2016 (7) TMI 87 - AT - Central Excise

Clandestine removal of goods - third parties made statement that he is purchasing the goods from the assessee and produced certain challans/katcha slips of the receipt of the goods. - Held that - On perusal of the katcha slips/challnas, I find that these challanas / katcha slips have been issued by M/s Jagan Nath Chanan Ram and the name of receiver or to whom these have been issued has not been mentioned anywhere. In that circumstance, it cannot be said that the assessee has issued thes katcha slips/challnas unless and until the genuineness of these katch slips/challans is verified. With regard to the statement of the assessee recorded during the course of investigation, I find that the statement has also been altered and the assessee in his statement separately has said that he is selling the goods against the invoices on payment of duty. Merely making some deposit during the course of investigation on persuasion of the departmental officers does not corroborate that the assessee has cleared the goods clandestinely - Entire demand set aside - Decided in favor of assessee.

Summary

Issues:
Appeal against demand of duty, interest, and penalty based on alleged clandestine removal of goods. Appeal by Revenue against dropping penalty on managing director.

Analysis:

Issue 1: Demand of Duty, Interest, and Penalty
The case involved appeals by both the assessee and the Revenue against impugned orders related to the alleged clandestine removal of goods without duty payment. The initial intelligence suggested such activities, but no incriminating evidence was found during the search of the appellant's premises. The demand of duty was based on katcha slips produced by a third party, M/s Jagan Nath Chanan Ram, indicating purchases from the assessee. The assessee argued that the evidence provided by the Revenue was insufficient and lacked relevance to them. They contended that without corroborative evidence, the charge of clandestine removal was unsustainable. The Tribunal observed that the katcha slips did not conclusively link the assessee to the alleged activity, and the statement recorded during investigation did not prove clandestine removal. The Tribunal found the charge unsustainable and set aside the demand of duty, interest, and penalty.

Issue 2: Penalty on Managing Director
The Commissioner (Appeals) had dropped the penalty imposed on the managing director, which was appealed by the Revenue. The Revenue argued that since the managing director admitted to clearing goods without duty payment, the penalty should not have been dropped. They contended that the managing director and the assessee were distinct entities. The Tribunal agreed with the Revenue, setting aside the dropping of the penalty on the managing director, as the admission by the managing director indicated involvement in the alleged activity. However, since the charge of clandestine removal against the assessee was deemed unsustainable, no penalty was warranted on the managing director. Ultimately, the assessee's appeal was allowed, and the Revenue's appeal was dismissed.

In conclusion, the Tribunal ruled in favor of the assessee, setting aside the demand of duty, interest, and penalty due to insufficient evidence linking them to clandestine removal. The dropping of the penalty on the managing director was overturned, but no penalty was imposed due to the unsustainable charge.