2015 (9) TMI 36 - AT - Central Excise

Manufacturing units win case over pan masala production allegations. Insufficient evidence found. Stay granted.

MAYANK & CO. Versus COMMISSIONER OF C. EX. & S.T., KANPUR

MAYANK & CO. Versus COMMISSIONER OF C. EX. & S.T., KANPUR - 2015 (318) E.L.T. 508 (Tri. - Del.) Issues:1. Disposal of stay petitions arising from an impugned order confirming duties and penalties against manufacturing units.2. Allegation of manufacturing pan masala instead of branded chewing tobacco.3. Contradictory reports from different laboratories regarding the composition of the final product.4. Absence of evidence supporting Revenue's claim of using lime and katha in the manufacturing process.5. Consideration of prima facie case in favor of the appellants based on expert reports and buyer statements.Analysis:1. The judgment addresses the disposal of stay petitions arising from an impugned order confirming duties and penalties against manufacturing units. The impugned order by the Commissioner confirmed duties against the manufacturing units and imposed penalties. The Tribunal noted that all the stay petitions were disposed of by a common order as they stemmed from the same impugned order.2. The case involved an allegation that the manufacturing units were actually producing pan masala instead of branded chewing tobacco, leading to a higher rate of duty. The Revenue based this allegation on a report from the Shriram Institute of Industrial Research, which indicated the presence of lime and katha in the samples. A show cause notice was issued to the manufacturing units, alleging the incorrect classification of their product.3. Contradictory reports from different laboratories added complexity to the case. While the Shriram Institute's report suggested the presence of additional ingredients in the final product, a report from the U.P. Government Food Laboratory contradicted this finding. The Tribunal highlighted the absence of concrete evidence supporting the Revenue's claim of using lime and katha in the manufacturing process.4. The Tribunal observed that apart from the report of the Shriram Institute, the Revenue failed to produce any additional evidence to substantiate its claim. Moreover, the report from the U.P. Government Food Laboratory, obtained by the appellants, contradicted the findings of the Shriram Institute. The Tribunal emphasized that the delayed sending of samples by the appellants did not undermine the credibility of the U.P. Government Food Laboratory's report.5. Considering the conflicting expert reports, lack of contrary evidence, and statements from buyers confirming the purchase of chewing tobacco, the Tribunal concluded that the appellants had a good prima facie case in their favor. The Tribunal dispensed with the condition of pre-deposit of dues, interest, and penalties, allowing all the stay petitions in favor of the manufacturing units.