2020 (2) TMI 5 - AT - Central Excise

Clandestine removal - on the basis of third party records - corroborative evidences or not - HELD THAT - The contention of Revenue is that there is no third party involved in this matter. The said argument is not acceptable as Revenue itself is the litigant in this case who alleged that appellant is engaged in the activity of clandestine removal of goods. The said allegation is based on the record recovered from M/s PIL who is third party in this case. Strangely no show cause notice has been issued to PIL to impose penalty under Rule 26 of Central Excise Rules, 2002. Revenue s case is based on the records recovered from M/s PIL and the statement of Shri Pankaj Agarwal. In terms of Section 9D of Central Excise Act, 1944 the Revenue was required to produce Shri Pankaj Agarwal in their defence to testify the documents recovered and the statement made by Shri Pankaj Agarwal are true and correct and thereafter the appellant was required to be offered for cross-examination of Shri Pankaj Agarwal. As the said act has not been done by the Adjudicating Authority, therefore, in terms of Section 9D of the Act, the evidence relied upon by the Revenue have no value in the eyes of law. As Revenue has failed to produce any supporting evidence in their favour, therefore, the charge of clandestine removal is not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against demand of duty for alleged clandestine removal of goods and imposition of penalties.

Analysis:
The case involves an appeal against an order demanding duty and imposing penalties on the appellants for allegedly engaging in clandestine removal of goods. The investigation was based on records from another company, which indicated the receipt of goods from the appellants without proper documentation. The appellant denied the allegations, stating that no goods were cleared without invoices. The appellant argued that the evidence from the third party should not be relied upon, citing legal precedents. The Revenue, on the other hand, claimed a buyer-seller relationship between the appellants and the other company, justifying their reliance on documents. The Tribunal noted that the Revenue's case was primarily based on records from the third party and the statement of an individual, which should have been produced for cross-examination as per the law. As this procedure was not followed, the evidence lacked legal value. The Tribunal emphasized that the allegation of clandestine removal of goods was not sustainable without proper evidence, as established in previous cases.

The Tribunal referred to a previous case involving third-party evidence, where the lack of verification and corroborative evidence rendered the allegations of clandestine removal unsustainable. The Tribunal highlighted the importance of verifying the authenticity of documents and the necessity of corroborative evidence to support such allegations. In the absence of substantial evidence implicating the appellants in clandestine activities, the demand for duty, interest, and penalties was set aside. The Tribunal concluded that without supporting evidence, the charge of clandestine removal could not be upheld, leading to the dismissal of the impugned order and granting relief to the appellants.