2021 (3) TMI 677 - AT - Central Excise

Clandestine production and removal - shortage of goods - duty evasion - demand against the main Noticee has been dropped, and the appellant being co-noticee also seeks relief - Subsequent filing of appeal against the said order, by Revenue - case of Revenue is that appeals of remaining 12 Notices are still pending consideration before this Tribunal - Reliability on third party documents - HELD THAT - In the present appeal, there is no additional document except the documents/evidences as have been discussed by the Division Bench of this Tribunal in SMART STEELS, HARYANA ROLLING MILL, EURO PRATIK ISPAT PRIVATE LIMITED, PRAGATI INGOTS POWER PRIVATE LIMITED VERSUS PR. COMMISSIONER OF CENTRAL TAX 2019 (8) TMI 1022 - CESTAT NEW DELHI with respect to the same Show Cause Notice as has been adjudicated vide the impugned order under challenge. The present appeal is before Single Bench because quantum of demand against the impugned appellant falls within the jurisdiction of Single Bench. Reliability on third party documents - HELD THAT - The reliance of third party documents while conforming demand against present appellant is also observed to be unjustified and unreasonable. 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. Department has failed to prove the allegations against the present appellant - Demand do not sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Alleged duty evasion and clandestine removal of excisable goods
- Validity of the demand of duty against the present appellant

Analysis:
1. Alleged duty evasion and clandestine removal of excisable goods:
The case involved an appeal against an Order-in-Original based on the discovery of unaccounted procurement of raw materials, suppression of production, and clandestine removal of excisable goods by a company. The officers found shortages in various materials like sponge iron, pig iron, MS scrap, etc., leading to an admission of duty evasion and payment by one of the directors. Incriminating documents were recovered from the premises and a Show Cause Notice was issued proposing a significant demand under the Excise Act, 1944. The Order-in-Original confirmed the demand against most noticees, including the present appellant, for a specific amount of duty.

2. Validity of the demand of duty against the present appellant:
The appellant challenged the demand, arguing that the main noticee had been dropped, rendering the demand unsustainable. The appellant relied on a previous Division Bench order that highlighted procedural violations in the search and seizure proceedings, lack of proper documentation, and estimation based on eye estimation rather than concrete evidence. The Division Bench's decision emphasized the importance of complying with legal provisions and the need for cogent evidence to support allegations of clandestine removal. The appellant also contested the reliance on third-party documents without corroborative evidence, citing legal precedents that require clinching evidence for such allegations.

3. Judgment:
The Member (Judicial) reviewed the evidence, including the Division Bench's previous findings, and concluded that the Department failed to provide sufficient proof against the present appellant. Citing the lack of a cogent basis for the duty demand and the importance of adhering to legal standards, the Member set aside the Order under challenge, thereby allowing the appeal in favor of the present appellant. The judgment highlighted the need for concrete evidence and proper procedures in cases involving duty evasion and clandestine removal of goods.

This detailed analysis showcases the legal complexities involved in the judgment, emphasizing procedural compliance, evidentiary standards, and the burden of proof in cases of alleged duty evasion and clandestine activities.