TaxTMI 
TaxTMI 
2016 (2) TMI 532
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....ri branded Gutkha clandestinely without payment of Central Excise duty by suppressing the production, searches were conducted in the state of Karnataka on 7.10.2004 and certain records were seized. Documents recovered indicated that (M/s. BP) has been manufacturing and clandestinely removing Maruti, Ajeet and Kaveri branded Gutkha to their distributors/ dealers located in the state of Karanataka without invoices / bills by rail or sometimes by road through the transporters namely, M/s. Lion Roadway, M/s. Uday Roadlines, M/s. Puja Roadways etc. Further investigation made to the Railway authorities at Hubli, Belgaum and Kankanadi (Mangalore) and the details of the Railway Receipt No. (RR No.) date of booking, number of bags dispatched and the name of the consignor and consignee were obtained wherein it was found that bookings were made in fictitious names by misrepresenting the description of the goods as sweet supari / Meethi supari / zarda supari / kirana except choti. The name of the consignor and the consignee are the same. The bookings were made from Hazrath Nizamuddin Railway Station, New Delhi on a particular day reach the destinations, Hubli, Belgaum and Kankanadi on the alte....
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....in the light of decision of M/s. Aswani & Co. [Final Order No. A/54559-54565/2014] dated 2.12.2014 wherein it has been held that no reliance can be placed on the statements which have not been examined under section 9D (1) (2) of the Central Excise Act, 1944. 3.2 He further submits that the whole case is based upon the allegation, the evidences gathered from Railways and transporters to allege that bookings were made by M/s. BP to three places namely, Hubli, Belgaum or kankandadi under the fictitious names under the description of goods as sweet supari /meethi supari / zarda suparai /kirana except choti. In this regard, he submits that various charts were prepared by Railway department and relied upon as such by the authorities below, shows that the railway authorities has only relied upon the RRs numbers stating at the top that the same were details of consignments of gutkha / sweet supari /meethi supari / zarda suparai /kirana except choti/ general goods consigned to Hubli Railway station or to Belgaum Railway station. As the Railways department has never stated that these consignments were booked by M/s. BP, but they only certified that the consignments were booked as gutkha / ....
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....statement of Shri Pawan M Prabhu nowhere describe the goods received at Hubli from M/s. BP were indicated with abbreviation MNG. The presumption made by the investigation team is without any sufficient evidence. Therefore, ;the said entries cannot be connected with the brands of Maruti, Ajeet and Keveri gutkha which are manufactured by M/s. BP. It is further submitted that the diaries seized from the premises of M/s. Damodar Traders nowhere indicated that same pertain to any clandestine receipt of gutkha from M/s. BP. It was further submitted that the learned Commissioner did not allow the cross examination of various witnesses and three buyers namely, Shri Pawan M Prabhu, proprietor of M/s. Devakikrishna Traders, Shri Avinash M Baliga proprietor of M/s. Damodar Traders, Belgaum and Shri Suresh Rao, proprietor of M/s. Maruti Agency, Mangalore, who have filed their respective affidavits stating the correct facts wherein they had clearly stated that they never received any Gutkha from M/s. BP under fictitious names. The ld.Commissioner has termed these affidavits are as an after thought. Infact, the adjudicating authority was required to examine the persons who have filed the sworn....
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....ta could instantly agree in answer to question No. 14 that the quantities entered date wise were pertaining to the quantities of gutka cleared by M/s. BP to M/s. Devakikrishna Traders through road and railways without raising invoices. Acceptance of Shri Varun Gupta to that is bald and instant acceptance and cannot be conceived by any reasonable person. 3.7 He further submits that the duty has been demanded for the period April, 2004 to September 2004 on the assumption that M/s. BP has received a quantity of 3370 Qtls. of supari from Hostota Arecanuts Traders, Shimoga from which M/s. BP could manufacture 32,68,90,000 pouches of Maruti brand gutkha. To corroborate this, the railway receipts (according to which) M/s. BP cleared 10091 bags to Hubli, Belgaum or kankandadi, Mangalore clandestinely. He submits that as these two evidences are proved to be unsustainable, untenable and factually incorrect, therefore duty for the period April 2004 to October 2004 cannot be demanded. Infact, the same quantification is based upon information gathered in the form of small diaries seized from the premises of M/s. Devakikrishna Traders whereas the actual details of Hubli and Managalore were reco....
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....ayment of duty and without the cover of any invoice through railway or various transporter of M/s. BP through distributor located in Hubli, Belgaum or kankandadi Mangalore. The case has been made out on the basis of information received by DGCEI and the investigation was started wherein the Railway was asked to furnish the details of dispatch from Hazarat Nizzamudin Railway station, New Delhi to Hubli station in respect of goods given description as kirana except choti. On the basis of details of railway receipts received from the Railways and investigations reveal from M/s. Devakikrishna Traders, Hubli, M/s. Damodar Traders, Belgaum and M/s. Maruti Traders Managalore and on the basis of various dairies seized which corroborates the railway receipts in respect of gutkha received without payment of duty and after corroborative statements of Shri Pawan M Prabhu, Shri Avinash M Baliga, Shri Suresh Rao, and Shri Varun Gupta, Managing partner of M/s. BP, the case has been made out against the appellants, who were engaged in clandestine manufacture and clearing of gutkha without payment of duty or raising invoices. The learned AR submits that as per various statements of persons recorded....
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....ion of Shri Ajay Gupta on account of M/s. BP. On quantification of demand, he submits that the show cause notice proposed demands based on the data supplied by the Railways and road transport companies more particularly on the basis of RRs of goods of description Kirana except Choti Supari etc. dispatched from Nizammudin Station, Delhi to Hubli, Managalore and Belgaum. The show cause notice also established a co-relation in the form of illustration of some of the RRs and the entries made in the pocket diaries recovered and seized from Shri Prabhu, Shri Baliga and also chits retrieved from the residence of Shri Varun Gupta. Such illustrative co-relation is appearing as Annexure C 11 and C 14 of SCN and extending the logic of this illustrative co-relation proposing that entire dispatches made through railways as appearing in the data provided by railway authorities of the goods dispatched from Nizammudin to Hubli, Belgaum etc. were manufactured and clandestinely removed without payment of duty by M/s. BP and the amount so computed was Rs. 7,88,64,986/- . However the adjudicating authority has confirmed the demand based on the quantity arrived from the entries made in the pocket diari....
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....der is to be upheld. 5. Heard the parties. Considered their submissions in detail. 6. We find that this case has been booked against the appellant on the basis of a) Railway receipts; b) diaries recovered from the premises of dealers /distributors; and c) on the basis of statements of Shri Varun Gupta, Shri Pawan M Prabhu, Shri Avinash M Baliga and Shri Suresh Rao. 7. The allegation against the appellant is that M/s. BP is manufacturing maruti brand gutkha and clearing the same to their distributors located in Hubli, through railways without invoices and clandestinely without payment of duty. The department has heavily relied on the statements of Shri Pawan M Prabhu who has admitted in his statement that he was receiving Maruti brand gutkha from M/s. BP and corroborated from diaries seized from the premises of M/s. Devakikrishna Traders. We have gone through the statement of Shri Pawan M Prabhu who has accepted as under:- "M/s. Devaki Krishna Traders is a proprietary concern started in the year 1989-90 and I am the proprietor of the same. We are engaged in trading of supari, gutkha, beedi, cigarettes, stationary items, sweets and confectionery items etc. For the last s....
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.... clandestine removal of gutkha of Maruti brand of M/s. BP cannot be proved. 10. We further find that in the show cause notice, the extract received from railways was made a part of the main basis to demand duty from M/s. BP. We have gone through the information received from the railways. Railways has given that extract of transportation of the goods during the impugned period wherein the query was made to Railway that a case has been booked against M/s BP New Delhi who manufacture gutkha under brand name of Maruti, Ajeet and Kaveri for evasion of Central Excise duty. The said gutkha is booked in Indian Railways from Hazrat Nizzamuddin Railway station. In the invoice raised for this purpose the description of the goods is given as kirana goods except choti and consignor and consignee are fictitious names. Railways were inquired about the case and n this regard, it was requested them to furnish details of railway receipts with the above said description along with the quantity booked, for the last five years. 11. We have also seen the details furnished by railways in their reply as information furnished are taken from RRs and represent the details of all consignments with the sai....
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....me set of investigations has granted them relief on the ground that the evidence adduced by the Revenue was not sufficient enough to conclude against the assessee as regards the clandestine activities. The said order has not been shown to have been appealed against by the Revenue. The same having attained finality, would be of a binding nature. Apart from that, we also note that there are plethora of judgments laying down that duty cannot be confirmed merely on the basis of railway receipts unless there is independent evidence to corroborate the allegations of clandestine removal, especially when such railway receipts do not get recovered from the assessesfactory in which case the onus may get shifted to him for explaining the presence of RRs in his premises. We have already referred to the Tribunal decision in the case of Charriot Cement Co., on the sad issue. Further, reference can be made to the Hon'ble Supreme Courts decision in the case of Collector of Customs Bombay vs. East Punjab Traders 1997 (89) ELT 11 Supreme Court. It is to be seen that RRs relied upon the Revenue are not in the name of the appellant in which case, the onus to establish a link between the appellant and ....
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....roper custody and such documents raise serious doubts about their genuineness. For the above proposition reference can be made to Bombay High Court decision in the case of Commissioner of Customs Mumbai vs. Foto Centre Trading Co. 2008 (225) ELT 193 Bombay; Radhey Shyam Kanoria 2006 (197) ELT, 130 Tribunal Mumbai; Pioneer Industries 2006 (193) ELT 506 Tribunal Mumbai & Rutwi Steel and alloys 2009 (243) ELT 145 [Tri. Ahmadabad]. Infact the list is never ending and reference to all the decisions cannot be made. 39.2 As regards the onus and production of sufficient evidence, reference can be made to the Tribunals decision in the case of Harsinghar Gutkha Pvt. Ltd. vs Commissioner 2005 (186) ELT 369. It stands held in the said decision that the non-accounted procurement of all the raw materials is required to be proved by various evidences. The Honble Delhi High Court in the case of Commissioner of Central Excise Raipur vs. CM re-rollers and fabricators 2004 (168) ELT 506 [Tri. Delhi] has held that the Revenues endeavor to prove clandestine removal based upon the private records seized from the assessee himself cannot be appreciated without corroborative evidence of corresponding raw....
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....estine removal based upon the statement as also the invoices issued by the informer, cannot be upheld in the absence of cross examination of the deponents of the statements. 41. In fact there are plethora of decisions laying down that the allegations of clandestine removal cannot be based upon the uncorroborated statements and evidences and when there are several raw materials involved, the Revenue is required to prove beyond doubt with reference to unaccounted use of all such major raw materials. Such charges of clandestine activities cannot be upheld on the basis of assumptions and presumptions. The list of such decisions is never ending and though the appellant have relied on most of them, we do not find it practical to deal with or to refer to all such decisions. Suffice it to say that though the allegations and findings of clandestine activities are to be decided based upon the evidences available in a particular case, which may vary from case to case but the general principles enunciated by various courts are to the fact that the onus to prove is on the Revenue and such onus must be discharged by production of sufficient evidence, which inspires confidence in the Revenues ....
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....mpugned orders are required to be set aside and appeals allowed. 45. Having independently come to the above finding, we also, at this stage take note of the notesheet orders on the file, which stands produced before us. For better appreciation of the same, we like to reproduce the relevant notesheets observations made by the ADG on 18.10.1999. Your reply dated 16.9.99 on my observations dated 1.1.99 has been noted. The replies to my observations dt. 1.1.99, however, are not satisfactory. I could not attend to this matter earlier as I was pre-occupied with election duty. In the meanwhile, another representation dated 29th September, 99 from Shri Anoop sahu of Ashwani & Co. addressed to the D.G. with a copy endorsed to me has been received in my office. While going through the draft show cause notice, statement of facts and the various representations including the most recent one, there are some very obvious incongruities in the entire investigation. From the overall reading of all the representations read in the light of statement of facts, there definitely appears to be certain amount of overzealousness in hurriedly concluding investigations which are helpful to some whilst be....
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....Rajiv Jain dated 14.7.97 which, apparently not on record though a copy of it has been enclosed by Shri Anoop Sahu in his representation dated 29.09.99 (refer para 31 page 12 of his representation). I would like JD(DZU)s comments on this aspect. e) Despatch by Rail: Certain attested photo copies have been discharges on the basis of an opinion taken by a local hand-writing expert. There would be some difficulty in sustaining such a piece of investigation, as firstly, the examination of documents should be confined to original documents and that too by the Examiner of Questioned documents a Govt. body the office of which I understand is located in Simla. Giving handwriting opinion on the basis of a photocopy would hardly be sustainable. Furthermore, it is not clear whether the person who had originally written the documents had been contacted and his statement obtained. 2. The above are merely a few illustrative incongruities in the show cause. I would also like JD(DZU) to conmment upon the role, if any, played by one Shri Shashi Kant Chaturvedi who has mentioned so often in the representation. I would like para-wise comments on the representation dated 29.9.99 of the JD(DZU) afte....