2026-VIL-1173-CESTAT-KOL-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Clandestine Removal of Excisable Goods - Whether the charge of clandestine removal and manufacture can be established on the basis of discrepancies in pen drive data, unofficial records, and statements of employees without corroborative evidence of actual transportation, receipt of sale proceeds, excess procurement of raw materials, or excess consumption of electricity – HELD - The charge of clandestine removal is a serious charge which must be proved by the revenue through tangible evidence and not merely on presumptions, assumptions, or inferences. Revenue has failed to establish the fundamental criteria required to establish clandestine manufacture and clearance, namely, evidence of raw materials in excess of statutory records, actual instances of removal of unaccounted finished goods not inferential or assumed, discovery of such goods outside the factory, instances of sale to identified parties with receipt of sale proceeds, use of electricity far in excess of normal consumption, statements of buyers with details of illicit manufacture, proof of actual transportation of goods cleared without payment of duty, and links between recovered documents and factory activities - The electricity consumption data produced by the appellant demonstrated that only 490 units were required to manufacture one metric ton of MS ingots, which was not possible under any circumstances, and the production capacity of the machinery installed in the factory had not been considered by the adjudicating authority. No statement of transporters of raw materials or finished goods had been recorded, and the statements of buyers and suppliers which were relied upon were identically worded, not tested through cross-examination, and lacked independent corroborative support from documentary evidence, cash transaction records, or third party affirmations - In cases of clandestine removal, mere recovery of data from pen drives and private records without independent verification and corroboration cannot form the basis for confirming demands - The demand for duty along with interest and the penalties imposed on the appellants for alleged clandestine removal of excisable goods are set aside – The appeals are allowed
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