Charge for clandestine removal cannot be confirmed without cogent evidence or on the basis of third-party documents, holds the Central Excise and Service Tax Appellate Tribunal, New Delhi.
The appellant, M/s Shree Rolling Mill, along with 30 others, including M/s Hariom Ingots & Power Private Limited, the main noticee, were arraigned for unaccounted procurement of raw materials, suppression of production and clandestine removal of excisable goods. The charges were framed after search and seizure conducted by the Central Excise officers at the premises of M/s Hariom Ingots & Power Private Limited, the main noticee. However, having the appeal of 17 other noticees decided in their favour, on grounds of procedural non-compliance by the revenue and for want of cogent evidence, the appellant had preferred the appeal.
The major contention of the appellant was that once the demand of duty against the main Noticee has been dropped the impugned demand is not at all sustainable and is liable to be set aside for want of any evidence of alleged clandestine removal and duty evasion against the appellant. The Single bench presided over by Mrs. Rachna Gupta, Member (Judicial), found that the set of evidence and facts pertaining to the appeals of other noticees , decided by the Division bench, in favour of 17 noticees, and that of the appeal at hand are one and same, and hence the reasoning applied in the former applies to the latter as well. Accordingly, the Single Bench reaffirmed the finding of the Divisional Bench that the search and seizure proceedings in the factory of the Noticees were made beyond the normal working hours and in violation of the provisions of Section 100 of CRPC read with Section 18 of Excise Act, 1944 and that the computer data had been procured without proper certificate as mandated by law and further that the shortage was detected only on the basis of eye estimation/average weight. Further, in deciding the propriety of using third party documents while conforming demand against the appellant, the Bench relied on the case of Bajrangbali Ingots & Steel Pvt. Ltd. & Suresh Agarwal vs. CCE, Raipur, wherein it was held that :
“9. The law i.e. as to whether the third party records can be adopted as an evidence for arriving at the findings of clandestine removal, in the absence of any corroborative evidence, is well established. Reference can be made to Hon’ble Allahabad High Court decision in the case of Continental Cement Company Vs. Union of India – 2014 (309) ELT 411 (All.) as also Tribunal’s decision in the case of Raipur Forging Pvt. Ltd. Vs. CCE, Raipur-I – 2016 (335) ELT 297 (Tri.-Del.), CCE & ST, Raipur Vs. P.D. Industries Pvt. Ltd. – 2016 (340) ELT 249 (Tri.-Del.) and CCE & ST, Ludhiana Vs. Anand Founders & Engineers – 2016 (331) ELT 340 (P&H). It stand held in all these judgements that the findings of clandestine removal cannot be upheld based upon the third party documents, unless there is clinching evidence of clandestine manufacture and removal of the goods.”
Thus, the appeal was allowed in favour of the appellant by holding that the Department has failed to prove the allegations against the appellant and that the confirmation of duty demand of Rs.15,43,084/- along with interest and penalty against the appellant was confirmed without any cogent basis.
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