2018 (1) TMI 765 - AT - Central Excise

Clandestine manufacture and removal - process of fabrics - corroborative evidences - Held that - Revenue authorities have miserably failed in bringing on record the evidence as to whom the clandestine clearance were made in any form - In the absence of details of recipient of the goods or any evidence they had accepted and admitted the receipt of goods; also in absence of clandestine purchase of raw-materials, unexplained consumption of electricity, movement of goods through transporters and receipt of sale proceedings, the demand made against the appellant seems to be incorrect and unsustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeals against demand of duty and penalty for alleged clandestine removal of goods.

Analysis:
The appeals were directed against an order passed by the Commissioner of Central Excise, Customs, and Service Tax. The main appellant, a fabric processor, was accused of clearing goods without payment of duty. The Central Excise Officers conducted a visit to the factory premises, recorded a Panchnama, and seized unaccounted fabrics. A show cause notice was issued for duty demand and penalties, which the appellants contested. The Adjudicating Authority and the first appellate authority ruled against the appellants.

The appellant's counsel argued that the Panchnama was drawn overnight, questioning its validity. The lack of corroborative evidence for clandestine removal was highlighted, citing case law to support the argument. The counsel emphasized that without such evidence, the allegation of clandestine removal could not be established.

The Departmental Representative countered by pointing out the recovery of blue note books containing detailed fabric consignment information. The retraction of statements by employees was dismissed as an afterthought. The Department argued that despite the denial of clandestine removal, the disappearance of fabrics as per the blue note book raised doubts.

Upon reviewing the submissions and evidence, the Tribunal noted the lack of conclusive evidence linking the appellant to clandestine activities. The recovery of blue note books alone was deemed insufficient to prove the allegations. The absence of details on recipients of the goods or evidence of clandestine purchase of raw materials weakened the case against the appellant. The Tribunal referenced previous cases where similar allegations were dismissed due to lack of substantial evidence. Ultimately, the impugned order was set aside, and the appeal was allowed.

In conclusion, the Tribunal found the evidence presented by the Revenue authorities lacking to establish clandestine manufacture and clearance of goods. The decision to set aside the impugned order was based on the insufficiency of evidence supporting the allegations.