2018 (3) TMI 1056 - HC - Central Excise

Clandestine removal - Penalty - Admissibility of statement - Whether the Tribunal was correct in allowing the appeals of the assessee solely by holding that there is no Sufficient corroborative evidence to statement tendered by partner of assessee even when Statement tendered by Central Excise Officer is admissible before court of law as piece of evidence and thereby deleting the penalty of 2, 00, 000/-? Held that - the controversy involved in the appeals is covered by the decision of this Court in case of Commissioner of Central Excise vs. Tara Chand Naresh Chand 2018 (1) TMI 209 - RAJASTHAN HIGH COURT where reliance placed in the case of Continental Cement Company vs. Union of India 2014 (9) TMI 243 - ALLAHABAD HIGH COURT where it was held that unless there is clinching evidence of the nature of purchase of raw materials use of electricity sale of final products clandestine removals the mode and flow back of funds demands cannot be confirmed solely on the basis of presumptions and assumptions. Appeal dismissed - decided against Revenue.

Summary

Issues Involved:
1. Delay in filing the appeals.
2. Admissibility and sufficiency of corroborative evidence.
3. Reliance on statements tendered by partners and their retraction.
4. Previous judicial precedents on similar issues.
5. Substantial question of law.

Detailed Analysis:

1. Delay in filing the appeals:
The court condoned the delay in filing the appeals and allowed the applications under Section 5 of the Limitation Act, waiving any defects.

2. Admissibility and sufficiency of corroborative evidence:
The main issue revolved around whether the Tribunal was correct in allowing the appeals of the assessee by holding that there was no sufficient corroborative evidence to support the statement tendered by the partner of the assessee. The court noted that the Tribunal found the explanation provided by the manufacturer to be plausible and that the Adjudicating Officer failed to verify the correctness of the explanation in light of the corroborative material produced.

3. Reliance on statements tendered by partners and their retraction:
The court referenced multiple precedents where statements recorded under Section 14 of the Central Excise Act, which were later retracted, were not considered sufficient evidence without corroborative material. The court highlighted that the only evidence against the assessee was the statement of the partner, which had been subsequently retracted, and no further investigation or corroborative evidence was provided by the department.

4. Previous judicial precedents on similar issues:
The judgment extensively cited previous cases to support its decision:
- Union of India vs. Jain Plas Pack (P) Ltd.: The Tribunal’s findings were based on facts and did not give rise to a question of law.
- D.V. Kishore vs. Commr. Of Cus. (Seaports-Imports), Chennai: The Tribunal’s findings were not supported by any documentary evidence.
- S.M.A. Siddique vs. Government of India: The judgment of the Criminal Court on identical facts should not be ignored.
- Commissioner of Central Excise vs. Omkar Textile Mills Pvt. Ltd.: Statements and panchnama recorded forcibly and later retracted were not sufficient evidence.
- Continental Cement Company vs. Union of India: Clandestine removal requires substantial corroborative evidence.
- Commissioner of Central Excise, Ludhiana vs. Nexo Products (India): The department failed to provide corroborative evidence for the alleged shortage of materials.

5. Substantial question of law:
The court concluded that no substantial question of law arose from the appeals as the Tribunal’s decision was based on factual findings and the lack of corroborative evidence. The appeals were dismissed on this basis.

Conclusion:
The court upheld the Tribunal's decision to allow the appeals filed by the assessee, emphasizing the need for corroborative evidence to support statements, especially when retracted. It reiterated that findings based on facts do not give rise to substantial questions of law, leading to the dismissal of the appeals.