2014 (2) TMI 62 - AT - Central Excise

Duty demand - Demand made on the basis of photocopy of the invoices - Clandestine removal of goods - Commissioner (Appeals) held that allegations of clandestine removal cannot be upheld on the basis of the photocopies of the invoices supplied by a casual informer - Held that - allegations of clandestine removal are serious allegation and cannot be upheld on the basis of photocopies of some of the invoices supplied by an in un-identified informer. There is no disclosure on record to show as to from where the Revenue received the said photocopies of the invoices. Further investigation conducted by the Department did not result in any evidence to reflect upon the clandestine manufacture and clearance of the final product. The various case lows discussed by the Commissioner (Appeals) in his impugned orders are in favour of the respondents - All the respondents have clarified in their statement that such order are only for Booking of the goods and do not relate to clearance of the goods mentioned therein. The clearance of the final product is only about percentage of such quantities shown in order Booking Forms which is dependent upon various factors. In the absence of any evidence to support revenue allegation I am of the view that the appellant authority has correctly set aside the demand - Decided against Revenue.

Summary

Issues: Allegations of clandestine removal based on photocopies of invoices and order recording forms/challans.

Analysis:
1. Allegations based on photocopies of invoices:
The case involved allegations of clandestine removal of goods based on photocopies of invoices supplied by an unidentified informer. The Revenue initiated proceedings against the appellants for duty demand and penalties. However, the Commissioner (Appeals) ruled in favor of the respondent, highlighting that the photocopies were not supported by original or duplicate invoices, and no admission was made by the company's directors or employees. The Commissioner emphasized the need for comprehensive examination of all invoices rather than a selective sample. The Commissioner concluded that the photocopies were fabricated and false, lacking substantial evidence of clandestine removal. The Tribunal upheld the Commissioner's decision, emphasizing the seriousness of clandestine removal allegations and the lack of concrete evidence to support the Revenue's claims.

2. Allegations based on order recording forms/challans:
The case also involved allegations of clandestine removal of goods based on order recording forms and challans. The Commissioner (Appeals) scrutinized the internal documents prepared by the appellants, emphasizing that mere allegations without corroborative evidence from customers or other sources were insufficient to establish clandestine removal. The Commissioner cited previous case laws to support the requirement for additional evidence such as excess raw material consumption, unaccounted funds, and discrepancies in stock. The Commissioner concluded that the Revenue failed to provide substantial evidence to prove clandestine removal based on the internal documents recovered. The Tribunal upheld the decision, highlighting the lack of supporting evidence and the internal nature of the order recording forms.

3. Overall Decision:
The Tribunal rejected all four appeals filed by the Revenue, affirming the decisions of the Commissioner (Appeals) in favor of the respondent. The judgments underscored the necessity of concrete evidence and corroborative proof in cases of clandestine removal allegations. The lack of substantial evidence, discrepancies in the documents, and internal nature of the records led to the dismissal of the Revenue's appeals. The judgments emphasized the importance of comprehensive investigation and evidence gathering to substantiate claims of clandestine activities in excise matters.