2026-VIL-900-CESTAT-KOL-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Admissibility of Third Party documents in Excise Proceedings - Clandestine Removal of Goods - Whether a demand for duty on alleged clandestine removal of goods can be sustained solely on the basis of third party documents and statements recorded without the maker of the statement being examined as a witness and without being afforded an opportunity for cross-examination – HELD - The third party documents and statements cannot form the sole basis for raising a demand of duty in clandestine removal cases. Even authentic entries in third party records cannot fix liability upon a person without independent corroborating evidence of their trustworthiness. Before relying upon statements recorded before an officer, the strict procedure prescribed under section 9D of the Central Excise Act, 1944 must be followed, which requires the person making the statement to be examined as a witness before the adjudicating authority with an opportunity for cross-examination. Where this statutory procedure is not followed, the statements become irrelevant and cannot be relied upon for proving the truth of their contents – Further, the charge of clandestine removal requires multiple layers of corroborative evidence including verification of procurement of excess raw materials from independent sources, evidence of electricity consumption, proof of actual buyers and transporters, physical stock verification, and production capacity assessment. The mere entries in a third party's rough notebooks containing vehicle numbers and quantities, without any supporting documentary evidence, without identification of buyers or transporters, and without any statement recorded from the actual transporter who engaged the contractor, cannot sustain a demand – The Revenue had the burden to prove the manufacture of goods and clandestine removal through clinching evidence rather than relying on surmises, conjectures or mere suspicions - The impugned order confirming the demand of duty and imposition of penalties is set aside and the appeals are allowed
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