2013 (7) TMI 535 - CESTAT AHMEDABAD

Clandestine removal – Demand of an amount of Rs. 1,85,10,861/- is based on the note books and pen-drive recovered from the premises of M/s. Sunrise Enterprises, Mehsana(third party), who was a dealer of M/s. Sakeen Alloys Pvt. Limited, Mehsana(appellant) – Held that:- In a clandestine removal case - Facts of clandestine removal of excisable goods cannot be established only on the basis of certain statements which are retracted later - But there has to be positive evidences like purchase of excess raw materials, shortage/ excess of raw materials/ finished goods found in the stock/ factory premises of the appellant, excess consumption of power like electricity, any seizure of cash during the investigation when huge transactions are made in cash.

From annexures of the SCN, observed that there were huge cash transactions to the tune of Rs. 11.23 Crores - When such large number of transactions involving huge amounts being undertaken in clandestine removal activities, it is very likely that some cash would have been seized - There is not a single instance where either seizure of cash is made or any clandestinely removed goods are seized or raw materials/ finished goods were found either short or in excess in the factory premises of the appellant or at any other place - As per the Panchnama drawn at the factory premises, shown that there was no excess/ shortage of the raw materials or finished goods found - The documentary evidences collected from the business premises of M/s. Sunrise Enterprise and the statements recorded by investigation, can at the most raise a reasonable doubt that some clandestine removal activities being undertaken by the appellant. However, such a suspicion or doubt, to be strengthened by positive evidences which seem to be lacking in the case.

Any suspicion whosoever cannot take the place of evidence regarding clandestine removal of excisable goods. Moreover, after having positive evidences, quantification of duty on clandestinely removed goods also becomes essential. As already mentioned above, the stock lying in the stock yard of M/s. Sunrise Enterprise, Mehsana was found containing the goods received from M/s. Sakeen Alloys Pvt. Limited under proper invoices. When the goods received under proper invoices are found in the stock yard of M/s. Sunrise Enterprise, then it is possible that out of such goods certain quantities were sold to various customers by accepting payment in cash. In such a situation, the quantification undertaken by the investigation becomes doubtful and incorrect. For this purpose cross-examination of the person Incharge looking after the records of M/s. Sunrise Enterprise was must, which was not allowed by the adjudicating authority. In view of the above observations, the demand of duty of Rs. 1,85,10,861/- is not sustainable and is required to be set-aside – Decided in favor of Assessee.

Clandestine removal - Demand of Rs. 8,25,277/- is based on the parallel invoices recovered as sealed envelopes from the business premises of transporter M/s. Khodiyar Transport Services, Mehsana – Held that:- positive evidence in the form of parallel invoices issued by the appellant are available and the same have been confirmed by the proprietor of transporter M/s. Khodiyar Transport and the same have been affirmed by independent witness other than the manufacturer of the goods. Therefore, the duty demand of Rs. 8,25,277/- pertaining to clandestine removal of goods on parallel invoices is upheld and the appellants are liable to penal action under the provisions of the Central Excise Act and Central Excise Rules. – Decided against the Assessee.