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2023 (11) TMI 1029 - CESTAT MUMBAIClandestine removal without entering in the production records - mild steel (MS) ingots - Penalties under rule 26 of Central Excise Rules, 2000 and section 11AC of Central Excise Act, 1944 - recovery of differential duty under section 11A of Central Excise Act, 1944 along with interest thereon under section 11AB of Central Excise Act, 1944 - between September 2003 and July 2009. The case of the central excise authorities, in a nutshell, is that raw materials procured from the open market was utilized to enable unreported production which is evidenced by inflated consumption of electricity during the reported heat cycles preferring to take cover under inefficient performance per cycle. HELD THAT:- From an analysis of the facts, it would appear that correlation of certain factors concerned with production do not suffice for establishing the extent of evasion, if any; at best, these aspects may corroborate the allegation of clandestine removal of evasion of duties of central excise. Doubtlessly, evidencing of clandestine removal must rest upon preponderance of probability as direct evidence is rarely possible, but interferences must indicate both probability and preponderance. Normally, it should happen that goods that have reached the market are traced to the assessee through a backward trail or raw materials that originated from a source be traced through forward trail to assessee. Ideally, both should converge but, for the purpose of ordering clandestine removal, one or the other would suffice; that is the true spirit of preponderance of probability - In the present instance, there are no whiff of the former whereas of the latter, there is ‘free floating’ evidence of procurement of ‘sponge iron’ and ‘BP sets’ by the assessee; nonetheless, the trail of investigation for linking delivery of alleged procurement of these raw materials and consumables at the premises of the assessee rests solely upon certain statements. Unless those statements are tested for acceptability, connecting of dots will hardly reveal the hidden picture. The witnesses relied upon by the central excise authorities are not acceptable evidence in the absence of cross-examination that was denied. The impugned order fails on that ground but, as the request for cross-examination had been rejected deliberately, availability or amenability to production for cross-examination is not in question. The impugned order set aside - matter remanded back to the original authority for fresh determination on the facts and evidences limiting reliance to such statements that have crossed the hurdle of ‘relevancy’ prescribed in section 9D of Central Excise Act, 1944 - appeal allowed by way of remand.
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