2019 (1) TMI 704 - AT - Central Excise

Clandestine removal - Duplex Paper - evidence in the form of Dispatch register, various statement and admission of the respondent director - Held that - Though on the investigation which detailed in the SCN show a picture of clandestine removal of duplex paper by the respondent. However, subsequently statements were retracted by the director and employees of the respondent company, not only that all the buyers of alleged clandestine removed goods and alleged supply of raw-material retracted there statements before the adjudicating authority. In the proceeding of cross-examination it was established on the basis of their procurement of inputs, manufacture and clearance of goods i.e. input output ratio that neither any raw-material in excess was procured nor any finished goods was manufactured in excess too. The only evidence left with the department is dispatch register which was properly explained by the respondent that said register is not for clearance but for the dispatch planning wherein all the entries are not related to clearance. In this position, the serious charge of clandestinely removal is not established against the respondent - also, Ld. Commissioner (Appeals) after considering the cross-examination and other facts came to conclusion that the clandestine removal of goods is not established. Appeal dismissed - decided against Revenue.

Summary

Issues: Alleged clandestine removal of duplex paper without payment of duty. Appeal against the order of Commissioner (Appeals) allowing the respondent's appeal.

Analysis:
1. The case involved the alleged clandestine removal of duplex paper by the respondent, leading to a demand of Central Excise duty amounting to ?20,39,668. The investigation revealed clearances without invoices, prompting the issuance of a Show Cause Notice (SCN) and subsequent adjudication confirming the duty demand, interest, and penalty against the respondent.

2. The Revenue, aggrieved by the Commissioner (Appeals) order allowing the respondent's appeal, contended that evidence from the Dispatch register, statements, and admission of the respondent's director supported the clandestine removal claim, seeking to set aside the order.

3. The respondent countered by arguing that the case primarily relied on the Dispatch register, which was a planning register maintained by the Dispatch clerk for convenience and not a record of actual clearance. They highlighted discrepancies in the entries, emphasizing that not all inquiries led to purchases, and explained the planning details recorded in the register.

4. During the investigation, statements from various individuals were recorded, but later retracted, including those of the billing clerk, Dispatch clerk, and directors of the respondent company. Cross-examination of buyers, suppliers, and employees revealed inconsistencies and raised doubts about the authenticity of the statements obtained under duress.

5. The adjudicating authority's findings considered the retracted statements, input-output ratio, electricity consumption, absence of excess production evidence, and lack of corroborative invoices for entries in the Dispatch register. The Commissioner (Appeals) concurred, concluding that clandestine removal was not proven, leading to the dismissal of the Revenue's appeal.

Conclusion:
The Tribunal upheld the Commissioner (Appeals) order, citing the lack of evidence supporting clandestine removal and inconsistencies in statements obtained during the investigation. The judgments cited by the respondent further bolstered their case, resulting in the dismissal of the Revenue's appeal on 11.01.2019.