Demand and Penalty based on Third Party Evidence is Invalid: CESTAT [Read Order]

The Delhi bench of Customs, Excise and Service Tax Appellate Tribunal while setting aside the impugned order granted a relief to Appellant and held that demand and penalty based on third-party evidence is invalid.

The bench comprising single Judicial Member Archana Wadhwa heard the case of M/s.Dadu Steel & Power Ltd against the impugned order of CCE.

In instant case Assessee engaged in the production of the ingot. When an investigation carried in the premises of a third party called M/s.Pankaj Ispat Ltd wherein found various documents which reveal that the appellant was clearing their final products to the said M/s. Pankaj Ispat Ltd. without payment of duty.

The director of the Appellant-company recorded that during the course of the investigation, denied the charges of clandestine removal and submitted that all the clearances made by them were under the cover of central excise invoices.

The original Adjudicating Authority confirmed the demand and penalty and the same was confirmed by the Commissioner (Appeals) and hence, the appellant challenged the order of both lower authorities to this Tribunal.

Advocate Kumar Vikram and P. Juneja appeared for Assessee and revenue respectively. The counsel for Appellant contended that the entire issue based on the search operation held at third party premises and no such operations carried at Assessee’s premises except the recordings given by the director. The counsel also argued that absence of such corroborative evidence authority confirmed the penalty and demand only on the basis of third parties records and evidences.

The Advocate cited the case of Abha Power & Steel P. Ltd wherein tribunal held that the demand of duty made on the basis of the third party’s records was set aside.

The bench heard the recitals and perused the cases and records cited by both the parties. The CESTAT noted that “the entire endeavour of the Revenue is based upon the documents recovered from the premises of M/s. Pankaj Ispat Ltd. read with the statement of their Director and by ignoring the statement of the Director of the present appellant. In such a scenario, the impugned orders confirming the demands and imposing penalties are unsustainable”.