The Delhi High Court in the case of Commissioner Of Central Tax, GST Delhi East Versus A S P Metal Industries has held that the case of unaccounted manufacture and clearance was built on sketchy evidence without any concrete corroboration and whatever evidence formed basis of the case of the Revenue fell short of the minimum requirement of credible case of clandestine removal.
The bench of Justice Ravinder Dudeja and Justice Yashwant Varma has observed that mere fact that the respondent-assessee agreed to deposit the duty amount to avoid any kind of litigation, itself cannot be held to be the basis for confirming the duty demand against the assessee.
The respondent-assessee is engaged in the manufacture of copper ingots, and is registered with the Central Excise Department. The unit of the appellant-assessee was searched by the officers of Directorate General of Central Excise Intelligence (DGCEI) on 21.09.2005.
The residential premises of Shri Rajendra Prasad Gupta, father of Shri Vinod Gupta, who is the sole proprietor of the assessee, was also searched. During the course of search of residential premises of Shri Rajendra Prasad Gupta, Indian currency amounting to Rs. 6,20,000/- was recovered and the same was seized by the officers of Revenue.
During the course of search in the factory premises of the appellant- assessee, the officers detected a shortage of 3500 Kgs of copper scrap valued at Rs. 3,85,000/-. Some records were also resumed by the officers from the factory premises of the assessee.
Amongst the documents seized, a spiral notebook was recovered from Shri. Girish Chand, Production/Labour Supervisor of the respondent. The file having sixty eight loose papers, two Spiral Neelgagan Notebooks, Neelgagan duplicate notebook and Neelgagan slip pad were recovered from Shri. Devender Kumar Sharma, supervisor of the respondent.
Two separate appeals were preferred by the appellant as also by the respondent against the Order before CESTAT. The appeal filed by the respondent was allowed while that of the Revenue was rejected by the CESTAT.
The court noted that the charges of clandestine removal of goods connotes accusations of serious nature. If the charges are of serious nature, evidence should also be equally strong to substantiate the charges, and therefore, the evidence needs careful scrutiny and appreciation.
The court stated that in criminal cases, the standard of proof as required to prove the charges in a criminal trial is “proof beyond doubt”, whereas, the adjudication proceedings are in the nature of civil proceedings and not criminal proceedings and therefore, the standard of proof of civil proceedings i.e. preponderance of probability is applicable in adjudication proceedings.
The court while upholding the order of the CESTAT held that in adjudication proceedings to establish the charge of clandestine removal and under valuation, Revenue is not required to prove the case with mathematical precision. Such charges are to be established on the basis of “preponderance of probabilities.” However, the conclusions to be drawn are necessarily to be logical and not on the basis of presumptions and assumptions. Suspicion, however grave, cannot replace the test of proof.
Case Details
Case Title: Commissioner Of Central Tax, GST Delhi East Versus A S P Metal Industries
Case No.: CEAC 6/2019
Date: 05/12/2024
Counsel For Appellant: Jatin Kumar Gaur
Counsel For Respondent: None
