2017 (11) TMI 533 - HC - Central Excise

Clandestine removal - Whether the Tribunal was justified in upholding a charge of clandestine removal in the absence of any documentary evidence to show acquisition and consumption of unrecorded raw material and manufacture of unaccounted goods? - Held that - The Tribunal found that the report made by the Court receiver did not support the version of the assessee that processed fabrics taken over by the Court Receiver and sent back to their SMP godown were co-relatable to the bales of processed fabrics initially cleared by the applicant on payment of duty to the Coimbatore dealer and which were taken over by the Court Receiver. The Tribunal had noticed a portion of the Receiver s report which indicates that there were no marking on the goods to indicate under which invoice the goods were received and there was no way to separate the goods received, as the marks on the goods revealed only the manufacturing month and year. It was not possible to separate the goods as per the invoices which were exhibited in the plaint in the said suit. Paragraph 5 of the impugned order of the Tribunal also recorded the fact that the appellant s attempt to establish corelation failed, movement of bales from the factory to Coimbatore on payment of duty is evident from the excise invoices but there was no corresponding document to show that return, bale wise, of the goods from Coimbatore. The Tribunal found that return of duty paid goods from Coimbatore either to the appellants SMP Godown or from factory at Roha had not been established and there were no entries in the factory Inward Register showing return of goods under Rule 173H of the Central Excise Rules. Appeal dismissed - decided against appellant.

Issues:
1. Upholding charge of clandestine removal without documentary evidence
2. Sustainability of order based on previous suit evidence
3. Upholding charge of clandestine removal in proceedings without natural justice
4. Invocation of longer period of limitation without evidence of suppression

Analysis:

Issue 1: Upholding charge of clandestine removal without documentary evidence
The case involved an appeal challenging the Tribunal's decision confirming duty demand and confiscation of goods. The appellant argued that the Tribunal failed to consider that the goods were duty paid and presented evidence from a separate suit to support their claim. However, the Tribunal found that the evidence did not establish a correlation between the cleared goods and the seized goods. The Tribunal also noted inconsistencies in the appellant's versions regarding the goods, leading to the conclusion that there was suppression of facts and contravention of the Act to evade duty payment. The Tribunal upheld the charge of clandestine removal based on these findings.

Issue 2: Sustainability of order based on previous suit evidence
The appellant relied on evidence from a previous suit to support their case, claiming that the goods in question were duty paid. However, the Tribunal found that the evidence presented did not establish a clear correlation between the duty paid goods and the goods for which duty was demanded. The Tribunal also highlighted that the appellant failed to provide sufficient documentation to support their claims, leading to the dismissal of the appeal.

Issue 3: Upholding charge of clandestine removal in proceedings without natural justice
The appellant raised concerns about the denial of natural justice during the proceedings, specifically regarding the cross-examination of witnesses. However, the Tribunal found no violation of natural justice principles in the proceedings. The Tribunal considered the evidence presented and concluded that the appellant had been inconsistent in their explanations, leading to the decision to uphold the charge of clandestine removal.

Issue 4: Invocation of longer period of limitation without evidence of suppression
The Tribunal invoked a longer period of limitation based on the appellant's consistent withholding of information and clandestine removal of goods. The Tribunal found that the appellant failed to establish a correlation between the cleared goods and the seized goods, leading to the conclusion that there was suppression of facts. The Tribunal justified the invocation of the longer period of limitation based on these findings.

In conclusion, the High Court dismissed the appeal as it did not raise any substantial question of law. The Court upheld the Tribunal's decision based on the findings of fact and the lack of tangible evidence presented by the appellant to support their claims. The judgment emphasized the importance of establishing a clear correlation between goods to avoid allegations of clandestine removal.

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