By TIOL News Service

CHENNAI, SEPT 19, 2018: THE CESTAT had by its order dated 23.06.2016 - 2016-TIOL-2672-CESTAT-MAD while dismissing the appeal filed by the assessee had held thus -.

Clandestine clearances - Cross Examination - When evidences for non-accountal of raw materials stand corroborated, denial of cross examination would not result in violation of principles of natural justice - Demand upheld: CESTAT

The assessee has challenged this order before the Madras High Court.

It is submitted that the entire demand was solely based on the diary notings maintained by the Manager and his statement recorded, which were retracted immediately, there was no investigation to the aspect of buyers of cotton yarn alleged to have been clandestinely removed by the assessee and the Department failed to note that there was no attempt to remove the goods, which were confiscated and there was no allegation that the assessee attempted to remove the goods clandestinely and, therefore, the orders passed are erroneous. Reliance is also placed in support on the decisions in Saakeen Alloys Pvt. Ltd. - 2014-TIOL-739-HC-AHM-CX and Continental Cement Company - 2014-TIOL-1527-HC-ALL-CX .

The counsel for the Revenue emphasised that the lower authorities had made a thorough factual exercise and recorded the findings which were affirmed by the Tribunal and as such, no question of law arises for consideration. It is also informed that the assessee is habitually engaged in such clandestine removal and another case against the assessee regarding clandestine removal which order, passed by the Adjudicating Authority, has been confirmed by the Tribunal .

The High Court considered the submissions and while distinguishing the decisions cited narrated the findings of the lower authorities and inter alia observed –

++ It may be true that the burden of proving such an allegation is on the Department. However, clandestine removal with an intention to evade payment of duty is always done in a secret manner and not as an open transaction for the Department to immediately detect the same. Therefore, in case of clandestine removal, where secrecies involved, there may be cases where direct documentary evidence will not be available.

++ However, based on the seized records, if the Department is able to prima facie establish the case of clandestine removal and the assessee is not able to give any plausible explanation for the same, then the allegation of clandestine removal has to be held to be proved . In other words, the standard and degree of proof, which is required in such cases, may not be the same, as in other cases where there is no allegation of clandestine removal.

++ The assessee has not denied any of the allegations, which were put forth except for simple and flimsy retraction. If the assessee had sufficient records to establish their innocence, nothing prevented the Managing Director to say so while making the retraction . There was no attempt made by the assessee to state their case by coming forward to give a statement and producing records. The allegation of parallel invoicing has not been disproved in the manner known to law. Thus, we find that the Adjudicating Authority, the Appellate Authority as well as the Tribunal concurred on facts and each of them has given independent reasons for their conclusion.

The appeal was dismissed.

(See 2018-TIOL-1924-HC-MAD-CX)