Mere Factum Of Two Set Of Invoices Not Sufficient To Prove Charge Of Clandestine Removal: CESTAT

The Kolkata Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that a mere factum of two sets of invoices is not sufficient to prove the charge of clandestine removal.

The bench of Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) has observed that the case was made out on the basis of rough papers seized during the course of the investigation, which were in the possession of the employees of the appellants, who made an inculpatory statement at the time of the seizure of the documents. But the managing director has controverted the statement made by the employees. Moreover, three parallel invoices on the basis of which demand has been confirmed against the appellants were not examined. Neither an investigation was made with the buyers mentioned in those parallel invoices nor any investigation was made with the transporters. No effort was made to find out who the author of those invoices was. In the absence of any corroboration to that effect, the demand is not sustainable.

The departmental officers searched the factory premises of the appellant/assesee on June 2, 2012, and during the course of the search, some pages containing some entries allegedly Daily Report, three invoices, and a waybill were found. The employees of the appellant company were recorded, who stated that the entries made in those documents pertain to clearance of some goods without payment of duty, some on which duty has been paid; therefore, further investigation was conducted, and the statement of Managing Director Shri Santosh Kumar Pareek was recorded on May 3, 2013, who gave a contradictory statement to the statement given by the employees.

Later on, the show cause notice alleges that the appellant has cleared the goods on the strength of parallel invoices. Some demands sought to be confirmed on the basis of the documents recovered during the course of the investigation. The matter was contested by the appellant, but an adjudication order was passed confirming the demand proposed in the show cause notice, along with interest and penalties on both appellants.

The assessee contended that a demand has been raised against the appellants on the basis of the alleged three parallel invoices, some rough papers seized during the course of the investigation, and the statements of the employees of the appellants. No investigation was conducted at the end of the buyer mentioned in those parallel invoices, nor was any investigation conducted with the transporter through whom they had transported the goods or not. No cross-examination of the employees was given to the appellants, and there is a contradiction in the statement of the employees and the Managing Director. In those circumstances, without cross-examination, it cannot be concluded that it is a case of clearance of goods without payment of duty or clearance of goods on the strength of parallel invoices, and no inquiry was made to corroborate the documents recovered during the course of the investigation. In those circumstances, the demands against the appellants are not sustainable. Consequently, no penalty is imposed on the appellant.

The department contended that it is the case where the parallel invoices were recovered during the course of the investigation, which was admitted by the employees of the appellants, who were looking after the business of the appellants; therefore, the demand is rightly confirmed and penalties are rightly imposed on the appellants.

The tribunal held that without corroboration of the corroborative evidence, the demand cannot be raised against the appellant when the appellant has denied the said charge during the course of the investigation.

Counsel For Appellant: N.K.Chowdhury

Counsel For Respondent: P.K.Ghosh

Case Title: M/s. Sharda Rerollers Private Limited Versus Commissioner of CGST

Case No.: Excise Appeal No.76976 of 2018

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