Burden of Proof for alleged Clandestine Removal of Goods is upon the Department: CESTAT [Read Order]

Clandestine Removal - CESTAT - Taxscan

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Delhi Bench held that the burden of proof for alleged clandestine removal of goods is upon the department.

The present order disposes of four appeals arising out of the order of Commissioner, GST has been assailed before this Tribunal. The said order has been passed in compliance of the Final Order of this Tribunal as was announced against the common order-in-original being a common order of two show cause notices issued to M/s Kayceel Electricals and others i.e. M/s Smita Global Pvt. Limited, Shri Jatinder Kumar Aggarwal, Partner M/s Kaycee Electricals, M/s M. S. Metal Co., the Director thereof Shri Sanjay Goel and M/s Master India Pvt. Limited.

It has been submitted on behalf of the appellants that the entire documents on which the demand has been confirmed against the appellant were recovered from the factory premises of M/s Kaycee Electricals and from the residential premises of its Partners. Further reliance has been placed by the Adjudicating Authority on the statement of Shri Shambhu Prasad, Supervisor, Mr. Manik Chand Pareek, Supervisor and M/s Kaycee Electricals.

However, the demand against the said M/s Kaycee Electricals has been dropped. Thus, there remains no reason for confirmation of demand against the appellant herein and their Partners / Directors. It is submitted that this Tribunal vide its earlier Final order dated 08.03.2017 had directed the Adjudicating Authority below for denovo adjudication after giving an opportunity for cross-examination of all the witnesses.

However, none except Shri Sanjay Goel of M/s Master India Pvt. Limited and Shri Sunil Gupta of M/s M. S. Metal Co. Appeared. They testified that their statements as were recorded during investigation were incorrect and were made under threat of arrest. The said statements are sufficient retraction of the earlier statements. The Adjudicating Authority still has confirmed the demand against the appellants. It is submitted that in view of the said retractions the reliance of the Adjudicating Authority below on Section 31, Section 58 and Section 106 of Evidence Act is bad in eyes of law. As these provisions have been improperly applied, accordingly appellants have prayed for setting aside the said order and for all four of the appeals to be allowed.

The coram of Judicial Member, Rachna Gupta observed that neither the documents as were recovered from the premises of M/s Kaycee Electricals can be read against the appellants nor the statements of employees of M/s Kaycee Electricals can be considered to be the admission on part of appellants.

The ITAT held that confirmation of demand against the appellants based on these two grounds is therefore not sustainable.

“In view of the directions of the order of remand by this Tribunal, the appellants are held to have proved their admission as untrue i.e. before the order under challenge could have been passed, question of their statements recorded previously cannot act as estoppel against them cannot arise. Findings of the Adjudicating Authority are held to be wrong for this reason as well. Law is settled that the burden of proof for alleged clandestine removal of goods by appellant is upon the department. Section 31 and 58 of Indian Evidence Act are held not applicable to the given facts and circumstances. I hold that the Adjudicating Authority has also erred in applying Section 106 of the Evidence Act,” the CESTAT ruled.

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