CESTAT Frees M/s Shree Holding Need Cogent Evidence for Removal of Charge for Clandestine
The Central Excise and Service Tax Appellate Tribunal (CESTAT) New Delhi held in the case titled M/s Shree Rolling Mill (Appellant) v. Commissioner, Raipur (Respondent) that for clandestine removal cannot be confirmed without cogent evidence or based on third-party documents.
The Tribunal presided by Judicial Member Mrs. Rachna Gupta found out that the set of evidence and facts pertaining to the appeals of other noticees, decided by the Division bench, in favour of 17 noticees, and that of the appeal at hand are one and same, and hence the reasoning applied in the former applies to the latter as well.
The CESTAT reaffirmed the finding of the Divisional Bench wherein it found out that the search and seizure proceedings in the factory of the Noticees were made beyond the normal working hours and in violation of the provisions of Section 100 of the Code of Criminal Procedure (CrPC) read with Section 18 of Excise Act, 1944 (Act). The computer data had been procured without a proper certificate as mandated by law and further that the shortage was detected only based on eye estimation/average weight.
In the instant matter the appellant along with 30 others, including M/s Hariom Ingots & Power Private Limited, the main noticee, were arraigned for unaccounted procurement of raw materials, suppression of production, and clandestine removal of excisable goods.
The charges were framed after search and seizure conducted by the Central Excise officers at the premises of M/s Hariom Ingots & Power Private Limited, the main noticee.
However, having the appeal of 17 other noticees decided in their favour, on grounds of procedural non-compliance by the revenue and for want of cogent evidence, the appellant had preferred the appeal.
An appeal was initiated before the single judge of the Tribunal because the quantum of demand against the impugned appellant falls within the jurisdiction of the single judge.
The single judge observed that there is no additional document except the documents/evidence as having been discussed by the Division Bench of this Tribunal regarding the same Show Cause Notice as has been adjudicated vide the impugned order under challenge.
Further, in deciding the propriety of using third party documents while conforming demand against the appellant, the Tribunal relied on the cases of Bajrangbali Ingots & Steel Pvt. Ltd. & Suresh Agarwal v. CCE, Raipur and Ludhiana v. Anand Founders & Engineers, 2016 (331) ELT 340 (P&H), wherein it was held that "The findings of clandestine removal cannot be upheld based upon the third-party documents unless there is clinching evidence of clandestine manufacture and removal of the goods."
It further referred to the decision of the Allahabad High Court in the case of Continental Cement Company v. Union of India, 2014 (309) ELT 411 (All.) and also on the Tribunal's decision in Raipur Forging Pvt. Ltd. v. CCE, 2016 (335) ELT 297 (Tri.-Del.), in another case CCE & ST, Raipur v. P.D. Industries Pvt. Ltd. – 2016 (340) ELT 249 (Tri.-Del.). it was held that there is no cogent evidence but the violation of mandatory provisions on part of the Department. The benefit whereof was ordered to be extended in favour of the Noticees.
The Tribunal found out that the department had failed to prove any allegation against the appellant. Based on the said observations the Tribunal has allowed the appeal partly.
It further stated that the confirmation of duty demand of Rs.15,43,084/- along with interest and penalty against the appellant was confirmed without any cogent basis.