Case Law Details

Case Name : M/s.Dadu Steel & Power Ltd. Vs CCE (CESTAT Delhi)
Appeal Number : Excise Appeals Nos. 50132 and 50081/2018-EX(SM)
Date of Judgement/Order : 06/04/2018
Related Assessment Year :
Courts : All CESTAT (756) CESTAT Delhi (267)

M/s.Dadu Steel & Power Ltd. Vs CCE (CESTAT Delhi)

Allegations based on inquiries made in the third party’s documents of Commission Agent and transporters cannot lead to the fact of clandestine activities. In fact, the list is un-ending and it is almost a settled law that the allegations of clandestine removal cannot be upheld based upon the third party’s records without there being any evidence reflecting upon such clandestine activities.

In the present case, the entire endeavor of the Revenue is based upon the documents recovered from the premises of M/s. Pankaj Ispat Ltd. read with the statement of their Director and by ignoring the statement of the Director of the present appellant. In such a scenario, the impugned orders confirming the demands and imposing penalties are unsustainable.

FULL TEXT OF THE CESTAT ORDER IS AS FOLLOWS:-

Both the appeals are being disposed of by a common order as they arise out of the same set of facts and circumstances, vide which the demand of duty stands confirmed against M/s.Dadu Steel & Power Ltd. to the extent of Rs. 13,77,691/- along with imposition of penalty of identical amount. Further, penalty of Rs.5 lakhs stands imposed upon Shri Santosh Agarwal, Director of the manufacturing unit.

2. As per facts on record, the appellant is engaged in the manufacture of steel ingots. Certain investigations were made in the factory premises of M/s.Pankaj Ispat Ltd., Raipur and based upon recovery of various documents including Excise Appeals Nos. 50132 and 50081/2018-EX(SM) weighment details, etc. read with the statement of the Director of M/s. Pankaj Ispat. Ltd, a view was entertained that the appellant was clearing their final products to the said M/s. Pankaj Ispat Ltd. without payment of duty. The Director of the present appellant, in his statement recorded during the course of investigation, denied the charges of clandestine removal and submitted that all the clearances made by them were under the cover of central excise invoices.

3. In the above background, proceedings were initiated against the present appellants resulting in the confirmation of demands and imposition of penalties, as detailed above. The order passed by the Original Adjudicating Authority was upheld by the Commissioner (Appeals) and hence, the present appeals.

4. The appellants’contention is that the entire case of the Revenue is based upon the result of the   search conducted at the premises of M/s.Pankaj Ispat Ltd. and there was no investigation at the  appellant’s end except recording of the statement of the Director, which is exculpatory. Revenue  instead of referring to the appellant’s statement has chosen to rely upon the statement of M/s.Pankaj Ispat. Ltd. without there being any corroborative evidence and has confirmed the demand only on the basis of the third party’s records and evidences.

5. Ld. Advocate has relied upon the Tribunal’s decision in the case of Abha Power & Steel P. Ltd. vide Final Order No.58580-58581/2017 dated 20.12.2017, wherein under the identical circumstances, the demand of duty made on the basis of the third party’s records were set aside by following the Tribunal’s earlier order in the case of Rudra Ventures Pvt. Ltd. –2016 (344) ELT 472 (Tribunal-Chan.). It was held in the said order that in the absence of any investigations conducted at the assessee’s unit and in absence of any corroborative evidence of procurement of raw materials, transportation of the goods, flow back of money, etc., allegations of clandestine removal based on mere assumptions and presumptions are not sustainable. To the same effect is the Tribunal’s decision in the case of Raipur Forging Pvt. Ltd. –2016 (335) ELT 297 (Tribunal-Delhi), wherein it was held that recovery of private records from the offices of the assessee, as admitted by the Director and confirmed by the buyer, who used them for manufacture of un-accounted final products, cannot be held to be sufficient evidences in the absence of any further inquiry/verification done regarding transportation, actual manufacture of M.S. ingots, etc. for upholding the charges of clandestine removal. Even the statement of the Director admitting such removal was held to be insufficient in the absence of any other corroborative evidences indicating clandestine activities. Further, the Tribunal in the case of CCE & ST, Raipur Vs. P.D. Industries Pvt. Ltd. –2016 (340) ELT 249 (Tribunal-Delhi) held that the allegations based on inquiries made in the third party’s documents of Commission Agent and transporters cannot lead to the fact of clandestine activities. In fact, the list is un-ending and it is almost a settled law that the allegations of clandestine removal cannot be upheld based upon the third party’s records without there being any evidence reflecting upon such clandestine activities.

6. In the present case, the entire endeavor of the Revenue is based upon the documents recovered from the premises of M/s. Pankaj Ispat Ltd. read with the statement of their Director and by ignoring the statement of the Director of the present appellant.

7. In such a scenario, the impugned orders confirming the demands and imposing penalties are unsustainable. Accordingly, I set aside the same and allow both the appeals with consequential relief to the appellants.

[Order pronounced on 06.04.2018.]

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