Charges of clandestine removal of goods cannot be sustained based on sketchy evidences: Delhi HC

Commissioner of Central Tax Vs A S P Metal Industries (Delhi High Court)

Delhi High Court held that duty demand alleging clandestine manufacture and removal of goods cannot be sustained in absence of any tangible evidence. Such charges cannot be sustained based on sketchy evidence.

Facts- The respondent-assessee is engaged in the manufacture of copper ingots, and is registered with the Central Excise Department. The unit of the appellant-assessee was searched by the officers of Directorate General of Central Excise Intelligence. The statements of various persons were recorded. On the basis of investigation, the Department issued a Show Cause Notice dated 20.03.2006, seeking confiscation of Indian currency on the ground that the said currency, recovered during search, was the sale proceeds of the goods cleared clandestinely. Accordingly, demand of duty and education CESS of Rs. 1,21,42,057/- was raised on alleged clearance of copper wire rod and Rs. 2,93,17,554/- on alleged clearance of copper ingots without payment of duty and of Rs. 62,832/- on the alleged shortage of copper scrap.

CESTAT allowed the appeal filed by the respondent. Being aggrieved, revenue has preferred the present appeal.

Conclusion- Held that the CESTAT conducted a meticulous exercise to examine and appreciate the evidence on record in the light of settled principles and came to a categoric finding that the case of unaccounted manufacture and clearance was built on sketchy evidence without any concrete corroboration and whatever evidence formed basis of the case of the Revenue fell short of the minimum requirement of credible case of clandestine removal. Thus, in the absence of any tangible evidence which would indicate that there was clandestine manufacture and clearance of the goods from the premises of the respondent, we hold that the impugned order dated 08.06.2017 passed by the CESTAT does not suffer from any serious error and does not merit interference. The appeal is therefore dismissed.