Packing-machine excise liability fails without proof of control over premises, manufacture, clearance, and reliable evidence

Liability under the packing-machine based excise regime could not be sustained where the Department failed to prove that the disputed pouch packing machines were installed in premises under the appellant's control, or that the appellant had manufactured or cleared gutkha. The record, including affidavits and supporting material, indicated that the machines were located in premises occupied by other entities, and the Department did not establish the appellant's dominion over those premises. Statements recorded during investigation were also not treated as reliable because cross-examination was denied. On that basis, the duty demand, interest and penalty were held unsustainable and the appeals were allowed.

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Issues: Whether the duty demand and personal penalty could be sustained when the Department failed to establish that the disputed pouch packing machines were installed in the appellant's premises and failed to prove manufacture and clearance of gutkha by the appellant, and whether reliance on statements recorded during investigation was permissible when cross-examination was denied.

Analysis: The premises rented to the manufacturer-appellant were found not to be the premises where the two pouch packing machines were located. On the material on record, including affidavits and other supporting material, the machines were found in premises occupied by other entities. The Department was unable to establish beyond doubt that the appellant controlled the premises where the machines were found, or that the appellant had manufactured or cleared the alleged goods. In such circumstances, the statutory mechanism for fastening liability based on installation of packing machines could not be invoked. The statements relied upon by the Department were also not treated as reliable where cross-examination had been denied.

Conclusion: The duty demand, interest and penalty were unsustainable, and the appeals were allowed.

Ratio Decidendi: Liability under the packing-machine based excise regime cannot be fastened unless the Department proves that the machines were installed in premises under the appellant's control and that the alleged manufacture or clearance is established by reliable evidence.

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