Case Law Details
Manoj Maheshwari Vs Commissioner of Central Excise (CESTAT Mumbai)
CESTAT Mumbai held that witnesses relied upon by the central excise authorities are not acceptable evidence in the absence of cross-examination that was denied. Hence, matter alleging clandestine removal mainly resting upon certain statements is remanded back to enable cross-examination.
Facts- Shortage of finished products and inputs on which CENVAT credit had been availed were noticed during visit of officers of central excise which was regularized promptly by discharge of differential duty and reversal of credit. That was also the starting point of investigations that culminated in issue of show cause notice.
Notably, 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.
Conclusion- 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 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, we find 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.
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