Charge of Clandestine Removal not sustained in the absence of Corroborative Evidence: CESTAT [Read Order]

The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), held that the charge of clandestine removal was not sustained in the absence of corroborative evidence.

The assessee, M/s. Scan Sponge Iron Limited challenged the Order-In-Original dated March 26, 2010, passed by the Commissioner, Central Excise and Customs, Bhubaneshwar-II Commissionerate, which confirmed the demands of Central Excise Duty and Education Cess totalling Rs.2,72,39,036/- with interest and equivalent penalty under various provisions of the Central Excise Act, 1944 (Act) read with the Central Excise Rules, 2002 (Rules).

During the search proceeding, the Company’s production and clearances were examined, joint stock verification was conducted under Panchnama and the statements of various personnel of the Company were also recorded whereby the Central Excise Officers detected a huge shortage in stock of finished goods as compared to the stock recorded in the Company’s Daily Stock Account register, which had been removed clandestinely without payment of duty.

It was contended by the assessee that the absence of detailed description as regards the weighment of M. S. Angles, M. S. Ingots and M. S. Scrap in the Panchnama, although mentioned in the joint stock verification reports, does cast serious doubt upon the reliability and correctness of an otherwise valid Panchnama.

The Tribunal observed that there was no evidence on record to support the revenue’s case, much less any corroborative evidence. In the circumstances, we are of the considered opinion that no substantive reliance should have been placed on the said purported incriminating statements of Sri Sanjay Gadodia, Sri Sanjib Mahapatra and Sri Praharaj Swain aforesaid. In support of their argument that a retracted statement cannot form the substantive basis of the charge, when there is no corroborative evidence available,

we hold that the adjudicating authority could not have straightaway relied on the purported incriminating statements of Sri Sanjib Mahapatra, Sri Prahraj Swain and Sri Sanjay Gadodia aforesaid (assuming that the subsequent retractions were invalid) without legitimately invoking Section 9D(1)(a) of the Act.

Shri P K Choudhary, member(judicial) and Shri P Anjani Kumar, member (technical) allowed the appeal as the principal demands against the Company have failed and the imposition of personal penalties cannot be sustained. The Tribunal set aside the impugned order.

Shri N.K.Chowdhury, I. Banerjee, Tanay Agarwal appeared for the Appellants and Shri S.S.Chattopadhyay appeared  for the Respondent (s)

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates