TaxTMI 
TaxTMI 
2017 (7) TMI 523
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd to different companies across the Country as per agreements under which the user companies like the petitioner are required to pay royalty to the above noted brand owner. Such "Gutkha" manufactured with the aid of packing machine and packed in pouches has been notified as goods falling within the purview of Section-3A of the Central Excise Act, 1944, for short, "the Act" for the purpose of levy and collection of excise duty vide notification under Annexure-3. Further, the Central Government in exercise of powers conferred by sub-sections (2) and (3) of Section- 3A of "the Act" has notified "Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008, for short, "the Rules". The said rule was amended during 2010. As per "the Rules", the factor relevant to the production of notified goods which is "Gutkha" in the present case shall be the number of packing machines in the factory of manufacturer. According to the petitioner, the said Rules also indicate the number of pouches deemed to be produced per operating/packing machine per month. Further, as per Rule-6 of "the Rules", a manufacturer is required to declare a number of particulars in the prescribed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Shop No.36, Unit-I Market, Bhubaneswar. From these two dealers "Safal" brand "Gutkha" pouches bearing MRP Rs. 5/- were seized. Mr. Jagabandhu Chell in his statement recorded under Section-14 of "the Act" stated that he had received the seized pouches from M/s. Jagannath Enterprise of Seeraj Bhawan, Bhati Road, Rourkela. Mr. Tapan Chandra Dey, Proprietor M/s. Jagannath Enterprise in turn stated that he has received these pouches from the petitioner. 4. Shri Babajee Charan Biswal, the other dealer in his statement under Section-14 of "the Act" stated that he procured "Safal" brand "Gutkha" pouch bearing MRP Rs. 5/- from Mitu Sahoo @ Soumendra Kumar Sahoo, Kalinga Market, Bhubaneswar. Mr. Soumendra Kumar Sahoo in turn stated that he had procured "Safal" brand "Gutkha" pouches having MRP Rs. 5/- manufactured by the petitioner from a person as instructed by Shri Neeraj Sharma, Director of the petitioner by paying cash. 5. During course of investigation, the authorities got hold of some advertisements in print and electronic media relating to advertisement of "Safal "Gutkha" pouch of MRP of Rs. 5/- indicating involvement of the petitioner. After the completion of investigation, the dep....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he right to file a reply after receipt of the photocopy of the outer packet and after crossexamination of Tapan Chandra Dey and Saumendra Kumar Sahoo as it disputed its version. It further took the stand in Annexure-25 that the brand name "Safal" belongs to M/s. Kamlakant and Company, Kanpur which has assigned the use of said brand name to various companies like the petitioner. Besides the petitioner one such company was/is M/s. Kay Pan Masala Pvt. Ltd., Ghaziabad. There the petitioner invited the attention of the authorities to a letter dated 12.9.2011 written by M/s. Kay Pan Masala Pvt. Ltd. to the Assistant Commissioner, Division-V, Central Excise, Ghaziabad informing him that M/s. Kanodia Technoplast Ltd., was the manufacturer of laminated products used by it and in the month of April, 2011 it had sent for lamination meant for manufacture of its newly launched products, i.e., "Safal" brand "Gutkha" of MRP Rs. 5/-. According to the learned Senior Advocate for the petitioner, the said laminations were wrongly printed with the name of the petitioner on account of inadvertent mistake on the part of the labour supervisor. Since those pouches were released to the market during May, 2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d Soumendra Kumar Sahoo, the impugned order under Annexure-1 has been passed confirming the demand of Central Excise duty of Rs. 237,92,85,000/-. Further, the opposite party has directed for recovery of interest at an appropriate rate on the above demanded amount with penalty i.e., equivalent to the demanded amount. The opposite party has further imposed penalty of Rs. 5,00,00,000/- each on two directors of the company. Mr. Hidayatullah, learned Senior Advocate submitted that the impugned order under Annexure-1 ought to be quashed as the same has been passed in violation of principles of natural justice as the petitioner has not been allowed to cross-examine Tapan Chandra Dey and Soumendra Kumar Sahoo, whose statements form the backbone of the case of the department/revenue. Though, he pointed out very many facts relating to non seizure of "Gutkha" pouch of MRP Rs. 5/- from the factory premises, non seizure of machines with capacity to manufacture of "Gutkha" pouch of MRP Rs. 5/- from the factory premises and non seizure of any document whatsoever from the factory premises showing manufacture and clearance of "Safal" brand "Gutkha" of MRP Rs. 5/- during search and that mere adverti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he "Safal" brand "Gutkha" of MRP Rs. 5/- from the petitioner. Since the petitioner has taken a stand that during course of investigation neither any pouch of MRP Rs. 5/- of "Safal" brand "Gutkha" was seized nor any machinery with capacity to manufacture of "Safal" brand "Gutkha" pouch of MRP Rs. 5/- was seized and that there was no seizure of any document/diary/note book/computer printout showing manufacture and clearance of "Safal" brand "Gutkha" of MRP of Rs. 5/- from the petitioner Unit, in the fitness of things the authorities should have allowed cross-examination of the above two persons to test the veracity of their statements. By not doing so, in our considered view there has been violation of principles of natural justice. The facts in Kanungo and Co. (Supra) show that there the petitioner was given enough opportunity including personal hearing. Moreover, as rightly contended by Mr.A. Hidayatullah, learned Senior Counsel in that case there is nothing to show that the petitioner therein had demanded to cross-examine the persons, who have made statement against it at the very initial stage like the present case. Therefore, it appears that in the facts and circumstances of the....