Charge of Clandestine Removal to be framed only on the basis of Substantial Evidence: CESTAT [Read Order]

The Allahabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), held that the charge of Clandestine removal is to be framed only on the basis of substantial evidence in favour of the appellant-assessee, M/s Raghuveer Rolling Mills.

The counsel for the appellants contended that the entire case of the department based on the entries in a notebook recovered during the search. He submitted that however, the person, who allegedly have made entries in the said notebook has neither been identified nor his statements were recorded; the proprietor of the company was made to accept the clandestine removal and to deposit the amount towards duty. It was further 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 revenue submitted in reply that, the impugned order has extensively analyzed the evidence submitted by the revenue and have upheld the charge of clandestine removal. Hence, the appeal is liable to be rejected.

The Appellate Tribunal found that, the case of the Department is that the appellants have indulged in clandestine removal.It was noted that the department came to this conclusion on the basis of entries made in a certain note book recovered from the appellant’s premises.  Neither the author of the notebook or the credibility of the entries made in the notebook were verified by the Excise Department. Several infirmities were also found in the investigation and the show cause notice issued to the appellant as pointed out by the counsel for the appellant.

It was thus held by the Single Bench consisting P Anjani Kumar, Technical Member that, “In view of the above, I find that the department has not adduced any additional evidence, even on a sample basis to substantiate the allegation of clandestine removal as per above. In the absence of evidence, the allegations raised by the department are not substantiated. For this reason, impugned order cannot be sustained”, thereby quashing the order-in-original, demanding Rs. 11,11,790/- in penalties and interests and the order-in-appeal by the Commissioner (Appeals) that upheld the order-in-original.

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