2022 (8) TMI 538 - AT - Central Excise

Clandestine Removal - Iron Flats, spring Leaves and Agriculture implements - entire case of department is based on the entries in a Shristi Brand Notebook recovered during the search - shortage or excess in the raw material/final products to prove clandestine removal - admissible statements or not - HELD THAT - The case of the Department is that the appellants have indulged in clandestine removal. The department came to this conclusion on the basis of entries made in a certain note book recovered from the appellant s premises. Learned Counsel for the appellants submits that the author of the notebook is not identified to verify the truthfulness of the entries made therein; his statement was also not recorded and that all the entries in the said notebook appeared to be made with the same ink at same time - it has been held in a catena of judgments that a serious charge like clandestine removal cannot be established without tangible evidence or procurement of raw material, deployment of labour, consumption of electricity, manufacture of excisable goods, sale of excisable goods, transportation of excisable goods and receipt of consideration etc. It is found that other than the entries in the notebook and the statement of the appellants no other evidence has been put forth by the Department. Under these circumstances, the statement of the appellant has no validity as evidence. It is also found that there are some entries related to transportation allegedly by Tractor. Learned authorized representative argues that only a tractor has registration and not the trolley and therefore, reference to tractor should be read as reference to tractor with trolley - clandestine removal is a serious charge and requires to be substantiated by evidence encompassing various activities in the chain of events. The department has not adduced any additional evidence, even on a sample basis to substantiate the allegation of clandestine removal as per above. In the absence of evidence, the allegations raised by the department are not substantiated - Appeal allowed - decided in favor of appellant.

Summary

Issues: Allegations of clandestine removal based on entries in a notebook recovered during search, validity of evidence, identification of author of notebook, sufficiency of evidence to prove clandestine removal.

Analysis:

Identification of Author of Notebook and Validity of Evidence:
The Department alleged clandestine removal based on entries in a notebook found at the appellant's premises. The appellant's counsel argued that the author of the notebook was not identified, and his statement was not recorded. It was contended that all entries appeared to be made simultaneously with the same ink. The Tribunal noted that the handwriting and entries were not examined by a handwriting expert, and the author was not identified or questioned. The absence of tangible evidence like procurement of raw materials, labor deployment, electricity consumption, and other activities raised doubts about the validity of the evidence.

Sufficiency of Evidence for Clandestine Removal:
The Department primarily relied on the entries in the notebook and the appellant's statement to establish clandestine removal. However, apart from these, no other evidence was presented. The Tribunal emphasized that serious charges like clandestine removal require concrete evidence such as raw material procurement, labor deployment, goods manufacture, sale, transportation, and consideration receipt. Without corroborative evidence, the appellant's statement lacked evidentiary value. The assumption regarding entries related to transportation by tractor was not substantiated, and the lack of corroborative evidence raised doubts about the allegations.

Legal Precedents and Standard of Proof:
The Tribunal referred to legal precedents emphasizing the need for tangible evidence to prove clandestine activities. Citing previous judgments, it outlined fundamental criteria, including evidence of excess raw materials, unaccounted goods removal, discovery of goods outside the factory, sales to identified parties, and other activities. The Tribunal highlighted that the Department failed to provide additional evidence to substantiate the allegations, leading to the conclusion that the impugned order could not be upheld.

Conclusion:
In light of the lack of substantial evidence beyond the notebook entries and the appellant's statement, the Tribunal set aside the impugned order and allowed the appeal. The decision underscored the importance of tangible evidence and the failure of the Department to meet the required standard of proof for allegations of clandestine removal.

This comprehensive analysis of the judgment highlights the key issues, arguments presented, legal standards applied, and the ultimate decision reached by the Tribunal in the case.