FACTS: Manufacturer suppressed production of dutiable goods & made clandestine clearance of such goods under parallel invoices to one of its buyer with an intention to avoid duty. However no original invoice & other records were made available evidencing such transaction. Sale Tax Tribunal found no concrete proof/strict evidence regarding clandestine removal of goods by the manufacturer & mere doubt was raised regarding the issue of parallel invoices ,hence issued an order dated 08.11.2003 where no penalty was levied on the buyer. Since mere evidence based on probability cannot hold buyer liable for any offence. Commissioner (Appeals) placing reliance on the Sales Tax Tribunal’s order & without examining the production figures before & after investigation & the related documents also exonerated the buyer from the levy of penalty.
Revenue filed an appeal to CESTAT against the order issued by Commissioner(Appeals), holding that penalty should be levied on buyer based on the following collective evidence obtained:
1.Post Investigation revealed suppressed unexplained production which were not duly accounted.
2.Close scrutiny of Parallel invoice issued indicating the escaped quantity & value of the unexplained goods & also clearly stated the identity of the buyers therein.
3. No original invoice & Octroi receipts issued by Municipality were available. But entries in Municipal records showed movement of clandestinely removed goods.
4. Revenue contended based on inquiry that original invoices were intentionally destroyed with the purpose of not revealing the transaction relating to clandestine removal.
5.Lastly Revenue contended that Buyer is beneficiary to clandestine removal of goods & he secretly cooperated with the manufacturer in respect of the transaction with the intention of evasion of duty.
HELD: Revenue’s appeal is accepted based on the following grounds:
1.Firstly, though strict proof is essential in criminal proceedings, but evidence demonstrating probability is enough for holding fiscal proceedings.
2.Secondly, decision of one court does not bind another court created under different statutes; hence order of Sales Tax Tribunal does not bind CESTAT (Customs, Excise and Service Tax Appellate Tribunal).
3. Goods, escaping duty from the end of manufacturer, is bound to escape in the hands of buyer resulting in evasion of duty.If evasion is permitted to continue it will be a bonus to the evaders and result in Government revenue loss. In order to prevent this occurrence, buyers should be liable to penalty for evasion of duty.
Hence Tribunal held that goods were secretly manufactured & the way transactions had been made proved wrong motive & secretly involved the buyer. Thus penalty of Rs-10,000/- levied on the buyer for breaching of law.
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