In a recent case, the Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the charges of clandestine removal without corroboration of recovered documents are not valid.
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Abhinav Agrawal, the appellants/assessee are in appeal against the impugned order confirming the demand of duty on account of clandestine removal of goods along with interest and penalty imposed on all the appellants. A show-cause notice was sent to the appellants for the period of October 28, 2010, to July 6, 2011, alleging that they were involved in the clandestine removal of goods. Based on the statements and documents seized during the investigation, it was alleged that the appellant was involved in the activities of clandestine removal and manufacturing of goods without payment of duty. Therefore, it is proposed to demand the duty along with interest and to impose a penalty on the appellants.
The appellant argued that there is no supporting evidence and that the demand is based on assumptions and presumptions. Under Section 36B of the Central Excise Act, 1944, electronic documents are not admissible proof of the covert removal of products without testifying, and no investigation was carried out with the consumers whose identities were discovered in the confiscated documents.
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The department argued that the claims of clandestine removal were supported by the examination and analysis of the recovered documents, that the statements made in accordance with Section 14 of the Central Excise Act are admissible evidence, and that the demand was calculated based on the records discovered during the investigation.
The two member bench of Ashok Jindal (Judicial Member) and P. Anjani Kumar (Technical Member) has observed that it is not possible to rely on documents that were collected during the course of the inquiry to support the charge of clandestine removal of commodities.
The tribunal ruled that the charge of clandestine removal of goods is not sustainable against the appellant in the absence of any supporting evidence, and that this is based on assumptions and presumptions. As a result, the duty cannot be demanded based on assumptions and presumptions.
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