24 June 2024


Customs, Excise and Service Tax Appellate Tribunal

Paragon Extrusions P. Ltd. Vs. Commissioner, CGST, Ghaziabad




Clandestine removal allegations cannot be upheld on basis of sole statement of one of employees, unless same are corroborated by other independent evidences

The Appellant's factory is engaged in the manufacture of Aluminium Profiles (hollow) of various sizes and specifications, was visited by the Central Excise Officers, who conducted various checks and verifications. It was found that, Daily Stock Register (RG-1) was written only up to 30th April, 2015. Proceedings were initiated against the Appellant proposing confirmation of demand of duty alleging clandestine removal, which in turn was based upon entries made in the note book as also on rough papers. The said show cause notice was taken up for adjudication by the Additional Commissioner. Additional Commissioner in his order has vacated the show cause notice by observing that apart from the statement of an employee, there is no other corroborative evidences on record to establish clandestine manufacture and removal of the goods.

Being aggrieved with the said order of the Original Adjudicating Authority, Revenue filed an appeal before Commissioner (Appeals). The appellate authority set aside the Order of the Original Adjudicating Authority and confirmed the demand and imposed penalty on the Appellants under Rule 25(1) of the Central Excise Rules, 2002 read with Section 11(AC) of the Central Excise Act, 1944. The said order of Commissioner (Appeals) is impugned before Tribunal.

Commissioner (Appeals) has strongly relied upon the statement of said deponent by observing that, he has accepted the clandestine removal. Further, as recorded in the order of the Original Adjudicating Authority as also as pleaded by the Appellant, the said statement cannot be held to be confessional as it is clearly deposed by Jagdish Prasad that, details in writing pad and slip pad etc. appears to be in the handwriting of dispatch and packing staff. Revenue has made no further efforts to get in touch with the said dispatch and packing staff or to find out who actually is the writer of the entries in the note pad. No enquiry stand made even from the Directors or from any other person/staff of the assessee. The entire case of the Revenue is based upon the not so confessional statement of Jagdish Prasad.

Apart from the fact that the statement of Shri Jagdish Prasad was not confessional, Tribunal observed that even if the said statement is held to be confessional statement accepting clandestine removals, the same cannot be made the sole basis for upholding the allegations of clandestine activity of the appellant. The deponent of the said statement was never put to Examination-in-Chief or cross examination and as such veracity of his statement has never been tested. Clandestine removal allegations cannot be upheld on the basis of the sole statement of one of the employees, unless the same are corroborated by other independent evidences.

The Revenue has failed to produce any evidence to establish clandestine removal on the part of the Appellant. The Order of Commissioner (Appeals) lacks merits and is accordingly set aside and the order of the Original Adjudicating Authority is restored.

Similarly in respect of the shortages, it is well settled that mere shortages cannot lead to the allegation of clandestine removal in the absence of any other evidences to reflect upon the fact that such shortages has occurred on account of clandestine clearances. Appeal is allowed by restoring the Order of the Original Adjudicating Authority.

Tags : Demand Penalty Legality

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