Case Law Details
Sanjay Goel Vs Commissioner of Central Goods and Service Tax (CESTAT Delhi)
CESTAT Delhi sets aside demand based on third-party evidence. Adjudicating Authority warned on compliance. Read the full judgment details.
Apparently and admittedly, no search was conducted in premises of any of the present appellants. No physical verification of the stock of present appellants was conducted. Both the show cause notices, the initial order-in-original and the impugned order under challenge are based merely upon the loose parchies and other handwritten documents as was recovered from the premises of M/s Kaycee Electricals and also on the basis of statements of the Supervisor as well as Partner that too of M/s Kaycee Electricals itself. The entire evidence is therefore nothing but a third party evidence. The law in this respect has been settled as is apparent from the decision of the Hon’ble Allahabad High Court in the case of Continental Cement Company vs. Union of India -2014 (309) ELT 411 (All.) wherein it was held-
“that the findings of clandestine removal cannot be upheld based upon the third party documents, unless there is clinching evidence of clandestine manufacture and removal of the goods. Any demand and the proportionate penalty on the Director of the manufacturer is not sustainable. There have been plethora of judgements to hold that to stand upon the charges as that of clandestine removal, there has to be some clinching evidence and the demand cannot be confirmed based on presumptions and assumptions. It was specifically held by the Hon’ble High Court that the charge of clandestine removal is a serious charge, which is required to be proved by the Revenue by tangible and sufficient evidence. Mere statements of buyers that too based on memories were not sufficient without support of any documentary evidence”.
Thus, it stands clear that neither the documents as were recovered from the premises of M/s Kaycee Electricals can be read against the appellants nor the statements of employees of M/s Kaycee Electricals can be considered to be the admission on part of appellants. I hold that confirmation of demand against the appellants based on these two grounds is therefore not sustainable. The Adjudicating Authority has dropped the entire demand against M/s Kaycee Electricals and the penalties upon its Partners no question survives for confirmation of demand on the job workers or the raw material suppliers of M/s Kaycee Electricals. The Adjudicating Authority below is held to have given a wrong interpretation to the order of remand vide which denovo adjudication was directed after providing the opportunity of cross-examination to the parties. The authority below has failed to appreciate the said direction and also the law with respect to the admission.
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