TaxTMI 
TaxTMI 
TaxTMI 
2017 (2) TMI 1040
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....th Central Excise Department and are clearing the goods on payment of Central Excise duty at the rate applicable and are availing the CENVAT Credit of duty paid on inputs. As stated in the appeal, the appellant is a partnership firm having three partners. On 19/02/2000, a search was conducted by the Directorate General of Central Excise Intelligence (DGCEI) at the premises of M/s. Suresh Enterprises, the supplier of scented tobacco and proceedings were initiated against them. Searches were also conducted in the premises of certain transporters viz. M/s. Sarita Roadways, M/s. Vijayant Travels and M/s. Hari Roadways Corporation (based in Pune) and documents were seized. Statements of owners and other employees of the transporters were also recorded. 4- It has also been stated that simultaneously, searches were conducted in the factory premises of the appellants and during the search 529 Kilograms of scented tobacco was found in excess than that recorded in the books. 3200 Kilograms of Gutkha in bulk packing was also seized. It has been further stated that during the course of search at the appellant's premises, the DGCEI Officers seized 35 pouches making machines valued at Rs. 1....
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.... there was corresponding manufacture and clandestine clearance of "Gutkha" (pan masala) when there is no evidence of purchase of other major ingredients like supari, katha, lime, menthol and kimam and there is also no evidence regarding manufacture of "Gutkha" as also in respect of clearance and financial transactions the same?" 8- It has been vehemently argued by learned Senior Counsel Shri Mathur that the order passed by the Tribunal is not based upon the tangible evidence about manufacture and removal of the goods and the department has drawn the inference about clandestine manufacture and removal merely on the basis of presumptions and assumptions. (Substantial Question of Law No.1) 9- Shri Mathur, learned Senior Counsel has also vehemently argued before this Court that the Tribunal has erroneously arrived at a conclusion that the appellant has clandestinely manufactured Gutkha and cleared the same without payment of Excise Duty merely on the basis of Lorry Receipt in absence of actual proof of delivery of the raw material which was allegedly transported under the Lorry Receipt to the appellant. It has also been vehemently argued that the present case is a case of no evidence....
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....ansportation of the goods, receipt of the same by the appellants, manufacture and clearance of relevant quantity of finished products attributable to the laminated films, is not sufficient. The fact that the Laminar has themselves carried out misdeeds of clandestine manufacture of goods shows that their statements cannot be accepted without corroboration. Hence, the relevant part of the impugned order is not sustainable and therefore, that part of order of the Tribunal dated 06/03/2012 which is against the appellants is totally unsustainable and the same is liable to be set aside. 13- Learned Senior counsel has vehemently argued that the Tribunal has blindly accepted the Lorry Receipts of Sarita Roadways as the ultimate proof for confirming the part of the demand pertaining to raw materials purported to have been transported by them and therefore, his submission is that the Lorry Receipts of M/s. Sarita Roadways cannot be relied upon because the respondents have failed to prove that the material i.e. scented tobacco/kimam covered vide LRs of M/s. Sarita Roadways was actually delivered at the factory premises of the appellants. 14- He submits that the respondents have attached an ....
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....emselves to the drivers on carrying the goods to destination and that he did not know any person of RSC and RSI of Indore. He also confirmed that he was not aware as to where the consignments were actually delivered and stated that the goods, which were loaded in the vehicle, were accompanied by the person who availed of the services of transportation. Such person used to travel along with the consignments to Indore. At Indore the goods were (i) shifted in the other vehicles and told by the driver of the vehicle (ii) delivered in open space for disposal by the buyer (iii) shifted to other vehicles in various open spaces at Dewas Road, Indore and that the goods were never delivered as per the report of the drivers at any factory premises and that since the owner accompanying the goods was always there, they have never taken any acknowledgment as they were assured that the goods were delivered to the right persons." 17- The inescapable evidence as revealed in the sworn affidavit of Shri Devi Prasad Pande is that even though the LRs were in the name of the appellants, still they did not prove the delivery of material at the appellant's premises which was a factory. The Tribunal h....
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.... of these firms and goods that are not accounted in their books. Penalty under section 11AC may also be re- determined accordingly. While determining and communicating the penalty the adjudicating authority should give the option to the respondents that if duty, interest and 25% of the duty amount as penalty are paid within thirty days of receipt of the order that will be in full discharge of the penalty under section 11AC of the ACT." 20- The Tribunal has ordered to calculate demand merely on the basis that some of LRs prepared by M/s. Sarita Roadways have been shown as consigned to the appellant. But mere issue of LRs by the transporter is not a proof of delivery of the material at the appellant's premises. In any case, the so- called LRs by themselves do not establish that the goods were delivered to the appellant as no receipts for delivery of the goods or receipt of payments or the identity of the employees of the appellant who are said to have accompanied the goods has been established. This is more so, when Shri Devi Prasad Pande of Sarita Roadways has stated that at Indore, the goods were (i) shifted to other vehicles as told by the driver of the vehicle (ii) delivered....
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....fective cutting blade, gear problem, panel board fault, defecting cutting blade, gear problem, belt loosening etc. and that is the reason that they had extra machines." 24- It has been further stated and argued that the appellants have sufficiently explained the possession of the machines and there is no ground for suspicion. In any case, mere excess capacity does not automatically lead to the conclusion that the appellants manufacture Gutkha clandestinely and cleared without payment of the duty. Learned Senior Counsel has stated that at the most it may lead to suspicion. It is settled law that suspicion, however, grave it cannot take the place of proof. The Hon'ble Apex Court Bhajan Lal reported in 1975 AIR 258 has held that suspicion, howsoever, strong cannot take the place of a proof. Hence, mere fact of excess capacity cannot lead to an inference that the appellants have clandestinely manufactured and cleared Gutkha without payment of duty, mere so, when the possession of machines have been explained. 25- Heavy reliance has been placed by learned counsel for the appellant upon the judgment delivered in the case of Commissioner of Central Excise Vs. Brims Products reported....
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....f revenue apropos to clandestine manufacturing of tobacco product by appellant carved out in appeal memo before the CESTAT. B. Important paragraphs of order of CESTAT marshaling the evidence on record. C. Vital statements recorded under Section 14 of Central Excise Act. 29- The precise description of the above core issues and their portion and their page number in the paper submitted by the appellant is as under:- A. Pleadings of revenue apropos to clandestine manufacturing of tobacco product by appellant carved out in appeal memo before the CESTAT:- a) The intelligence backdrop of the case is reflected on page no. 302 which is portion of appeal memo filed by the Revenue before the learned CESTAT. b) The evidence related to receipt of scented tobacco is on page no. 305 and 306 of the compilation i.e. paragraph no. 3.1 and 3.2 of the appeal memo. The same reads as under:- "3. Evidence linking receipt of scented tobacco clandestinely cleared by SE, Pune and its received by RSC / RSI, Indore. 3.1 As already stated above, it was found that SE, Pune had transported 61.8 MT of scented tobacco and 170 drums of kimmam to RSC and RSI during period 98-99 through Sarita Roadway....
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.... the statement of Suresh Jajra has been considered. d) Findings and conclusion regarding all such evidence is in paragraph no. 10.10 i.e. upto page 342. "10.01 Here copies of Lorry Receipts and statements of Devi Prasad Pande, owner / partner of firm are relied upon. 10.2 Lorry Receipts (LRs) were recovered from the premises of M/s. Sarita Roadways, Pune giving details like date, name of consignee, quantity and description which clearly show that 2060 bags of scented tobacco and 172 drums of Kimam were transported by them from SE Pune to RSC and RSI, Indore during 1998-99. 10.3 Statement of Shri Devi Prasad Pande of Sarita Roadways Pune was recorded on 09.03.2000 wherein he stated that these consignments were produced by SE Pune and that Shri Ramesh Pardeshi from SE used to visit them for booking consignments to Indore parties, that RSC, RSI and Shri Suresh Jajra proprietor of SE, Pune used to make enquiries, if there were any delays in transportation of goods. 10.4 Shri Suresh Jajra proprietor of SE in his further statement dated 17.04.2000, when confronted with evidence recovered from Sarita Roadways, admitted clandestine clearance of entire 70.86 tons of scented tobacc....
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....has to be taken to be correct unless rebutted with clear evidence to show that the names were indicated maliciously, no such evidence is forthcoming, so we find that the evidence gathered from this transporter is of reliable quality, further the supplier SE did not have any explanation for this unaccounted supplies and opted to pay Rs. 1 crore readily towards excise duty not paid. This is a relevant evidence though the demand was found to be not sustainable for the reasons that the goods were not liable for excise duty". e) Conclusion of the order of the CESTAT is in paragraph no. 27 i.e. page no. 363 and the penalty has been imposed in subsequent paragraph upto paragraph no. 29.3 i.e. upto page no. 365. C) Vital statements recorded under Section 14 of the Central Excise Act:- a) Statement of Devi Prasad Pande which is page no. 406 to 410 of the private paper book filed by the appellant, the same reads as under:- "Statement of Shri Devi Prasad Pande, Partner of M/s Sarita Roadways, 7th Milestone, Ahmed Nagar Road, Ubale Nagar, Wagholi, Pune- 412207, Pune , Age: 36 years, residing at the same address near by, recorded under Section 14 of the Central Excise Act, 1944 before the ....
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....it us for booking their consignments of loose scented Tabacco to Indore Parties. We used to receive their consignments in gunny bags weighing 30 kg approx and Kimam in drums, on being asked to name the parties of Indore to whom Ms. Suresh Enterprises were consigning their goods, I have to state that as per L.R. prepared by us, it mod be seen that the consigns in Indore were Ms. R.S. Company. 27, SDA Annex Dewas Naka Indore(M.P.), R.S. Industries S.R. Compound Dewas Naka Indore (M.P.), Shiv Supari Stones Siyaganj, Indore (Phone No. 531753, Mobile No. 9826020060). Some times, we have transported to silvasa, the consignments of Raw Tabacco and Kimam in drums in the name of Ms. Yogesh Associates Silvasa as consigned by Ms. Suresh Enterprises. On being asked about the mode of payments towards transport rotation in respect of consignments booked by Ms. Suresh Enterprises, I have to state that some times we asked to receive some advance payments from M/s. Suresh Enterprises and the remaining payments were being collected by the drivers from the consignees and in cases of drives not coming back immediately, we used to get some advance payments from the drives of the vehicle in which the go....
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....ge. I have read the statement and confirm that it has been correctly recorded as per my say". b) Statements of Mr. Vijay Agarwal which is on page no. 69 of interim application dated 02.09.2016 for placing addl. Documents on record. Relevant portion is on page no. 72 of the application, the same is as under:- c) Statement of Mr. Suresh Jajra which are on page no. 87 of the application dated 02.09.2016. Relevant portion of the statement is on the bottom of page no. 87 and the same is reproduced as under:- 30- In back drop of above, there is cogent, clear and clinching evidence for clandestine manufacture of tobacco product and in the considered opinion of this Court, the appeal deserves to be dismissed. 31- In the Case of Collector of Customs, Madras Vs. D. Bhoormall the Hon'ble Supreme Court in paragraphs No.32, 33, 43 and 44 has held as under:- "32. Smuggling is calendestine conveying of goods to avoid legal duties. Secrecy and stealth being its covering guards, it is impossible for the Preventive Department to unravel every link of the process. Many facts relating to this illicit business remain in the special or peculiar knowledge of the person concerned in i....
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....per to read into the above observations more than what the context and the peculiar facts of that case demanded. While it is true that in criminal trials to which the Evidence Act, in terms, applies, this section is not intended to relieve the prosecution of the initial burden which lies on it to prove the positive, facts of its own case, it can be said by way of generalisation that the effect of the material facts being exclusively or especially within the knowledge of the accused, is that it may proportionately with the gravity or the relative triviality of the issues at stake, in some special type of cases, lighten the burden of proof resting on the prosecution. For instance, once it is shown that the accused was travelling without a ticket, a prima facie case against him is proved. If he once had such a ticket and lost it, it will be for him to prove this fact within this special knowledge. Similarly, if a person is proved to be in recent possession of stolen goods, the prosecution will be deemed to have established the charge that he was either the thief or had received those stolen goods knowing them to be stolen. If his possession was innocent and lacked the requisite incrim....
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....o believe are liable to confiscation under Section 111. Thus in the instant case, as no presumption under Section 123 was available, it was for the prosecution to prove affirmatively that the appellant was in possession of smuggled gold knowing full well that it was imported from outside the country so as to fall within the ambit of Section 111. Dr. Chitale, appearing for the appellant, contended that if the presumption under Section 123 is not available to the prosecution, then there is no legal evidence to show that the appellant had any knowledge or had any reason to believe that the goods were imported or were smuggled without a lawful permit. The counsel appearing for the State, however, submitted that the fact that the gold bore foreign markings and was recovered from the possession of the appellant who had admitted in his statement before the Customs officers that some unknown person had given it to him, would itself raise a sufficient presumption to attribute knowledge to the appellant that the gold was smuggled without any permit. Although the question raised by the counsel for the parties is not free from difficulty, an overall consideration of the special facts of the pr....
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....ws :- If the gold now in question had been imported earlier it would be extremely improbable that the gold would remain in the same shape of bars and with the same fineness as when imported after the passage of this length of time. It was precisely for this reason that at the stage of the enquiry before the Collector the principal point which was urged on behalf of the appellants was to deny that the seized gold was of foreign origin and it is the nature of the defence that accounts for the order of the Collector dealing almost wholly with the consideration of that question. In order to reach his finding about the gold being smuggled, the Collector has referred to the conduct of the appellants ...... These were undoubtedly relevant pieces of evidence which bore on the question regarding the character of the gold, whether it was licit or illicit. Learned counsel is, therefore, not right in his submission regarding the absence of material before the Collector to justify the finding recorded in paragraph 6 we have set out earlier. 8. In a later decision of this Court in the case of Commissioner of Income Tax, Madras v. Messrs Best & Co. this Court observed as follows: When suf....
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....ption that arose out of the tell-tale circumstances in which the goods were found, regarding their being smuggled goods by disclosing facts within his special knowledge. It was also pointed out that the broad effect of the application of the basic principles underlying s. 106 of the Evidence Act would be that onus is discharged if the prosecution adduces only so much evidence, circumstantial or direct, as is sufficient to raise a presumption in its favour with regard to the existence of the facts sought to be proved. In the case of Labchand Dhanpat Singh Jain v. The State of Maharashtra, while this Court was again considering the extent and application of Sections 106 and 114 of the Evidence Act and in this connection, observed as follows:- Even if we were to apply the ratio decidendi of Gian Chand's case (supra) in the case before us, we find that the result would only be that no presumption under section 123 of the Act could be used against the appellant. We do not think that the High Court or the Magistrate had used this presumption. We find that they had relied upon circumstantial evidence in the case to infer the character of the gold recovered and the accused's gu....
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....e brought to his house and concealed the same in his compound; and other details elaboration of which is not material. The question then is: whether it was influenced by threat of implicating his wife in the crime which is the sole basis for the claim that it was obtained by threat by PW-2 and PW-5? In that behalf, the High Court has held that it could not be considered to be induced by threat that his wife will be implicated in the crime and accordingly disbelieved his plea. It is seen that admittedly after the appellant gave his statement, he was produced before the magistrate though no complaint was filed and was released on bail. He did not complain to the magistrate that Ex. P-4 statement was given under inducement, threat or duress. It was raised only subsequently making accusations against PW-5, the Inspector of Customs. Therefore, obviously it was only an afterthought. The High Court, therefore, rightly has not given any weight age to the same. It is true that the Magistrate has given various reasons for disbelieving the evidence of PW-3, the panch witness who had also, at one point of time, indulged in smuggling. It is unlikely that PW-3 would bring 200 gold biscuits of fo....
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....roved by unimpeachable evidence and if it is of voluntary nature, it when retracted, is entitled to high degree of value as its maker is likely to face the consequences of confession by a statement affecting his life, liberty or property. Burden is on the accused to prove that the statement was obtained by threat, duress or promise like any other person as was held in Bhagwan Singh V/s. State of Punjab [AIR 1952 SC 214, para 30]. If it is established from the record or circumstances that the confession is shrouded with suspicious features, then it falls in the realm of doubt. The burden of proof on the accused is not as high as on the prosecution. If the accused is able to prove the facts creating reasonable doubt that the confession was not voluntary or it was obtained by threat, coercion or inducement etc., the burden would be on the prosecution to prove that the confession was made by the accused voluntarily. If the Court believes that the confession was voluntary and believes it to be true, then there is no legal bar on the Court for ordering conviction. However, rule of prudence and practice does require that the Court seeks corroboration of the retracted confession from other....
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....not accept the confessional statement of co-accused containing inculpatory and self-exculpatory statement. The High Court reversed the acquittal and convicted the accused, accepting that part of the confessional statement of the accused which was corroborated from other evidence. This Court upheld the conviction and held that it is not necessary that each item of fact or circumstance mentioned in the confessional statement requires to be corroborated separately and independently. It would be sufficient if there is general corroboration. The ratio in Kashmira Singh's case was referred to. 25. It would thus be seen that there is no prohibition under the Evidence Act to rely upon the retracted confession to prove the prosecution case or to make the same basis for conviction of the accused. The practice and prudence require that the Court could examine the evidence adduced by the prosecution to find out whether there are any other facts and circumstances to corroborate the retracted confession. It is not necessary that there should be corroboration from independent evidence adduced by the prosecution to corroborate each detail contained in the confessional statement. The Court is....
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...., it is not necessary for the learned Judge of the High Court to wade through every reasoning and give his reasons for his disagreement with the conclusion reached by the Magistrate. On relevant aspects, the learned Judge has dwelt upon in detail and recorded the disagreement with the Magistrate and reached his conclusions. Therefore, there is no illegality in the approach adopted by the learned Judge. WE hold that the learned Judge was right in his findings that the prosecution has proved the case based upon the confession of the appellant given in Ex.P-4 under Section 108 of the Evidence Act and the evidence of PWs 2, 3 and 5. The prosecution proved the case beyond doubt and the High Court has committed on error of law. 34. Having reached the finding that the appellant has committed the offences under Section 135 (1) (i) of the Act and Section 85 (1) (a) and 86 of the Gold (Control) Act, 1968 we think that instead of being committed to jail, the appellant should be sentenced to pay fine of Rs. 10,000/- and Rs. 5,000/- respectively for the two aforementioned offences, within 4 months from today. In default, he shall undergo imprisonment for a period of 2 months and 1 months resp....