2018 (6) TMI 744 - AT - Central Excise

Clandestine removal - purchasing excisable items from the manufacture, without payment of duty - Imposition of penalty and demand based on documents recovered - Held that - It is seen that based upon the same set of evidences i.e. pen drive recovered from the premises of M/s Amit Steels and based upon the same set of investigations and more or less identical statements recorded by the officers during the course of investigations, proceedings were initiated against many other manufacturers of identical items. Such proceedings reached Tribunal and the impugned orders passed by the authorities below were set aside - thus following the Tribunal s decision in the case of B.K. Rolling Mills Pvt. Ltd. and Others Vs. CCE & ST, Raipur 2018 (2) TMI 1557 - CESTAT NEW DELHI where it stated that in absence of any corroborative evidence produced by the Department the charges cannot be levelled against the appellants for confirmation of the duty demand and for imposition of penalties - hence following the precedent decisions, the impugned orders are set aside.

Summary

Issues:
1. Allegation of clandestine manufacture and clearance of goods without payment of duty.
2. Validity of evidence collected during investigations.
3. Imposition of penalties based on the evidence.

Analysis:
1. The case involved allegations of clandestine manufacture and clearance of goods without payment of duty by M/s Varun Steel to M/s Amit Steels. The investigations were based on incriminating documents and a pen drive recovered from the premises of Amit Steels. The Revenue initiated proceedings against M/s Varun Steel, resulting in the impugned order confirming the demand and imposing penalties. Three appeals were filed challenging this order.

2. The Tribunal noted that similar proceedings against other manufacturers of identical items, based on the same evidence and investigations, had been set aside in previous cases. The Tribunal emphasized the requirement for Revenue to produce sufficient, positive, and cogent evidence to prove allegations of clandestine removal. In the absence of concrete evidence linking the alleged clandestine activities to the appellants, the Tribunal found no justification for upholding the impugned orders or imposing penalties.

3. Citing previous decisions, the Tribunal emphasized that entries in third-party documents recovered from their premises could not be the sole basis for charges of clandestine manufacture. Without clear evidence of excess raw material procurement, conversion, and clearance without duty payment, the allegations could not be substantiated. Since similar cases with identical investigations had their demands set aside, the Tribunal decided to follow precedent decisions and set aside the impugned orders in the present case. Consequently, all three appeals were allowed with consequential relief.

In conclusion, the Tribunal found that the evidence presented was insufficient to prove the allegations of clandestine manufacture and clearance without payment of duty. By following established legal principles and precedent decisions, the Tribunal set aside the impugned orders and allowed the appeals in favor of the appellant.