By TIOL News Service

NEW DELHI, AUG 08, 2014: THIS is a case of demand of duty on goods found short on physical verification by the department. The Commissioner (Appeals) set aside the demand and aggrieved by the same revenue is in appeal before CESTAT.

Revenue submitted that when physical verification resulted in shortage of 1236.240 M.T. of Sponge iron valued at Rs.1,28,56,896/- involving duty evasion of Rs.20,57,103/- and Education Cess of Rs.41,442/- and no good reason in respect of such shortage advanced by respondent, Commissioner (Appeals) finding fault with investigation resulted in letting off the evader. It is the case of the department that the Commissioner (Appeals) without examining the physical examination report and also the data recovered from the computer as well as laptop simply agreed with the assessee to hold that the allegations by investigation is baseless. Revenue accordingly prayed that the adjudication order may be restored.

None appeared on behalf of the respondent.

After hearing the revenue and examining the Order-in-Original and the Order-in-Appeal, the Tribunal held:

The material facts with evidence brought out by investigation as depicted in the preceding paragraphs appears to have force and truth, not being discarded by Respondent. Statements recorded brought out evidence to support the case of investigation. There was neither any hypothesis nor any presumption made by investigation. Investigation made its story of evasion believable bringing out the manner of causing evasion backed by cogent evidence depicted as aforesaid. The electronic record (computer data) proved the modus operandi of the respondent. Fabrication of the records proved evasion of excise duty. This is vividly clear from para 15 of the adjudication order. When the deficiency of stock was found by investigation and that remained unexplained, that is enough to make allegation of unaccounted removal of such goods. No evidence was there to show reason of evacuation of stock. Hon'ble High Court of Madras in the case of Alagappa Cement Pvt. Ltd. vs. CEGAT reported- 2010-TIOL-770-HC-MAD-CX held that non-existence of stock is sufficient ground to hold clandestine removal.

It is shocking to read the order passed by ld. Commissioner (Appeals) who worked hard to grant relief on pulpable grounds making suppositions and assumption with total disregard to the law and statutory records. The goods manufactured when did not find place in statutory records and incidence of manufacture being event of levy, non-accountal of the goods imputes the respondent to the charge of clandestine removal. It is not necessary for the investigation to prove its case with mathematical precision. Burden of proof was not discharged by the respondent to explain when the goods found their destination. Not only the physical verification result but also other evidence gathered by investigation as stated here in before lend credence to the case of Revenue demonstrating premeditated design of evasion of duty made by the respondent. It appears that the respondent had made systematic approach to cause evasion as is revealed from para 14 and 15 of the adjudication order.

Ld. Commissioner (Appeals) was guided by misplaced sympathy in terms of para 10 of his order to hold that there was no flow back of the fund out of realisation of the alleged goods. It is not necessary for Revenue to prove the disposal of extinct goods when it questioned non-existence thereof on the date of visit. Non-existence of the goods at the time of physical verification is good ground to charge clandestine removal thereof following the ratio laid down in Alagappa Cement Case (Supra) . By his own hypothesis he proceeded to grant relief to an evader with the total disregard to the statutory provisions and rule of rationale.

It would be proper to request ld. CDR to mark a copy of this order with his comments to the learned Member (L & J) of CBEC for the needful.

(See 2014-TIOL-1456-CESTAT-DEL)