TaxTMI 
TaxTMI 
2017 (2) TMI 1040
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....Act, 1985. 3- The appellant is registered with 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 ....
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....the raw materials viz. scented tobacco by itself was sufficient to hold that 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. I....
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....without there being any corroborative evidence like receipt of payments by Laminar, transportation 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 fa....
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....r affirmed that SE never paid anything for the consignments and the payment was made by the buyers themselves 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....
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....ct of such quantities of scented tobacco as evidenced by LRs recovered from M/s. Sarita Roadways showing the names 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 sta....
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.... such as burning/short circuiting of heating element, eye mark adjustment out, spacing our between pouches, panel board fault, defective 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 le....
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....e core issues as submitted below and allied vital portions of the private paper book filed by the appellant are as under:- A. Pleadings of 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, ....
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....d CESTAT has dealt with the evidence related to supply of scented tobacco to the appellant in paragraph no. 10 of the order which is on page no. 339. b) In Paragraph no. 10.02, Lorry Receipts have been considered. c) In paragraph no. 10.04, 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, Pun....
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....nsignee were indicated in LRs. as told by the persons, who brought the cargo and accompanied the cargo can not take away evidentiary value of LRs, transporters may not conduct verification about owner of each and every consignment but they go by trust. These are documents which were maintained in ordinary course of business and 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 pri....
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....00/- to Ahmedabad, Hyderabad, and Indore for M/s. Milton Plastics and for the other parties rates were not fixed and were charged according to destination, weight and market rate. On being specifically asked about the consignment booked by M/s Suresh Enterprises, Wagholi, Pune, I have to state that one Mr. Ramesh Pardeshi, from M/s Suresh Enterprises used to visit 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 cons....
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....nterprises were lifted to Indore, I have to state that all the consignments during the said period were lifted from the Muktanand form House premises at Waghali even though M/s. Suresh Enterprises address as per the bill was of sai-satyam park, Wagholi. The above statement is my voluntary deposition without any duress. Statement is true and correct to the best of my knowledge. 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....
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....t necessary for the Customs authorities to prove that any particular person is concerned with their illicit importation or exportation. It is enough if the Department furnishes prima facie proof of the goods being smuggled stocks. In the case of the latter penalty, the Department has to prove further that the person proceeded against was concerned in the smuggling. 43. If we may say so with great respect, it is not proper 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 ....
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....m guilty. 33- In the case of Shah Guman Mal Vs. State of Andhra Pradesh the Hon'ble Supreme Court in paragraphs No. 4 and 8 has held as under:- "4. Analysing the essential ingredients of clause (b), it is manifest that before a conviction can be recorded under it, the prosecution must prove that the accused has acquired possession of or is in any way concerned in depositing, keeping, etc., any goods which he knows or has reason to 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 foreig....
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....is Court regarding the interpretation of Section 106 of the Evidence Act would not apply to the facts of the present case. In the case of Issardas Daulat Ram & Ors. v. The Union of India & Ors.(2) this Court, after discussing the admitted circumstances of the case, found that the relevant pieces of evidence would prove the guilty knowledge of the accused. That was a case which arose under Section 178 (A) of the Sea Customs Act and this Court observed as follows :- 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 wer....
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....mstantial evidence suggesting the inference that the goods were illicitly imported into India, was similar and reasonably pointed towards the conclusion drawn by the Collector. The Collector had given the fullest opportunity to Bhoormull to establish the alleged acquisition of the goods in the normal course of business. In doing so, he was not throwing the burden of proving what the Department had to establish, on Bhoormull. He was simply giving him a fair opportunity of rebutting the first and the foremost presumption 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....
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....t in paragraphs No.19 to 21, 25, 32 and 34 has held as under:- "19. Next question for consideration is: whether such statement can form the sole basis for convition? It is seen that, admittedly, the appellant made his statement in his own hand- writing giving wealth of details running into five typed pages. Some of the details which found place in the statement were specially within his knowledge, viz., concealment of the 200 biscuits in his earlier rented house till he constructed the present house and shifted his residence and thereafter he 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....
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.... In a criminal trial punishable under the provisions of the IPC it is now well settled legal position that confession can form the sole basis for conviction. If it is retracted, it must first be tested whether confession is voluntary and truthful inculpating the accused in the commission of the crime. Confession is one of the species of admission dealt with under Sections 24 to 30 of the Evidence Act and Section 164 of the Code. It is an admission against the maker of it, unless its admissibility is excluded by some of those provisions. If a confession is proved 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 o....
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.... by a four-judge Bench in Balbir Singh V/s. State of Punjab [AIR 1957 SC 216] where in it was held that if there is independent evidence, besides the confession, the rule that the confession could be used only to corroborate the other evidences loses its efficacy. Therefore, it was held that if the retracted confession is believed to be voluntary and true, it may form the basis of a conviction but the rule of practice and prudence requires that it should be corroborated by independent evidence. Therein also, for the charges of capital offence, the trial court did 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 s....
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....eak falsehood but circumstantial evidence will not. Falsity is counted from man's proclivity to faltering but when it is tested on the anvil of circumstantial evidence truth trans. On scanning the evidence and going through the reasoning of the learned Single Judge we find that the learned Judge was right in accepting the confessional statement of the appellant, Ex. P-4 to be a voluntary one and that it could form the basis for conviction. The Magistrate had dwelt upon the controversy no doubt on appreciation of the evidence but not in proper or right perspective. Therefore, 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 evidenc....
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....¾ शà¥à¤°à¥€ जाजरा से समà¥à¤ªà¤°à¥à¤• करते थे। शà¥à¤°à¥€ जाजरा का खà¥à¤¦ का पà¥à¤°à¥‹à¤ªà¥à¤°à¤¾à¤¯à¤Ÿà¤°à¥€ कंपनी सà¥à¤°à¥‡à¤¶ इंटरपà¥à¤°à¤¾à¤ˆà¤œà¥‡à¤œ नाम से पूना सà¥à¤¥à¤¿à¤¤ है। इसकी हमें जानकारी है। वहां à¤à¥€ सà¥à¤—ंधित तमà¥à¤¬à¤¾à¤•à¥‚ का उतà¥à¤ªà¤¾à¤¦à¤¨ होता है। यह हमें मालूम है। हमको सà¥à¤—ंधित तमà¥à¤¬à¤¾à¤•à¥‚ का सपà¥....
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....°à¤¿à¤•à¤¾à¤°à¥à¤¡ में दरà¥à¤œ है, जो कि आपकी कसà¥à¤Ÿà¤¡à¥€ में है। आपके दà¥à¤µà¤¾à¤°à¤¾ दिखाये हà¥à¤ डाकूमेट के उपर मà¥à¤à¥‡ कोई पà¥à¤°à¤¤à¤¿à¤•à¥à¤°à¤¿à¤¯à¤¾ नहीं देनी है । " Document 2 "इंदौर को à¤à¥‡à¤œà¥‡ गये माल के बारे में शà¥à¤°à¥€ सà¥à¤°à¤¾à¤¨à¤¾ ने कहा है कि शà¥à¤°à¥‚आत में इंदौर में सà¥à¤¥à¤¿à¤¤ आर à¤à¤¸ कंपनी के नाम à....