Dept. Cannot allege Clandestine Removal of Goods without Proper Investigation u/s 9D Excise Act: CESTAT sets aside Order and Penalty [Read Order]

The Customs, Excise and Service Tax AppellateTribunal (CESTAT), Kolkata Bench, set aside an order and held that the department cannot allege clandestine removal of goods without proper investigation under Section 9D of the Central Excise Act, 1944.

On the basis of certain intel, the officers of Directorate General of Central Excise Intelligence (DGCEI) conducted search operations at various premises of a Third Party from whom the appellant, M/s Jolla Steel Pvt. Ltd., had taken Business Auxiliary Services. During the search, it was alleged that the payments received in cash from the appellant were without cover of Central Excise invoices.

Proceedings were therefore initiated against the appellant, alleging clandestine removal of excisable goods. The demand in the SCN was confirmed vide order dated 15.01.2018 which was under challenge in the present appeal.

The counsel for the appellants submitted that the entire case was based on assumption and presumption without any evidence on record. Further, it was submitted that the statement which has been relied upon by the department has been reported in the absence of the appellant and the same is not tested in terms of Section 9D of the Central Excise Act.

CESTAT observed that they found no merit in the order and that it has been passed without proper investigation in contravention of Section 9D. The bench of Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) held that the charge of clandestine removal of goods is not sustainable and the order was set aside. Finally, the appeal was allowed and the penalty was held not imposable.

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