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2017 (11) TMI 815 - AT - Central ExciseClandestine removal - Cotton Yarn - it appeared that the appellants were engaged in the purchase of cotton which were not properly accounted and the same were manufactured as cotton yarn and removed clandestinely in the guise of hank yarn as against cheese yarn without payment of appropriate duty - Held that: - The fact that M/s. SPRT could have purchased the alleged cotton yarn from any other parties cannot be ruled out. The income expenditure statement maintained by the broker Shri ThiruThirumoorthy is his personal accounts of income expenditure and this cannot be an authentic document so as to form the basis of demand of duty alleging clandestine removal against the appellant. Thus, the major part of the remaining evidence in this case is the statement obtained from various persons. In cross-examination, Shri Thirumoorthy has stated that he purchased hank yarn as well as cheese yarn from appellants. The ld. Counsel has strongly argued that the statements cannot be taken as evidence unless they are tested by way of examination of the persons as provided under section 9D of Central Excise Act - In the absence of examination of witnesses and their cross-examination, the statements are inadmissible in evidence and the demand of duty based on such statements alone, in our view, is unsustainable. The allegation of clandestine clearance of goods being a serious one, though not proved to mathematical precision has to be established at least to the extent of balance of probabilities. In the present case, the department has raised the demand on the basis of documents which are mainly third party documents and only on statements of various persons. Therefore, in our view, on the totality of facts and evidence presented, we find that the department has failed to establish the allegation of clandestine clearance as alleged by them in the show cause notice. In such circumstance, the demand raised is unsustainable and requires to be set aside. Appeal allowed - decided in favor of appellant.
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