Charge Of Clandestine Removal Is A Serious One Must Have Corroborative Evidences: CESTAT

The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the charge of clandestine removal which is a serious one has not been established by the Revenue with corroborative evidence.

The bench of Ashok Jindal (Judicial Member) and P. Anjani Kumar (Technical Member) has observed that the statements recorded during the course of investigation which later on retracted by the appellants are not admissible to allege clandestine removal by the appellants.

A common investigation conducted at the premises of one M/s Trikoot Iron & Steel Casting Ltd. was engaged in the manufacture of MS Girders, Rounds, TMT Bars, MS Ingots, Castings etc.

The Directorate General of Central Excise Intelligence pursuant to intelligence, conducted simultaneous searches at the factory premises of M/s Trikoot office and residential premises of Shri Vibhav Goyal, Director of M/s Trikoot.

During the search some loose sheets, hard disks, pendrives were seized. Print outs were also taken from seized hard disks. During the course of search of the factory premises of M/s Trikoot on 04.07.2023, shortage of some goods were also found.

Some excess of end cuttings were also found. The said goods were seized and statements of various persons relating to M/s Trikoot were recorded. Later on, some of the statements were retracted. In continuations of the search conducted at the premises of M/s Trikoot wherein certain documents relating to the appellants before us were also recovered and search was conducted.

During the course of search on the premises of the appellants before us no shortage or excess of goods were found. Certain documents were seized but the appellants were asked to go through the documents recovered from the premises from M/s Trikoot containing certain bills issued by the appellants.

During the impugned period having invoices issued by the appellants in the records of M/s Trikoot but was not available with the appellants. The appellants could not answer those queries properly and admit in some cases that goods were supplied. On the basis of the investigation a show cause notices were issued to M/s Trikoot as well as the appellants before us to demand duty alleging clandestine removal of goods along with interest and imposed various penalties on the appellants.

The matter was adjudicated, demand of duty was confirmed against all the appellants/manufacturers and penalties were imposed on all the appellants.

Against the order, M/s Trikoot filed appeal before the Tribunal and the Tribunal held that the documents recovered during the course of investigation from the premise of M/s Trikoot are not admissible documents, as the condition set out under section 36B(4) of the Central Excise Act were not satisfied, therefore, the demand against M/s Trikoot was set aside.

The appellant submitted that the demand has been raised against the appellants being supplier of goods to M/s Trikoot is on the basis of printouts taken from the hard disks found in the residential premises of Vaibhav Goyal, which is not admissible evidence as per the order of this Tribunal in the case of Trikoot. No incriminating documents were recovered from the premises of the appellant, therefore, demand against the appellants without any corroborative evidence are not sustainable.

the appellant are the supplier and no documentary evidence has been recovered with alleged clandestine removal by the appellants having been brought on record by the Revenue. The Revenue is relying on the documents recovered from the premises of M/s Trikoot, therefore, the question arises whether the third party evidence is admissible or not.

The tribunal has held that the charge of clandestine removal against the appellant are not sustainable. Consequently, the demand of duty and imposition of penalties on the appellants are not sustainable.

Case Details

Case Title: M/S Shri Parasnath Alloys Pvt Ltd Versus Additional Director General (Adjudication)

Case No.: EXCISE APPEAL NO. 50759 OF 2022

Date: 08.05.2025

Counsel For Appellant: S.K. Mathur

Counsel For Respondent: Rakesh Agarwal

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