major renovation at the office/godown of JBMC, subject goods were temporarily stored in Appellant s factory premises. No investigation has been done in order to refute the claim of the main appellant, by recording the statement of transporter or the supplier of trader from whom the goods have been claimed to be purchased from JBMC. It is a well established law that documentary evidence will prevail over an oral evidence especially in these proceedings where cross examination of such witness is not provided. As the decision of Tribunal was based entirely on appreciation of evidence on record, no question of law arises. - Decided against the revenue

Summary

Issues: Alleged clandestine production and removal of goods, reliance on reconstructed challans, authenticity of reconstructed documents, demand of duty based on delivery challans, sufficiency of evidence, absence of confirmatory statements, failure to record findings on all points of contention.

Alleged Clandestine Production and Removal of Goods:
The case involved allegations of clandestine production and removal of goods by the manufacturer assessee. The revenue relied on 62 reconstructed challans to support these claims. The Commissioner (Appeals) partially deleted the duty demand but confirmed the rest. The Tribunal noted that the case primarily relied on reconstructed copies of delivery challans, which were neither original nor xerox copies. The author of these challans was unidentified, and they were not found in the premises of the assessees. The Tribunal highlighted that 20 of these reconstructed documents were determined to be fake. Additionally, the challans lacked essential details like vehicle numbers and transporter names. No investigation was conducted by the department to verify the contents through transporter statements or confirmatory statements from buyers. Consequently, the Tribunal concluded that reconstructed challans could not be relied upon to establish clandestine manufacture and clearance of goods.

Authenticity of Reconstructed Documents:
The Tribunal specifically addressed the authenticity of the reconstructed documents in question. It emphasized that due to the lack of crucial details and the absence of confirmatory statements from buyers, the demand of duty from the assessee could not be upheld solely based on these documents. Despite admissions by the assessee and co-noticees, the Tribunal highlighted the insufficiency of evidence to support the duty demand without corroborative statements or material. The Tribunal's decision was based on the principle that documentary evidence should prevail over oral evidence in the absence of cross-examination opportunities.

Demand of Duty Based on Delivery Challans:
Regarding the duty demand of &8377; 3.48 lacs based on two delivery challans, the Tribunal scrutinized the case in detail. The main appellant contended that the goods in question were purchased by their trading company and temporarily stored in the appellant's factory premises due to renovations at the trading company's office/godown. The Tribunal noted documentary evidence confirming the purchase of goods by the trading company from a specific supplier, including truck numbers on the delivery challans. It pointed out the lack of investigation to dispute the appellant's claim, emphasizing the importance of documentary evidence in the absence of cross-examination opportunities. The Tribunal's decision was grounded in a thorough analysis of the evidence presented.

Sufficiency of Evidence and Absence of Confirmatory Statements:
Throughout the judgment, the Tribunal highlighted the insufficiency of evidence and the absence of confirmatory statements to support the revenue's claims. It underscored the importance of corroborative evidence, such as statements from transporters or buyers, to substantiate allegations of clandestine activities or duty demands. The Tribunal's decision was guided by the principle that evidence must be robust and verifiable to uphold duty demands or allegations of misconduct.

Failure to Record Findings on All Points of Contention:
Lastly, the Tribunal addressed the issue of whether its order adequately addressed all points of contention raised by the revenue during the appeals. The Tribunal concluded that its decision was based on a comprehensive evaluation of the evidence on record, and no substantial error of law was committed. As the decision was rooted in the appreciation of evidence rather than legal questions, the tax appeals were dismissed.