Case Law Details
Bharat Sheth Vs C.C.E. & S.T. (CESTAT Ahmedabad)
We find that allegation of clandestine removal of excisable goods was totally based on entries found/ recorded in the records of transporters and brokers against the name of the appellant and transporters and brokers have admitted in their statements recorded by the department specifically that they have loaded and transported the said alleged goods without the cover of invoices from the premises of the appellant. However, department has not produced any loading advices or consignment notes issued by the transporters in respect of alleged quantity of excisable goods. Further on a careful consideration of the facts and records, we notice that mere entries found recorded in the records of said Transporters and brokers are not sufficient to confirm the demand of duty and allegation of clandestine removal. It is well settled law that there has to be some evidence in the form of receipt of raw materials, shortage of raw materials, clandestine manufacture including use of electricity, excess or shortage of inputs found in the stock, flow back of funds, purchase of final products by parties alleging receipt and removal of goods and any such evidence which would show clandestine manufacture of goods. Mere entries in third parties’ records of Transporters and brokers cannot be basis for clandestine removal.
It is settled law that documents recovered from a third party can be used against the manufacturer to prove clandestine removal only when these are supported with corroborative evidences. The Revenue has alleged that huge quantity of finished products have been manufactured and cleared clandestinely without payment of Central Excise duty. The data/ records recovered from the premises of third party, no doubt, may give rise to suspicion. However, clandestine manufacture and clearance alleged against the appellant is a very serious charge which needs to be proved by Revenue by producing tangible and reliable evidences. For clandestine clearance of such huge quantities of finished products, corresponding quantity of raw materials is also required. The investigation could not adduce a tip of evidence in this regard. The finished products allegedly have been cleared to various customers. In fact, in the transporters and brokers records, names of several buyers have been indicated. However, we are in utter surprise that investigation has not tried to approach any of the buyers to corroborate the documents recovered from transporter and broker. The investigation also failed to establish the procurement of raw materials attributed to the huge quantity of alleged clandestine removal. In fact on the date of search, no discrepancy was recorded in respect of stock of raw materials and finished goods vis-a-vis that recorded in statutory records.
It is true that the evidence which is required to be produced in quasi judicial proceedings should be such that the charges get established on the basis of preponderance of probability. The standard of evidences need not be as high as in criminal proceedings, where the charges are required to be established beyond reasonable doubts. But in the present case, we are of the view that the allegation of clandestine manufacture and clearance has not been substantiated by any tangible evidences. The only evidence unearthed by Revenue in the form of records of third party which alone cannot be considered as sufficient proof to support such allegation. This is particularly so since the authenticity of the evidence has been questioned. The Revenue has failed to produce any corroborative evidence. The evidence, at best, raises suspicion in the minds but is not sufficient to prove the charges of clandestine removal. In the absence of any corroborative evidence, benefit of doubt goes in favour of the appellant. In these circumstances, we hold that Revenue has failed to prove their case.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
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