The Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has ruled that the Revenue has not shown enough supporting evidence to prove the serious charge of clandestine removal.
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A common investigation carried out at the location of M/s Trikoot Iron & Steel Casting Ltd., which manufactured MS Girders, Rounds, TMT Bars, MS Ingots, Castings, and other items, served as the basis for the contested order. In accordance with intelligence, the Directorate General of Central Excise Intelligence simultaneously searched the office of M/s Trikoot’s factory and the home of M/s Trikoot Director Shri Vibhav Goyal on July 4, 2013. Pendrives, hard drives, and several loose papers were found during the search. Additionally, printouts from confiscated hard drives were obtained.
Pendrives, hard drives, and several loose papers were found during the search. Additionally, printouts from confiscated hard drives were obtained. A shortfall of certain items was also discovered on July 4, 2023, when M/s Trikoot’s production grounds were searched. Additionally, some superfluous end cuts were discovered. The aforementioned items were seized, and statements made by different individuals regarding M/s Trikoot were documented. Some of the statements were later taken back. In keeping with the search that was done at M/s Trikoot’s location, where some documents pertaining to the appellants in question were also found, a search was also carried out.
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No shortfall or surplus of products was discovered during our search of the appellants’ property. The appellants were invited to review the documents that were found on the premises of M/s Trikoot, which included some of their own bills, even though some of them had been confiscated.
M/s Trikoot’s records contain invoices from the appellants during the contested period, but they were unavailable from the appellants. In several instances, the appellants were unable to acknowledge the supply of goods and provide appropriate answers to those questions. The investigation’s findings led to the issuance of show-cause notices to M/s Trikoot and the appellants before us, demanding duty and interest on the alleged covert removal of goods. The appellants were also subject to further penalties.
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The case was decided, all appellants and manufacturers were found to have violated the duty requirement, and all appellants were subject to penalties. Against the order, M/s Trikoot filed appeal before the Tribunal and the Tribunal held that the documents recovered during the course of investigation from the premise of M/s Trikoot are not admissible documents, as the condition set out under section 36B(4) of the Central Excise Act were not satisfied, therefore, the demand against M/s Trikoot was set aside.
The appellant argued that the demand against the appellants for being a supplier of goods to M/s Trikoot was based on printouts from hard disks discovered in Vaibhav Goyal’s home, which, according to this Tribunal’s ruling in the Trikoot case, is not admissible evidence. Since no incriminating documents were found on the appellant’s property, demands made against them in the absence of supporting documentation are unsupportable.
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It was found that the appellants are the supplier, and the Revenue has not uncovered any documentation supporting the appellants’ purported covert removal. The question of whether or not third-party evidence is admissible arises since the Revenue is depending on documents that were found on M/s Trikoot’s property.
The two member bench of Ashok Jindal (Judicial Member) and P. Anjani Kumar (Technical Member) has observed that allegations of clandestine removal by the appellants cannot be supported by statements recorded during the investigation that were later retracted by the appellants. According to the tribunal, the appellant cannot be found guilty of clandestine removal. As a result, it is unsustainable to demand a duty and impose penalties on the appellants.
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