2016 (11) TMI 1221 - AT - Central Excise

Demand - clandestine removal of manufactured goods - Toughened Laminated Glass - Insulated Glass Unit - cross examination - principles of natural justice - Held that - the appellants had requested to cross examine Shri Ram Mohan whose statement is much relied by the Department. The adjudicating authority has failed to grant permission to cross-examine Shri Ram Mohan which is noted in para 20 of the Order-in-Original. The adjudicating authority has observed that the request for cross-examination is only a dilatory tactics on the part of the appellants to prolong the adjudication process and that it was just a statement of facts made by Shri Ram Mohan and not related to his opinion on any matter or on a subject. That the denying of cross-examination of Shri Ram Mohan is not prejudice to the interest of the fair play and principles of justice . When the Department relied upon the statement of Shri Ram Mohan and his acceptance with regard to emails, the appellants ought to have been given a chance to cross-examine him. The investigation is too shabby and evidences are not sufficient to establish that appellant is guilty of clandestine removal of goods, The figures in e-mail messages relied by department showing column such as Commercial/Tax figures do not tally with the figures in the books of accounts maintained by appellant which cuts the root of the Department s case. The buyers shown in the sales statement were not questioned or their stocks verified. This together with the fact that all statutory records were proper, would go to establish that Department has failed to prove the case put forward in the show-cause notice. Appeal allowed - demand not sustainable - decided in favor of appellant-assessee.

Summary

Issues: Alleged clandestine clearance of goods without payment of duty based on computer printouts and other evidences.

Analysis:
1. The case involved allegations of clandestine clearance of goods without payment of duty against the appellants, who are manufacturers of architectural glass. The Central Excise Department issued a show-cause notice based on intelligence gathered during a visit to the factory premises, where documents were recovered, and statements were recorded.

2. The main contentions raised by the appellants included challenges to the admissibility of computer printouts as evidence, lack of discrepancies in stock during the search, inability to procure certain raw materials locally, lack of examination of transporters, and absence of cross-examination opportunities for key witnesses.

3. The appellants argued that the computer printouts were inadmissible as evidence due to non-compliance with Section 36B of the Central Excise Act. They also highlighted the lack of verification with buyers listed in statements and emphasized the serious nature of the allegation of clandestine clearance.

4. The Department relied on email messages, sales statements, and the statement of the Finance Manager to establish the alleged clandestine clearances. The Finance Manager's admission of the email contents was crucial to the Department's case.

5. The Tribunal noted that physical stock of raw materials and finished goods matched the records, and discrepancies in the figures presented as evidence raised doubts on the Department's case. The failure to cross-examine key witnesses and verify details with buyers weakened the Department's evidence.

6. The Tribunal emphasized the importance of proper investigation and sufficient evidence to establish guilt in cases of clandestine removal of goods. The lack of correlation between presented figures and statutory records, as well as the absence of thorough verification, led to the setting aside of the impugned order and the allowance of the appeals.

This detailed analysis of the judgment highlights the key arguments, evidences, and findings related to the alleged clandestine clearance of goods without payment of duty, providing a comprehensive understanding of the legal proceedings and outcome.