2011 (7) TMI 12 - AT - Central Excise

Tribunal overturns penalties and confiscation in gutkha & chewing tobacco case, citing lack of evidence

The Tribunal allowed the appeals, overturning the confirmation of demand, penalties, and confiscation related to the seizure of goods like ZATPAT gutkha, ... Valuation - Canalize removal - the appellants have drawn my attention to the Panchnama where the bags of Chetna cheqing tobacco were also shown to be printed with the month of manufacture as February 2006 - The bags of FIFTY FIFTY gutkah did not show any month of manufacture - As such, he submits that the findings of Commissioner (Appeal) are factually incorrect inasmuch as this mistake occurred in respect of all the products manufactured by the appellants - He clarifies that the date of manufacture as printed on the large packing bags of gutkha is irrelevant inasmuch as the same does not affect the marketability of the product - The pouches being less than 10 grams are exempted from declaring the date of manufacture - The month of manufacture is only printed on the wholesale bags/ packets containing 50 such pouches - He submits that there being no other evidence on record, the findings of the lower authorities that the bags printed with January and February 2006 as manufacturing dates, were not the same goods which were entered in RG-1 register, cannot be upheld - Hence, set-aside the confirmation of demand of duty, imposition of penalty and confiscation of the goods against M/s. Chetna Zarda Company and imposition of penalty on Shri Dinesh L. Daiya - Thus, the appeals are, accordingly allowed with relief to the appellants. Issues:1. Seizure of goods due to alleged clandestine clearances.2. Confiscation of seized goods, imposition of duty, and penalties.3. Discrepancies in production records and stock verification.4. Allegation of illegal seizure and contention of mistaken printing on packaging.5. Adjudication of show cause notices and imposition of penalties.6. Appeal against the orders and remand by Commissioner (Appeal).7. Contention regarding the month of packing on products.8. Factual discrepancies in the Commissioner (Appeal)'s findings.9. Decision on confirmation of demand, penalty, and confiscation.Analysis:1. The case involved the seizure of goods, including ZATPAT gutkha, FIFTY FIFTY gutkha, and CHETNA chewing tobacco, due to alleged clandestine clearances based on discrepancies in production records and stock verification.2. The authorities issued show cause notices proposing confiscation of seized goods, duty appropriation, and penalties on the appellants, which were adjudicated resulting in confirmation of demands and imposition of penalties.3. The appellant contended that the seizure was illegal as there were no unaccounted goods in the factory, and discrepancies in production dates were due to mistakes by illiterate workers.4. The Commissioner (Appeal) rejected the appellant's contentions, emphasizing that the month of packing on products was not a printing mistake and concluded that the seizure was valid.5. The appeal against the orders led to a remand by the Commissioner (Appeal) for a single officer to decide both show cause notices, resulting in the maintenance of demands and penalties.6. The appellant further argued that the month of manufacture on packaging was irrelevant, and there were factual discrepancies in the findings of the Commissioner (Appeal).7. Upon review, the Tribunal found merit in the appellant's contentions, accepted that the dates on packaging were erroneous, and set aside the confirmation of demand, penalties, and confiscation, granting relief to the appellants.8. The decision highlighted the lack of evidence supporting the alleged clandestine clearances and emphasized that no reasonable person would keep clandestinely manufactured goods while clearing recorded goods.9. Ultimately, the Tribunal allowed the appeals, providing consequential relief to the appellants by overturning the confirmation of demand, penalties, and confiscation, based on the benefit of doubt due to factual discrepancies and lack of evidence supporting the allegations.