In the case of M/s, Mohit Engineering versus CCE, the Delhi bench of Customs Excise & Service Tax Appellate Tribunal ( CESTAT ) ruled that allegation of clandestine removal cannot be upheld only on the basis of mere entries made in certain private record recovered from the security.
The appellant is a proprietor engaged in the manufacture of electric motors in its Unit called ME-2 and they have also another factory called ME-1 where mixers and juicers are manufactured. The electric motors manufactured in the second factory are carried to first one in order to make mixers and juicers. The items like mixers and juicers entirely sold to M/s Electrocom Juicer (India) Pvt. Ltd. (EJIPL). Various plastic body parts for mixers and juicers are manufactured by M/s Eskay Polymers Pvt. Ltd. (EPPL).
The department investigated an allegation that the appellant was clandestinely clearing goods without payment of duty to EJIPL and also that the appellant was undervaluing the goods cleared to them. Upon investigation and issue of show cause notice both charges were upheld by the original adjudicating authority.
Against the above order, the appellant filed an appeal before CESTAT where matter remanded back to the authority for passing a fresh order. Thereafter, through de novo proceedings in which the demand for Central Excise duty was confirmed again along with interest and penalties.
Appellant aggrieved with the present order carried the matter before CESTAT where appeared Ms. Reena Khair, Counsel for the appellant as well as R. K. Mishra, AR for the Revenue.
The Tribunal after hearing both the parties recitals observed that the Department compared the number of motors which was cleared by ME-2 to ME-1 with that accounted with ME-I and concluded that some portion of the motors were cleared without accounting which was in turn used in the manufacture of mixer/juicer and cleared to EJIPL.
The bench noted that allegations have been made on the basis of the outward and inward registers maintained by the Security Guard at the units of the appellant and the movement of such goods was recorded by him. The tribunal also brought the notice of statement of the security guard, explained about some motors having been received for repairs.
The bench also opinioned that Revenue had no other evidence got to support and substantiate the allegation of clandestine removal. Accordingly, the bench held that allegation of clandestine removal cannot be upheld only on the basis of mere entries made in certain private record recovered from the security.