2018 (6) TMI 1484 - AT - Central Excise

Clandestine removal - demand based on third party evidences - the entire case of the Revenue is based upon the records recovered from M/s Monu Steels and based upon the statement of the representative of M/s Monu Steels as also the appellant s Director - Held that - The law i.e. as to whether the third party records can be adopted as an evidence for arriving at the findings of clandestine removal, in the absence of any corroborative evidence, is well established - the findings of clandestine removal cannot be upheld based upon the third party documents, unless there is clinching evidence of clandestine manufacture and removal of the goods. Demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Allegation of clandestine removal based on third-party records without corroborative evidence.

Analysis:
The judgment by the Appellate Tribunal CESTAT NEW DELHI, delivered by Hon’ble Mrs. Archana Wadhwa, Member (Judicial), addressed the issue of clandestine removal allegations against the appellant. The appeals were disposed of collectively as they stemmed from the same investigations, with duties and penalties imposed based on evidence of clandestine removals. The Commissioner had initially raised substantial demands linked to electricity consumption but reduced them following a Supreme Court decision. The Revenue's case relied on records from M/s Monu Steels and statements from their representative and the appellant's Director, without verifying with the buyers or providing corroborative evidence.

The Tribunal highlighted the legal principle that findings of clandestine removal cannot be sustained solely on third-party records without concrete proof. Citing precedents such as the Hon’ble Allahabad High Court decision in Continental Cement Company case and various Tribunal decisions, including Raipur Forging Pvt. Ltd. case, it was emphasized that conclusive evidence of clandestine activities is required. The Tribunal also referenced similar cases where demands based on records of M/s Monu Steels were rejected in favor of the appellants, underscoring the importance of substantiated evidence in such matters.

Consequently, the impugned orders confirming demands and penalties were set aside, and all appeals were allowed. The judgment serves as a reminder of the necessity for concrete proof in cases of alleged clandestine activities, reiterating the legal requirement for corroborative evidence to support such claims.