2017 (11) TMI 1479 - AT - Central Excise

Clandestine removal - MS Ingots - entire case of the Revenue is based on the allegation that invoices were issued by M/s Lauls Limited in favor of certain assessees such as M/s JRM Steels and M/s Bhushan Steels for supply of M.S. Ingots - Held that - The allegation of clandestine clearance is a very serious charge. The department is required to support such a charge with tangible evidence. In the present case, the allegations of clandestine clearance has not been supported by any tangible evidence. Without support of evidence, allegation remains only allegation and cannot be taken as established. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Alleged clandestine clearance of goods based on invoices not received by the actual recipients, denial of cross-examination, failure to provide copies of crucial documents, lack of tangible evidence supporting the allegations.

Analysis:
The case involved appeals by an assessee and a director against an order alleging clandestine clearance of goods based on invoices not received by the actual recipients. The investigating agency found discrepancies in the receipt of goods covered by invoices issued by a third party. The appellant argued that incriminating documents were not found during a search, and the department failed to provide copies of crucial bills cited in the show cause notice. The denial of cross-examination was highlighted as a breach of natural justice. The appellant referenced relevant case laws to support their arguments.

The Revenue justified the order, emphasizing the quantity of goods allegedly received by the appellant but not accounted for. They relied on statements from persons issuing the invoices to support their case. The tribunal noted the lack of tangible evidence to establish the receipt and use of ingots in manufacturing clandestine goods. The absence of incriminatory documents at the appellant's factory undermined the department's case. The failure to provide copies of documents listed in the show cause notice was deemed detrimental to the appellant's defense.

The tribunal referenced legal precedents regarding clandestine clearance, emphasizing the need for tangible evidence to support such serious allegations. The absence of evidence linking the alleged clandestine clearance to the appellant's activities led to the decision to set aside the impugned order and allow the appeals. The judgment highlighted the importance of concrete evidence in establishing allegations of clandestine activities and the necessity of due process in legal proceedings.