2018 (2) TMI 1390 - AT - Central Excise

Clandestine manufacture and removal - M S Steel Bars and Rods - the entire allegation of the clandestine removal is based on the statement of the transporter as well as detailed culled out from the register of the transporter - Held that - the Department has not verified to whom the unaccounted goods were sold. No attempt was made to verify the excess consumption of the raw material and use of the extra energy - It is settled law that the documents recovered from third party cannot be used against the manufacturer to prove the clandestine removal unless they are supported by corroborative evidence. From the record of the factory, no evidence has been brought on record regarding manufacture of the finished goods for the clearance of the same without payment of duty - also, the Department has failed to prove the case of clandestine removal. Appeal allowed - decided in favor of appellant.

Summary

Issues: Allegation of clandestine removal without sufficient evidence

Analysis:
The appellant, engaged in manufacturing M S Steel Bars and Rods, filed appeals against Order-in-Original No.61/2017 dated 08/11/2016, alleging clandestine removal of goods without duty payment based on recovered documents from a transporter. The Department's case relied on the transporter's statement and register entries, without verifying sales recipients or raw material consumption. The Tribunal noted the lack of evidence linking unaccounted goods to sales or raw material usage, emphasizing the need for corroborative evidence from third-party documents. Citing the case of M/s Balaji v/s CCE Raipur, the Tribunal held that the Department failed to prove clandestine removal. Referring to Continental Cement Company v. Union of India, the Tribunal stressed the necessity of detailed investigation and corroborative evidence to sustain allegations of clandestine removal, ultimately setting aside the impugned order and allowing the appeals.

Conclusion:
The Tribunal found the Department's allegations of clandestine removal lacking in supporting evidence, highlighting the importance of thorough investigations and corroborative evidence in such cases. By setting aside the impugned order and allowing the appeals, the Tribunal emphasized the need for substantial proof to establish charges of clandestine removal, as mere reliance on third-party evidence without verification or corroboration is insufficient in legal proceedings.