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

The Allahabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in the case M/s Raghuveer Rolling Mills Versus Commissioner of Central Excise, Kanpur observed and has held that the allegation of clandestine removal is merely being based on the entries in diaries, etc. is not sustainable.

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

The assessee/appellants are in the manufacture of iron flats, spring leaves, and agricultural implements. Officers of Central Excise visited the premises of the appellants and an investigation was conducted. Thus, a show cause notice has been issued 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 and the order confirmed the duty demanded and imposed an equal penalty under Section 11AC.

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

It was submitted by the appellant 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 presumptions and assumptions.

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

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

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

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