2021 (12) TMI 1010 - AT - Central Excise

Clandestine removal of the finished excisable goods from the factory - MS bars and rods - MS angles - MS flats - MS rolls - rolling waste - allegation mainly based on the statement of employees - corroborative evidences present or not - wilful misstatement and suppression of facts - period 18.12.2011 to 31.08.2012 and from 01.10.2012 to 23.07.2013 - HELD THAT - The entire plank of the case rests on the private loose documents/ Papers which were recovered and seized during searches on 24.07.2013 and the statements of Sri Vijay Kumar Sinha, Sri Prabhat Kumar Singh (both being employees of Appellant no.1) and Shri Sudhir Kumar Garg Appellant no. 2. It is an admitted position that the premises of Alok Raj Associates located at 212, Ashiana Tower, Exibition Road, Patna which is being referred to by the department as the secret office‟ of Appellant no.1, belongs to Shri Alok Chaudhary. Private documents were recovered and seized from this premises, but no statement of Shri Alok Chaudhary was recorded either on 24.07.2013 or at any point of time subsequent to the search - There is nothing on record to suggest or indicate that attempts were made to record the statement of the said Shri Alok Chaudhary who was available. Although these documents contain verifiable clues, no attempts appear to have been made to make inquiries with the persons whose names appear on them. No inquiries appear to have been made with regards to the vehicle numbers featuring on them. No transporter was called to affirm the quantity and the description of the goods transported by the vehicle numbers found mentioned on those private documents - The appellants requested for cross-examination of all those persons whose statements were recorded as well as the Panchas, which were relied upon by the Revenue. However, none of them could be presented by the Revenue for cross examination by the appellants. No positive independent tangible evidence have been produced by the Revenue to substantiate the statements recorded during investigation and the entries made in the private documents which are undoubtedly unsigned, bearing no indication in any form that they relate to the appellant No.1 - specific description of the finished excisable goods alleged to have been clandestinely removed are also not found mentioned on the unsigned handwritten loose private records/documents, and as a result of which the amount of duty alleged to have been evaded and confirmed by the impugned order appears to be vague, in the realm of conjecture. On a careful evaluation of the submissions and arguments put forth by both the sides, it can be held that the Revenue has failed to discharge the burden to prove the case of clandestine removals of finished excisable goods by the appellants beyond doubt by collecting and producing independent corroborative tangible evidences to sustain their claim/findings - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Alleged clandestine removal of finished excisable goods.
2. Validity and sufficiency of evidence (private documents, statements).
3. Appropriateness of penalties imposed.
4. Denial of cross-examination requests.
5. Legality of search and seizure operations.

Issue-wise Detailed Analysis:

1. Alleged Clandestine Removal of Finished Excisable Goods:
The central issue revolves around the alleged clandestine removal of 9,924.836 MT of finished excisable goods (MS bars, rods, angles, flats, rolls) and 354.665 MT of rolling waste by Appellant No.1. The demand of ?3,92,46,461 was confirmed based on these allegations. The search conducted on 24.07.2013 led to the recovery of private documents and statements from employees and the director of the company. The Tribunal found that the entire case was built on private loose documents and statements, which lacked concrete evidence to substantiate the allegations of clandestine removal.

2. Validity and Sufficiency of Evidence:
The Tribunal observed that the private documents recovered were unsigned and did not explicitly link to Appellant No.1. The investigation did not extend beyond the initial searches and statements, failing to corroborate the entries with independent tangible evidence. The Tribunal referenced multiple judgments, including the Delhi High Court's decision in Commissioner of Income Tax vs M/s Dhingra Metal Works, emphasizing that mere statements and unverified documents cannot conclusively prove clandestine activities without corroborative evidence.

3. Appropriateness of Penalties Imposed:
The penalties imposed on Appellant No.1 and Appellant No.2 were based on the alleged clandestine activities. However, the Tribunal found that the evidence presented by the Revenue was insufficient to justify these penalties. The lack of independent corroborative evidence and the reliance on unsigned private documents led the Tribunal to conclude that the penalties were unjustified.

4. Denial of Cross-Examination Requests:
The appellants' requests for cross-examination of the individuals whose statements were relied upon by the Revenue were denied. The Tribunal held that this denial was incorrect, especially given the lack of corroborative evidence. The Tribunal cited the Bombay High Court's judgment in Sharad Ramdas Sangle, which underscored the necessity of cross-examination when sufficient corroborative evidence is absent.

5. Legality of Search and Seizure Operations:
The Tribunal noted the appellants' arguments regarding the illegality of the search and seizure operations. Although the Tribunal acknowledged the merit in these arguments, it did not dismiss the fact that private documents were indeed seized. However, the Tribunal found that the Revenue's investigation was incomplete and lacked the necessary depth to substantiate the claims of clandestine removal.

Conclusion:
The Tribunal concluded that the Revenue failed to discharge the burden of proving the case of clandestine removals beyond doubt. The lack of independent corroborative tangible evidence, the reliance on unsigned private documents, and the denial of cross-examination requests led the Tribunal to set aside the impugned order. Both appeals were allowed with consequential relief to the appellants. The judgment emphasized the need for concrete and tangible evidence to support allegations of clandestine removal and the importance of thorough and impartial investigations.