TaxTMI 
TaxTMI 
2013 (10) TMI 944
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....asad Kedar Nath Halwai, Prop. M/s Ram Prasad Sushil Kumar, Ahmedabad, a dealer dealing in Pan King Gutkha is alleged to have been receiving non-duty paid consignments of Gutkha cleared by MRT/MRS. 1.1.2 M/s Pawan Carriers is a transport company which is alleged to have transported the consignments of Gutkha cleared by MRT/MRS without payment of duty to M/s Ram Prasad Sushil Kumar, Ahmedabad. Shri Tripawan Kumar Ram Prasad Sandhir and Shri Krishan Gopal, Ram Prasad Sandhir are the partners of M/s Pawan Carriers. 1.2 For manufacture of Gutkha, which is Pan Masala containing Tobacco, in addition to Supari, Katha, Tobacco, Menthol etc. another important raw material required is printed laminated plastic rolls (plastic laminate) with manufacturer's name, product name, brand name, MRP etc. printed on them, which are used for making retail pouches of the Gutkha in automatic packing machines. The plastic laminate was being received by MRT/MRS from the units of M/s Flex Industries Ltd. (M/s FIL) at Malanpur and Noida. 1.2.1 M/s Gupta Trading Company, Gwalior with Shri Arvind Kumar Gupta as its Prop. is a dealer of the plastic laminate manufactured by FIL who was receiving the plast....
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.... Delhi. It is in this background that on 17/11/98, the factory, residential and other premises of MRS/MRT were searched in course of which a number of incriminating documents were recovered. 1.3 Inquiry was, thereafter, made with (a) Shri Arvind Gupta, Prop. M/s Gupta Trading Company, Gwalior ; (b) Shri Anil Sharma, Executive Manager -M/s FIL, Malanpur ; (c) Shri Barun Verma, DGM, M/s FIL, Noida ; (d) Shri Mahesh Haryana, Accountant, MRS/MRT ; (e) Shri Chander Kumar Gupta, Director, MRS/MRT ; (f) Shri Madan Lal, Manager, M/s Pawan Carriers, Delhi, a transporter ; (g) Shri Tripawan Kumar Ram Prasad Sandhir, Partner, M/s Pawan Carrier ; (h) Shri Ram Prasad Kedar Nath Halwai, Prop. M/s Ram Prasad Sushil Kumar, Ahmedabad ; (i) Shri A.P. Singh, GM (Marketing), M/s FIL and Shri Yogeshwar Singh, Executive Manager (Sales), M/s FIL; (j) Shri Shanti Prasad Sharma of M/s Pandit Transport Company, 7210, Aram Nagar, Delhi ; and (k) Shri Anil Lamba, Partner, M/s Lamba Road Transport Ltd. ; in course of which their detailed statements were recorded. 1.4 M/s Pawan Carriers, the transporters, besides an office at Delhi, also have an office and godown in Ahm....
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....ster for the period prior to 1998-1999, as they have destroyed the same alongwith the GRs. 1.4.2 Shri Madan Lal, Manager, M/s Pawan Carrier at New Delhi in his statement dated 17/11/98 and 27/11/98, corroborating the statements of Shri Tripawan Kumar stated that consignments of Pan King brand Gutkha used to be brought from the factory of MRS/MRT by a driver Shri Than Singh and that in the GRs issued, instead of actual description, the codes 104, or 072 or 123 used to be written. 1.4.3 Shri Mahesh Haryana, Accountant, MRS/MRT in his statements dated 17/11/98 and 18/11/99 also confirmed sending of consignments of Gutkha to the office of M/s Pawan Carriers, New Delhi through Shri Than Singh in his tempo. He also stated that MRS/MRT mostly make Gutkha pouches of MRP of 50 paise, that they work in one eight hour shift and that one kg. of laminate can produce 2700 pouches of MRP 50 paise and 2200 pouches of MRP of Rs. 1/-. 1.4.4 In course of inquiry with Shri Ram Prasad Kedar Nath Halwai, he in his statement dated 17/11/98 while admitting that he was trading in the Gutkha/Tobacco for the last 10 years and that he was buying Pan King brand Gutkha for the last 5 years, stated that....
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....i Chander Kumar Gupta of MRS/MRT, and that though the invoices had been issued in the name of the firm M/s Arora & Co., the printed laminated rolls had been received by MRS/MRT, Samaypur, Badli, Delhi only, as buyers representative used to come to his premises and it was his responsibility to take the material to the destination. 1.6.1 The scrutiny of the records of M/s GTC revealed that during period from 31/8/94 to 07/9/95, they had 49596.4 kgs. of plastic laminate for Pan King brand Gutkha had been supplied to MRS/MRT, and these receipts of plastic lamination had not been accounted for by MRS/MRT in their books of accounts. The total Central Excise duty involved on the retail Gutkha pouches manufactured by using 49,596.4 kg. of plastic lamination was Rs. 1,73,58,810/. 1.7 Inquiry with M/s FIL, Noida revealed that substantial quantity of plastic lamination rolls for manufacture of Pan King brand Gutkha retail pouches were also being procured by MRS/MRT from M/s FIL, Noida also. These supplies from M/s FIL, Noida were in the name of M/s Chandra Packers, Delhi, M/s Karan Packers, Delhi and M/s Vikram Packers, Delhi which on inquiry were found to be fictitious. 1.7.1 Shri ....
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....above investigation, three show cause notices dated 4/1/2000, 31/1/2000 and 14/5/99 were issued to MRS/MRT and other noticees. The show cause notice dated 14/5/99 was for recovery of duty of Rs. 5,20,520/- involved on the Pan King brand Gutkha pouches valued at Rs. 26,02,600/- seized from the premises of M/s Pawan Carriers at Ahmedabad alongwith interest and also for imposition of penalty under Section 11AC on MRS/MRT, as these goods appeared to have been cleared without payment of duty in a clandestine manner. 1.9.1 The show cause notice also sought confiscation of the seized goods and the trucks from which the goods had been seized and beside this also, sought imposition of penalty under Section 209A of Central Excise Rules, 1994 on Shri Chander Kumar Gupta, Director MRS/MRT, M/s Pawan Carriers, Delhi, Shri Tripawan Kumar Ram Prasad Sandhir and Shri Krishan Gopal, Ram Prasad Sandhir, Partners of M/s Pawan Carrier. 1.10 Show cause notice dated 4/1/2000 sought recovery of allegedly short paid duty amounting to Rs. 4,57,23,510/- (Rs. 2,46,33,700 + Rs. 1,73,58,810 + Rs. 37,31,000/-) in respect of consignments of Gutkha alleged to have been cleared without payment of duty during....
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...., Director MRS/MRT, Samaypur, Badli, Delhi Rs. 50,00,000/- ; (2) M/s Pawan Carriers, Khanna Market, Delhi Rs. 1,00,000/- ; (3) Shri Ram Prasad Kedar Nath Halwai, Prop. M/s Ram Prasad Sushil Kumar Rs. 50,000/- ; (4) Shri Tripawan Kumar Ram Prasad Sandhir and Shri Krishan Gopal, Ram Prasad Sandhir Rs. 5,000/- each. 1.13 Against the above order of Commissioner, these six appeals have been filed. 2. Heard both the sides. ARGUMENTS ON BEHALF OF APPELLANTS. 3. Shri Bipin Garg, Advocate, representing M/s M.R. Tobacco (P) Ltd. and Shri Chander Kumar Gupta, Director and Shri J.P. Kaushik, Advocate, the learned Counsel representing M/s Pawan Carriers, Shri Krishan Gopal Ram Prasad Sandhir, Shri Tripawan Kumar Ram Prasad Sandhir, Partners and Shri Ram Prasad Kedar Nath Halwai made the following submissions. 3.1 The submissions made by Shri Bipin Garg, Advocate, the learned Counsel for the appellants MRS/MRT and Shri Chander Kumar Gupta :- (1) Though the Commissioner made a finding that all the documents were supplied to the appellant under acknowledgement receipts dated 05/6/2000, the un-relied upon document were not supplied at all and certain relied upon documents....
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....artments allegation that the code No. GTC 010 and GTC 020 pertain to printed plastic laminate meant for packing of Pan King brand Gutkha and the consignments of plastic laminate sent by M/s Gupta Trading Co., Gwalior to M/s Arora & Co., Delhi had actually been received by the appellant, are based on the statements of certain persons. The appellant had sought cross examination of those persons, but that was not allowed. Therefore, the statements of the persons on which these allegations are based cannot be taken in evidence. (5) The duty demand of Rs. 2,46,33,700/- against the appellant is based on alleged receipt of 70,382.3 kg. of printed plastic laminate sent by M/s FIL, Noida to M/s Karan Packers, M/s Vikram Packers and M/s Chandra Packers and it is the departments allegation that all the consignment of plastic laminate sent by M/s Flex Industries Ltd., Noida in the name of these three firms had actually been received by the appellant company. In this regard, the main evidence relied upon by the Department is the statement of Shri Chander Kumar Gupta, Director of the appellant company. But this statement had been retracted by Shri Chander Kumar as the same had been obtained....
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....e, on behalf of M/s Pawan Carriers, Shri Tripawan Kumar Ram Prasad Sandhir, Shri Krishan Gopal Ram Prasad Sandhir and Shri Ram Prasad Kedar Nath Halwai, Prop. M/s Ram Prasad Sushil Kumar, Ahmedabad :- (1) The Departments allegation that all the lorry receipts/ GRs showing booking of consignments of M/s Malhotra Trading Co., Delhi to self in Ahmedabad had actually been booked by the appellant company, is without any basis. This allegation is based on the statements dated 17/11/98 and 27/11/98 of Shri Madan Lal, Manager, M/s Pawan Carriers, New Delhi and statements dated 17/11/98 and 18/1/99 of Shri Mahesh Haryana of MRS/MRT wherein they have stated that one Than Singh, owner of Tata 407 vehicle No. 0366 used to transport the consignments of Gutkha cleared by MRS/MRT to transport office of Pawan Carriers for booking in the name of M/s Malhotra Trading Co., Delhi. But Shri Than Singh has not been examined. (2) M/s Pawan Carriers had booked the consignments brought by M/s Malhotra Trading Co., Delhi and even if those consignments contained Pan King brand Gutkha cleared clandestinely by the appellant company, there is no evidence on record to prove that M/s Pawan Carriers or its ....
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....ed by MRS/MRT and payment of those goods have been made in cash. Not only this, Shri Chander Kumar in his further statement dated 21/4/99 once again confirmed the correctness of his statement dated 17/11/98 in which he had stated that he had received plastic laminates from M/s Flex Industries Ltd. in the name of three firms namely M/s Vikram Packers, M/s Chandra Packers and M/s Karan Packers and he once again confirmed that the material received in the name of these companies were used in the manufacture of Pan King brand Gutkha, which had been cleared without payment of duty. On this point when Shri A.P. Singh, GM (Marketing), M/s Flex Industries Ltd. was asked, he in his statement dated 29/3/99 had also stated that as per the system of their company, the printed packing material goes only to the brand owner and that before accepting orders for branded laminates, they ensure that the person placing the order is the brand name owner or his representative. The statement of Shri A.P. Singh, thus, corroborates the statement of Shri Chander Kumar Gupta. The retraction of his statement by Shri Chander Kumar Gupta, therefore, has no meaning. 4.2 As regards, the duty demand of Rs. 1,73....
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....ini Roadlines, Agra and that the 419 packages consigned to M/s Arora & Co., Delhi after their release from the Sales Tax authorities, were delivered at the factory premises of MRS/MRT at Samaypur, Badli. In this regard, Shri Kamal Singh, Manager of M/s Saini Roadlines, Agra also in his statement dated 22/11/97 stated that these goods, though consigned to M/s Arora & Co., had been delivered at the factory premises of MRS/MRT at Samaypur, Badli. It was also found that Chander Kumar Gupta, Director MRS/MRT had filed an affidavit before U.P. Trade Tax Tribunal claiming that order for the detained consignment of printed plastic packing material with 'Pan King' trade mark printed on it, was placed by him through Shri Suresh Kumar owner of M/s Arora & Co. and this fact was confirmed by Shri Rajender Narain Kapur, Notary in his statement dated 18/11/98. Not only this, in the judgment dated 9/12/94 of Honble Allahabad High Court, Honble Court has observed that the Tribunal found that MR Sales Corporation, Delhi and Arora & Co., Delhi an inter-connected firms. All these evidences clearly show that all the consignments of printed plastic laminate consigned to M/s Arora & Co., Delhi had actu....
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..../invoices, the same used to be in the name of M/s Malhotra Trading Co., Delhi and never in the name of MRS/MRT, that he was not writing the name of MRS/MRT as the consignor in GRs, as one Shri Pradeep Kumar of MRS/MRT has instructed him to not to do so, and that the consignee was being mentioned as self and whoever produced the original copy of the GRs to their Ahmedabad office, was delivered the said goods. Shri Tripawan Kumar Ram Prasad Sandhir, Partner of M/s Pawan Carriers in his statement dated 18/11/98, 19/11/98, 22/11/98 and 25/11/98 corroborated the statement of Shri Madan Lal and confirmed that in the GRs covering the transportation of Pan King brand Gutkha instead of actual description of the goods, only mentioned the code No. 104, or 123 or 072 were being written, that the address of the consignee was not being mentioned either in the GRs or in their register, that on arrival of the consignments of Gutkha at Ahmedabad, a representative of the consignee used to approach them, that if nobody approached them at Ahmedabad, they use to call Shri Ram Prasad, the dealer of MRS/MRT at Ahmedabad having Phone No. 214417 after which he himself or his representative used to come and....
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....ertain relied upon documents, record reveals that this issue was never pleaded in course of proceedings before the Commissioner. Hence, such belated plea made baselessly at this stage, is a dilatory tactics to cause prejudice to Revenue. It was not submitted specifically which are the documents not supplied and how such non-supply deprived the appellant from leading defence. 7.1 First component of duty demand is the duty demand of Rs. 5,20,520/- on 182 bags of Pan King brand Gutkha seized from the three trucks No. HR-29/C 0139, GJ-IT/ T 7303 and DL-1G/A 1436 parked outside the office of M/s Pawan Carriers at Sarkhej Ahmedabad on 22/11/98. There is no dispute that the consignment of the 182 bags loaded in these trucks contained Pan King brand Gutkha manufactured by MRS/MRT and there was no Central Excise invoice showing payment of duty in respect of the same. 7.2 The invoices under which above goods were transported were issued by the consignor M/s Malhotra Trading Co., New Delhi to M/s Shyam Trading Co., Ahmedabad, and M/s Patel Pan House, Ahmedabad, which were found to be fictitious entities. Not only this, M/s Malhotra Trading Co., Delhi has also been found to be a non-exis....
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....Gutkha covered under the invoices of M/s Malhotra Trading Co., Delhi had actually been cleared by MRS/MRT, Delhi without payment of duty and had been booked for transport with M/s Pawan Carriers and M/s Pawan Carriers as transporters, had transported these non-duty paid goods knowing very well, that the same are non-duty paid and hence are liable for confiscation. Accordingly, the duty demand of Rs. 5,20,520/- on 182 bags of Gutkha seized from the three trucks parked in front of M/s Pawan Carriers at Sarkhej, Ahmedabad and confiscation thereof as well confiscation of the three trucks is upheld. 8.1 As regards the duty demand of Rs. 79,56,960/-, the same is based on the GRs recovered from the Delhi office of M/s Pawan Carriers each of which was having either of the three code Nos. 104, 072 or 123 written on it, which as explained in the statements of Shri Madan Lal and Shri Tripawan Kumar Ram Prasad Sandhir, were the code numbers assigned for Pan King brand Gutkha. 8.2 As mentioned above, from statements of Shri Madan Lal, it is clear that the consignments of Gutkha cleared by MRS/MRT from their factory at Samaypur, Badli, Delhi were being brought to their office by a driver S....
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....ering these goods mentioned their description in code words as printed plastic packaging material GTC 010. Subsequently, Shri Arvind Gupta, Prop. M/s Gupta Trading Co., in his statements dated 23/2/98 and 2/3/98 had stated that the printed plastic laminate had been procured from M/s Flex Industries Ltd., Malanpur, that the code words GTC 010 and GTC 020 meant the plastic laminate material meant for Pan King brand Gutkha and that these goods could only be used by MRS/MRT for making Gutkha pouches of Pan King brand. 9.1.2 Subsequently on orders of Hon'ble Allahabad High Court, this consignment was ordered to be released to M/s Gupta Trading Co. Subsequent inquiry revealed that M/s Arora & Co., J-7, Malka Ganj, Delhi is fictitious and non-existent entity. After release, the goods were transported to Delhi by Truck No. HRP 5627, which as per the statement of its owner Shri Subhash Chand, was attached to M/s Saini Roadlines, Agra. Shri Kamal Singh, Manager, M/s Saini Roadlines in his statement dated 22/11/97 stated that the consignment of 419 packages of plastic material had been delivered at the factory premises of MRS/MRT at Samaypur, Badli, Delhi, although in the invoice, the cons....
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.... (b) Shri Nand Kishore in his statement dated 20/11/98 has confirmed that on 29/10/94 Shri Chander Kumar Gupta had signed the affidavit in his presence before the Notary Shri Rajender Narain Kapur. The statement of Shri Nand Kishore is corroborated by the statement of Shri Ashok Kumar Sharma. (c) Shri Arvind Gupta of M/s Gupta Trading Co. in his statement dated 17/11/98 has stated that Shri Chander Kumar Gupta had accompanied him to the office of the Advocate Shri Ashok Kumar Sharma and had given an affidavit stating that for the seized goods, they had placed the order through Arora & Co., Delhi and that after release of the goods on order of Honble Allahabad High Court, he had dispatched the consignment to MRS/MRT, Samaypur, Delhi. (d) Judgment dated 07/11/94 of U.P. Trade Tax Tribunal mentions that the consignment of 419 packages had been purchased by M/s Gupta Trading Co., Gwalior from M/s Flex Industries Ltd., Malanpur in the name of MRS on a telephone message from Arora & Co., Delhi, and that consignee M/s Arora & Co., Delhi is alleged to have nexus with MRS, Mainpuri, which is claimed to be a branch of MRS, Delhi. (e) Judgment dated 9/12/94 of Hon'ble Allahabad Hig....
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....ctually being delivered at their factory at Samaypur, Badli, Delhi. 9.3.3 Some of the consignment of plastic laminate supplied by M/s Gupta Trading Co., Gwalior to M/s Arora & Co., Delhi had been transported through M/s Lamba Roadlines Pvt. Ltd. In this regard, inquiry was made with Shri Anil Lamba, Partner of M/s Lamba Roadlines Pvt. Ltd. and he in his statements dated 24th September 1998, 30th November 1998 stated that though the invoice was issued to M/s Arora & Co., Delhi, the goods booked by M/s Gupta Trading Co., had been delivered at the factory of MR Sales Corporation at Samaypur, Badli, Delhi and in this regard Shri Anil Lamba submitted photocopy of GR No. 18199 dated 21/4/94 under which a consignment of 5222.55 kgs. of Plastic packing material roll GTC 010 had been transported and its trip sheet, which mentioned the place of delivery as 'Pan King factory', while the invoice had been issued to M/s Arora & Co., Delhi. 9.3.4 The statement of Shri Anil Lamba corroborates the statement of Shri Arvind Gupta and also the statement of Shri Kamal Singh, Manager M/s Saini Roadlines, wherein it had been stated that the consignments whose consignee was mentioned as M/s Arora & ....
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....M/s FIL, Noida for supply of printed plastic laminate to M/s Karan Packers were resumed during investigation and signatures on these challans indicated that the goods covered under these challans issued to M/s Karan Packers had been received by Shri Sonik Sharma and Shri Mahesh Haryana of MRS/MRT in factory of MRS/MRT. 9.4.4 Though Shri Chander Kumar retracted his statement, in view of the fact that he had made this statement initially on 17/11/98 and subsequently after about six months on 21/4/99 he had confirmed that statement as correct, and these statements are corroborated other independent evidence also, his subsequent retraction has to be treated as an afterthought. 9.4.5 In view of above evidence it is bound to be held that all the consignments of printed plastic laminate supplied by M/s Flex Industries Ltd. in the name of M/s Karan Packers, M/s Chandra Packers and M/s Vikram Packers had actually been received by MRS/MRT in their factory at Samaypur, Badli, Delhi and used in the manufacture of Pan King brand Gutkha pouches which had been cleared without payment of duty. Therefore, the duty demand based on the receipt of the plastic laminate in the name of Chandra Pack....
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....t the consignments of Gutkha transported to Ahmedabad under these GRs had been manufactured and cleared clandestinely by MRS/MRT and since MRS/MRT have not been able to produce any evidence in their defence, the allegation of duty evasion based on these GRs has also be treated as proved by preponderance of probability. 10.3 For linking the 182 bags of Gutkha covered under GRs issued by M/s Pawan Carriers, seized at Ahmedabad and the GRs seized from Delhi office of M/s Pawan Carriers on the basis of which duty demand of Rs. 79,56,960/- is based, with MRS/MRT, Samaypur, Badli, Delhi, the statement of Shri Madan Lal of M/s Pawan Carriers, corroborated by the statements of Shri Mahesh Haryana of MRS/MRT and Shri Ramprasad Kedarnath Halwai of M/s Ramprasad Sushil Kumar is sufficient and in this regard, inability of the investigating officers to trace Shri Than Singh and examine him is not fatal. 11. The cross examination of two main witnesses Shri Mahesh Haryana, Accountant, MRS/MRT and Shri Madan Lal, Manager, M/s Pawan Carriers had been allowed and therefore on this count the appellant cannot have any grievance. As regards cross examination of other witnesses Arvind Gupta, since....