The Customs Excise and Service Tax Appellate Tribunal ( CESTAT ), Kolkata held that serious allegation cannot be made merely on assumption, in the absence of detailed supporting evidence and thus dismissed the charge of clandestine removal.
In this case, the appellant, Shree Krishna Laxmi Steel Udyog Pvt Ltd. was engaged in the activity of clandestine manufacture and removal of goods. The show-cause notice issued to the appellant alleged that the appellant was engaged in the clandestine manufacture and removal of goods without proper records by evading excise duty and thus they are liable for duty, interest, and penalties.
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The counsel on behalf of the appellant stated that the case against them is based on documents recovered from Shri Sati Ram, an accountant, and statements from various individuals. It was submitted that no discrepancies were found at their factory, and physical stock checks were in order and that the show-cause notice proposed duty demand, interest, and penalties based on these documents and statements.
One of the issues raised by the appellant was whether the documents recovered from the possession of the third party and without any corroboration thereof, can the demand be raised against the appellants ?
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The bench noted that although Shri Sati Ram’s statement was recorded and documents were seized from his possession, further investigation is needed, including examining suppliers, buyers, transporters, and commission agents listed in the records and thus the authenticity of these documents remains questionable.
The CESTAT held that due to the lack of proper investigation and corroborative evidence, the allegations against the appellants regarding clandestine manufacture and clearance of goods are unsustainable.
The CESTAT comparing Ashok Jindal ( Judicial Member ) and Rajeev Tandon ( Technical Member ) set aside the impugned order and ruled in favour of the appellant.
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