2020 (2) TMI 684 - AT - Central Excise

Tribunal overturns confiscation and penalty due to lack of evidence, emphasizing need for chemical examination.

Shrikant Chaurasia s/o Harbans Chaurasia Versus Commissioner, Central Excise & CGST, Varanasi

The Tribunal allowed the appellant's appeal, overturning the confiscation of seized goods and penalty imposed. It found the lack of chemical examination ... Seizure of goods during the search operation - Chewing Tobacco or not - HELD THAT:- Through the impugned order, learned Commissioner (Appeals) has upheld confiscation on seized goods worth ₹ 80,000/- holding the same to be chewing tobacco packed in pouches. Further, he also upheld imposition of penalty of ₹ 40,000/- on the appellant. From the record, it is found that though the samples of the seized goods were taken the same were not sent for chemical examination by CRCL, New Delhi and market opinions were obtained. There is no provision in Central Excise law to decide the chemical composition of the goods on the basis of market opinion. The samples should have been sent to CRCL to seek report as to whether the same were chewing tobacco. It was not proved that the seized goods were chewing tobacco - Appeal allowed - decided in favor of appellant. Issues:1. Relevance of a final order in a present appeal arising from the same investigation.2. Determination of seized goods as marketable and manufactured.3. Admissibility of evidence based on statements not offered for cross-examination.4. Consideration of market opinions in the absence of chemical examination reports.5. Imposition of penalty on the appellant.Analysis:1. The appellant sought to consider a final order dated May 21, 2019, relevant to the present appeal, arguing both cases stem from the same investigation. The Revenue contended the final order pertained to duty demand, while the present appeal concerned goods seizure during a search operation. The Tribunal acknowledged the link between the cases and allowed the miscellaneous application.2. The appellant claimed the seized goods were not marketable or manufactured, as they were non-redeemable pouches of no use. Samples were taken during the investigation, but not chemically examined. The Commissioner (Appeals) upheld confiscation based on statements and market opinions. However, the Tribunal found the lack of chemical analysis by CRCL and the inadmissibility of un-cross-examined statements rendered the allegation of manufacturing without registration unproven.3. The Tribunal highlighted the necessity of sending samples for chemical examination to ascertain if the seized goods were indeed chewing tobacco. Relying on the precedent set by the Allahabad High Court, the Tribunal deemed statements not subjected to cross-examination as inadmissible evidence, thereby refuting the Commissioner's basis for confiscation.4. Market opinions were considered insufficient to establish the nature of the seized goods without chemical examination reports. The Tribunal emphasized the inadequacy of relying solely on market opinions under Central Excise law, reinforcing the need for scientific analysis to determine the composition of goods accurately.5. Ultimately, the Tribunal set aside the impugned order, overturning the confiscation of goods and the penalty imposed on the appellant. The decision was made based on the lack of concrete evidence, specifically the absence of chemical examination reports and the inadmissibility of un-cross-examined statements, leading to the appeal's success.