2019 (11) TMI 432 - AT - Central Excise

Clandestine manufacture and removal - MS Ingots and structural steel - third party evidence - corroborative evidences or not - HELD THAT - Since the sole challenge to the order is its reliance upon third party evidence, it is necessary to check the evidentiary value of the third party evidence. There is no other evidence or document in the form of stock verification of the raw-material of the appellant and the material supplied to M/s. PIL nor is there any evidence about usage of any transportation by the appellants for transporting the alleged quantity of raw-material to M/s.PIL. In absence thereof, the documents recovered from M/s.PIL cannot be held conclusive against the appellant. The order confirming the recovery has no legal basis to sustain - Appeal allowed - decided in favor of appellant.

Summary

Issues: Alleged clandestine removal of MS Ingots, reliance on third party evidence, imposition of duty and penalty, evidentiary value of third party evidence.

Alleged Clandestine Removal of MS Ingots:
The case involved M/s Pragati Ingots and Power Pvt. Ltd. and M/s Pankaj Ispat Limited (PIL) engaged in the manufacture of MS Ingots. PIL was suspected of engaging in suppression of production and clandestine removal of MS Ingots. Statements from directors and records revealed unaccounted purchases and removal of ingots. The appellant was accused of supplying MS Ingots clandestinely to PIL. The Department issued a show cause notice for duty recovery and penalty, which was contested, leading to the Assistant Commissioner dropping the notice.

Reliance on Third Party Evidence:
The Commissioner (Appeal) allowed the revenue's appeal based on PIL's confirmation of the unaccounted ingots as per their records. The appellant argued against the reliance on third-party evidence, citing lack of investigations or corroborative evidence from their premises. They presented case laws supporting their stance. The Department defended the reliance on evidence recovered from PIL, asserting the appellant's involvement in clandestine removal.

Imposition of Duty and Penalty:
The Commissioner confirmed duty imposition and penalty on both appellants, considering the business relationship with PIL and the evidence provided by them. The appellants challenged this decision before the Tribunal, emphasizing the lack of direct evidence against them and disputing the basis for duty and penalty imposition.

Evidentiary Value of Third Party Evidence:
The Tribunal analyzed the evidentiary value of third-party evidence, citing legal precedents that findings of clandestine removal cannot rely solely on third-party documents without conclusive evidence. The lack of stock verification or transportation evidence from the appellants weakened the case against them. Consequently, the Tribunal set aside the order confirming the recovery, allowing the appeal and restoring the original order.

In conclusion, the Tribunal found the reliance on third-party evidence insufficient to prove the appellant's involvement in clandestine activities, leading to the order-in-appeal being set aside and the appeal being allowed. The judgment highlighted the importance of corroborative evidence and direct proof in cases of alleged clandestine removal to uphold duty imposition and penalties.