2018 (5) TMI 1657 - AT - Central Excise

Clandestine removal - sent ingots to the present manufacturing unit and received TMT bars from there, without payment of duty - evidences based on third party records and statements - Held that - The appellate authority having held the third party evidence as insufficient for confirming the demand on TMT bars, should have held the same evidence to be insufficient for confirming the demand in respect of ingots - the issue i.e whether third party records can be held to be sufficient for clandestine removal is the subject matter of various decisions of the Tribunal and it has been repeatedly held that the third party records cannot be considered sufficient for upholding the charges of clandestine removal. Inasmuch as the Revenue s entire case is based upon the documents recovered from the premises of M/s Pankaj Ispat, without there being any corroborative evidence, the impugned orders are not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
Confirmation of demand of duty, interest, and penalty against manufacturing unit, imposition of penalty on the Director of the company, allegations of clandestine clearance of ingots and TMT bars, sufficiency of evidence based on third party records and statements.

Confirmation of Demand of Duty, Interest, and Penalty:
The judgment pertains to the confirmation of a demand of duty, interest, and penalty against a manufacturing unit, along with the imposition of a penalty on the Director of the company. The original adjudicating authority confirmed the demands based on allegations of receiving ingots without payment of duty and clandestinely clearing ingots to another company. On appeal, the Commissioner (Appeals) dropped part of the demand, citing insufficient evidence from third party records and statements. The appellate authority found the evidence insufficient for confirming the demand on TMT bars but upheld it for the clearance of ingots. The appellant argued that since the evidence for both allegations was the same, the confirmation of the demand for ingots should also be dropped. The Tribunal agreed, emphasizing that third party records alone are insufficient for proving clandestine removal, citing precedents to support this view.

Allegations of Clandestine Clearance:
The case involved allegations of clandestine clearance of ingots without payment of duty. The Commissioner (Appeals) upheld this part of the demand based on evidence from third party records and statements. However, the Tribunal noted that the evidence used was the same as that for the TMT bars allegation, which the appellate authority found insufficient. The Tribunal emphasized that third party records alone cannot sustain charges of clandestine removal, citing previous decisions to support this stance. As the Revenue's case relied solely on documents recovered from another company without corroborative evidence, the Tribunal held that the impugned orders were not sustainable and set them aside, allowing both appeals with consequential relief.

Significance of Third Party Records and Statements:
A crucial aspect of the judgment was the reliance on third party records and statements as evidence. The Tribunal highlighted the insufficiency of such evidence alone to establish clandestine removal, emphasizing the need for corroborative evidence. By referencing previous decisions, the Tribunal reiterated that third party records cannot be considered sufficient for upholding charges of clandestine removal. The judgment underscored the importance of corroborative evidence to support allegations of wrongful conduct, particularly in cases involving complex transactions and multiple parties.