Allegations Of Clandestine Removal Of Goods Merely Based On Entries In Diaries Not Sustainable: CESTAT

The Allahabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the allegation of clandestine removal is merely based on the entries in diaries, etc. is not sustainable.

The bench of P. Anjani Kumar (Technical Member) has observed that the department has not adduced any additional evidence, even on a sample basis, to substantiate the allegation of clandestine removal.

The appellants/assessee are in the manufacture of iron flats, spring leaves, and agricultural implements. Officers of Central Excise visited the premises of the appellants and conducted investigations. A show cause notice demanding Central Excise duty, invoking the proviso to Section 11A, along with interest and a proposed penalty under Section 11AC of the Central Excise Act, 1944. The order confirmed the duty demanded and imposed an equal penalty under Section 11AC.

The appellant submitted that the entire case of the department was based on the entries in a Shristi Brand Notebook recovered during the search. However, the person who allegedly made entries in the notebook has neither been identified nor had his statements recorded. The proprietor of the company was made to accept the clandestine removal and to deposit the amount towards duty.

The appellant submitted that clandestine removal cannot be alleged only on the basis of the statement but it has to be corroborated with tangible concrete evidence and not on the basis of wild inferences or assumptions and presumptions.

The department contended that the appellants had indulged in clandestine removal. The department came to this conclusion on the basis of entries made in a certain notebook recovered from the appellant's premises.

The CESTAT has found that other than the entries in the notebook and the statement of the appellants, no other evidence has been put forth by the Department. The statement of the appellant has no validity as evidence.

"I find that this is only an assumption as the entries in the diary distinctly mention the tractor and tractor trolley separately. The person writing the diary was not identified and evidence was not established as to the truthfulness of the contents. This becomes significant due to the lack of any other corroborative evidence," the tribunal said.

Case Title: M/s Raghuveer Rolling Mills Versus Commissioner of Central Excise, Kanpur

Citation: Excise Appeal No. 71145 of 2018

Date: 10.08.2022

Counsel For Appellant: Advocate Amit Awasthi, Raj Shukla

Counsel For Respondent: Authorised Representative V.S. Yadav

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