Cogent Evidence is needed to establish a Charge against Clandestine Removal, No Penalty sustained under Central Excise Act: CESTAT [Read Order]

The Delhi bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that cogent evidence is needed to establish a charge against clandestine removal and no penalty sustained under section 11 AC of the Central Excise Act

The appeal was furnished related to the dropping of demand of Rs. 9,94,65,997/- by the Commissioner out of the total proposed demand of Rs. 11,46,10,423/- in the show cause notice.  The Commissioner confirmed the balance demand of Rs.1,51,44,426/- along with the penalty under Section 11AC of the Act and a penalty of Rs.50 lakhs was imposed on the appellant under Rule 25 of Central Excise Rules, 2002.

The assessee and revenue appealed before the tribunal against the order of the commissioner and tribunal vide Final Order No. 52332 – 52334/2017 dated 15.03.2017, allowed the appeal of Revenue by way of remand to decide the issue by giving the fresh opportunity of hearing and submission of documents by both the sides. TheTribunal upheld the order of confiscation and the fine was reduced from Rs. 25 lakhs to Rs. 6.25 lakhs. Being aggrieved by Tribunal’s orderassessee& Revenue appealed before the High Court of Chhattisgarh where the vide common order dated 09.08.2018, upheld the confirmation of demand of Rs.1,51,44,426/-.the perusal of the show cause notice concerning the proposed demand of Rs.9,94,65,997/-

It was observed that the allegation of clandestine manufacture and clearance has to be established with the evidence relating to the clandestine receipt of raw material, etc., consumption of electricity, transportation of the goods, and receipt of the despatch. The respondent-assessee contended that there is no evidence of receipt of matching inputs or excess use of electricity, or evidence of manufacture.

It was clear from the allegations in the show cause notice that the said demand ofRs.9,94,65,997/- was proposed based on the ‘biltynakalregister‘The Tribunal found that there is no categorical admission of clandestine removal as alleged by the Revenue and the persons had retracted their statementof the recording of their initial statement by the officers during the investigation.

The Coram consisting of Anil Choudhary and P. Anjani Kumar observed that the appellant revenue failed to verify the entries found in the records of the transporters, even though the data contained enormous entries alleged to have been clandestine transactions by the respondent-assessee.Even if the respondent-assessee hadadmitted and deposited/debited the duty component during the investigation, it does not corroborate the allegation of Clandestine removal for the alleged duty evasion of Rs.9,94,65,997/-.

The Tribunal confirmed the order of Commissioners which relates to the dropping of demand of duty for Rs.9,94,65,997/- and dismissed the appeal filed by the revenue.Shri Sanjay Kumar Singh appeared for the appellant and Shri Rohit Choudhary & Ms PreetiKhiwani, Advocates appeared for the respondent.

To Read the full text of the Order CLICK HERE

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