2011 (6) TMI 985 - HC - Central Excise

Summary

Issues Involved:
A. Justification of the Tribunal in upholding the charge of clandestine removal.
B. Reliance on third-party statements for upholding the charge.
C. Consideration of re-warehousing certificates by the Tribunal.
D. Rejection of the Rectification of Mistake Application (ROM application) u/s. 35C(2).

Summary:

Issue A: Justification of the Tribunal in upholding the charge of clandestine removal
The Tribunal upheld the charge of clandestine removal based on substantial evidence, including statements from various individuals, Panchnama, and scrutiny of books of account. The Tribunal concluded that the demand of duty and interest levied by the Order-in-Original was justified. The investigation revealed that the appellant diverted duty-free raw materials into the local market, which was confirmed by statements from involved parties that were not retracted.

Issue B: Reliance on third-party statements for upholding the charge
The Tribunal relied on the statements of third parties, such as the partner of M/s. Shiv Processors and the partner of M/s. Shree Ram Synthetics, which were not retracted, to substantiate the charge of clandestine removal. These statements, along with other evidence, indicated that the appellant was involved in the fraudulent diversion of raw materials.

Issue C: Consideration of re-warehousing certificates by the Tribunal
The Tribunal and the Order-in-Original both found that the re-warehousing certificates were obtained fraudulently. The appellant's contention regarding the certificates was dismissed, as the evidence showed that the certificates were produced in collusion with M/s. Aakash Fabrics and were not valid. The Tribunal noted that the fraudulent nature of the certificates was evident and did not warrant further consideration.

Issue D: Rejection of the Rectification of Mistake Application (ROM application) u/s. 35C(2)
The Tribunal rejected the ROM application, stating that the non-consideration of the re-warehousing certificates did not constitute a mistake apparent on the face of the record. The Tribunal emphasized that there was overwhelming evidence to support the charge of clandestine removal, and the issue of the certificates was not significant enough to alter the outcome of the case.

Conclusion:
The High Court dismissed the appeal, finding no substantial question of law. The Tribunal's findings were based on a comprehensive evaluation of evidence, and the appellant's arguments regarding the re-warehousing certificates and lack of cross-examination were not sufficient to overturn the decision. The Tribunal's conclusion of clandestine removal and imposition of penalties was upheld.