2018 (8) TMI 545 - AT - Central Excise

Valuation - enhancement of value on the basis of private records recovered from shop premises - Held that - In the instant case the matter was earlier remanded by Commissioner (Appeals) in special direction to provide the relied upon document namely diary to the appellant. However, the diary was not provided as the same could not be traced by Revenue. The demand was however confirmed by the Original Authority and subsequently by the first Appellate Authority without providing diary. The primary evidence against the appellant in the instant case is diary and the statement of Shri S.S. Saboo recorded on 28/29.10.1997. The said diary has not been providing to the appellant and the statement of Shri S.S. Saboo was retracted on the very next day - In absence of primary evidence not being supplied to the appellant to contest the charge made on them, the demand cannot be sustained. Appeal allowed - decided in favor of appellant.

Summary

Issues: Alleged evasion of Central Excise duty based on recovered private records and statement, failure to provide relied-upon diary as primary evidence, retraction of statement, imposition of penalty.

In this case, the appellants, a company and its director, were engaged in the manufacture and clearance of Yarns. A search was conducted, leading to the recovery of private records in the shop premise. The Revenue alleged that the appellants were collecting an excess amount per kilogram, which was not included in the assessable value to evade Central Excise duty. A statement was recorded from the director admitting the omission. However, the statement was later retracted, and the relied-upon diary, crucial for the case, was not provided to the appellants despite specific instructions from the Commissioner (Appeals). The Original Authority and the Appellate Authority confirmed the demand and imposed penalties without providing the diary. The Tribunal noted that the primary evidence against the appellants was the diary and the retracted statement. Citing the decision of the Hon'ble Apex Court in a similar case, it emphasized the importance of providing necessary information to the accused to ensure natural justice. The failure to supply the crucial diary to the appellants prejudiced their ability to contest the charges effectively, leading to the conclusion that the demand could not be sustained without the primary evidence. Consequently, the appeals were allowed, and the demand was set aside.

The judgment highlighted the significance of providing primary evidence to the accused for a fair trial, as established in previous legal precedents. It underscored the principle of natural justice and the detrimental impact of withholding crucial information from the accused. The failure to supply the relied-upon diary, despite specific instructions, was deemed prejudicial to the appellants' defense, ultimately leading to the allowance of the appeals and the dismissal of the demand based on insufficient evidence.