2018 (1) TMI 365 - AT - Central Excise

Clandestine removal - corroborative evidences - third party evidence - Held that - an investigation was conducted at the end of one of supplier M/s Ambika Ispat, Raipur and some documents were recovered from the possession of the peon who was located outside the factory premises. On the basis of that diary, statement of the Director of M/s Ambika Ispat were recorded who stated that sometimes, they are clearing goods clandestinely but no investigation was conducted at the end of appellants to ascertain the fact i.e. whether the appellants have received those goods or not? The whole case has been made out against the appellants on the basis of third party evidence which cannot be relied upon. As no investigation was conducted at the end of the appellants to ascertain the facts whether the appellants are indulging and no other corroborative evidence has been brought on record to allege clandestine removal of goods. The proceedings against the appellants are not sustainable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against impugned orders alleging clandestine removal of goods.

Analysis:
1. The appellants challenged impugned orders confirming demands for clandestine removal of goods. A search at M/s Ambika Ispat led to the recovery of a diary implicating the appellants after 4 years. The appellants denied the charges, arguing no proper investigation was conducted at their premises. The appellants relied on a Tribunal decision in Rudra Ventures Pvt. Ltd. case to contest the allegations.

2. The learned Counsel for the appellants argued that the case was built on third-party evidence without verifying shortages or record maintenance at the appellants' factory. The impugned orders were deemed meritless and sought to be set aside. However, the authorized representative reiterated the findings of the impugned order.

3. The Tribunal noted that the investigation was based on evidence from M/s Ambika Ispat, without verifying if the appellants received the goods. Citing the Rudra Ventures Pvt. Ltd. case, the Tribunal emphasized the need for substantial evidence in cases of clandestine removal. The lack of direct evidence against the appellants led to the impugned orders being set aside due to insufficient proof.

4. Referring to the Shrigonda Sahakari Sakhar Karkhana Ltd. case, the Tribunal highlighted the necessity of corroborative evidence in cases of clandestine production and removal. Without proper verification and tangible evidence, allegations of clandestine activities were deemed unsustainable. The Tribunal emphasized the importance of reliable evidence to prove such claims, which was lacking in this case.

5. As no investigation was conducted at the appellants' premises to substantiate the allegations of clandestine removal, and no corroborative evidence was presented, the impugned orders were set aside. The lack of concrete evidence against the appellants rendered the proceedings unsustainable, leading to the appeals being allowed with consequential relief.

In conclusion, the Tribunal emphasized the importance of substantial and reliable evidence in cases of clandestine removal, setting a precedent for dismissing allegations based solely on third-party evidence without direct verification or corroborative proof.