IN THE HIGH COURT OF KERALA AT ERNAKULAM
C.E.Appeal.No. 17 of 2006()
1. THE COMMISSIONER OF CENTRAL EXCISE &
... Petitioner
Vs
1. M/S.ELECTORNIC CONTROL CORPORATION,
... Respondent
For Petitioner :SRI.JOHN VARGHESE, ASSISTANT SG
For Respondent :SRI.DINESH R.SHENOY
The Hon'ble MR. Justice C.N.RAMACHANDRAN NAIR
The Hon'ble MR. Justice V.K.MOHANAN
Dated :18/06/2008
O R D E R
C.N.RAMACHANDRAN NAIR &
V.K.MOHANAN, JJ.
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C.E. Appeal No.17 of 2006
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Dated this the 18th day of June, 2008.
JUDGMENT
Ramachandran Nair, J.
Heard the Assistant Solicitor General appearing for the appellant and
counsel appearing for the respondent. Pursuant to information that
respondent was engaged in clandestine removal of goods without payment
of duty, the department conducted search in the business premises of two
units of the respondent and in the residence of the proprietrix. Documents
pertaining to business transactions were seized. Evidence was also
collected from the Bank which showed withdrawals and deposits of massive
amount by the assessee. Statements were recorded from several employees
giving details of production, sales etc. Based on the materials gathered, the
Adjudicating Authority confirmed duty and penalty on the respondent. The
first appellate authority concurred with the finding of the Adjudicating
Authority. However, on further appeal, the Tribunal cancelled the demand.
It is against this order the Revenue has filed this appeal.
2. We have gone through the Tribunal’s order and the orders of the
two lower authorities. We find that the Tribunal has considered only the
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grounds of appeal raised by the respondent and they have proceeded to
assume that the department has not discharged their burden in proving
clandestine removal of dutiable goods. Strangely, the Tribunal has not
considered any evidence relied on by the department like the statements
recorded from the employees, admission made by the proprietrix at the time
of search and the evidence collected from the Bank pertaining to business
transactions. When prima facie evidence is established by the department,
particularly with reference to banking transactions, it is for the respondent-
assessee to explain why the transactions should not be treated as pertaining
to business. The Tribunal failed to note that reasonable inferences can be
drawn from evidence collected by the department, more so when the
respondent fails to explain the transactions brought on record. Strangely,
the employees statements which have evidentiary value have been ignored
by the Tribunal. However, we do not want to enter any finding on facts
based on evidence collected in the course of search and enquiry conducted
by the department. Counsel for the appellant contended that the
adjudication given up for Calicut unit does not bar the depatment from
pursuing against Quilon unit because contrary to what Tribunal has said,
facts relied on by the department are entirely different. Since we are
thoroughly dissatisfied with the order of the Tribunal which was issued
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without reference to the materials gathered by the department and based on
which adjudication was made, we set aside the order of the Tribunal with
direction to the Tribunal to rehear the matter after calling for the search
records and after considering the evidence relied on by the adjudicating
officer. The Tribunal is directed to issue fresh orders within a period of
four months from now. The parties will produce copy of this judgment for
timely compliance of the judgment.
C.N.RAMACHANDRAN NAIR
Judge
V.K.MOHANAN
Judge
pms