TaxTMI 
TaxTMI 
2018 (2) TMI 1110
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....he case are that M/s.Som Aromatics were engaged in the manufacture of Pan Masala containing Tobacco commonly known as Gutkha under the brand name Dilbagh . The goods manufactured were classifiable under Tariff Item No.24039990. The factory premises of M/s.Som Aromatics was inspected by officers of Central Excise on 27.08.2007. Officers physically verified the stock of finished goods as well as raw materials and also work in progress. Officers found some loose slips. It appeared to the officers of Central Excise department that said loose slips indicated clearances of 820 bags of Dilbagh Gutkha. It also appeared to them that said goods were removed without payment of duty. Further officers also collected gate passes issued by Shri V.K.Bansal, Authorized Signatory. The gate passes recovered from factory premises during the said search by the officers were bearing No.146 dated 13.08.2007 to 157 dated 24.08.2007. On 27.08.2007, statements of various persons were recorded such as Shri Vinod Kr. Bansal, Manager and Authorized Signatory, Shri Atul Kr. Agarwal, partner of the firm. Simultaneously searches were also conducted at a few premises such as M/s.Bimal Kr. & Bros., Moradabad. State....
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....ti On Of HSD (Ltrs) Totol Hrs. Of Running Per Machine Per Hrs. Production Totol Production Ass. Value Duty E.Coss Totol Duty 1 2 3 4 5 6 7 8 (3x6x7) 9 10 11 12 1 Des'06 81 6800 26.25 259 4800 100699200 50349600 33230736 995922.08 34227658.08 2 Jan'07 81 12000 26.25 457 4800 177681600 88840800 58634928 1759047.84 60393975.84 3 Feb'07 81 12000 26.25 457 4800 177681600 8840800 58634928 1759047.84 60393975.84 4 Mar'07 81 9000 26.25 343 4800 133358400 66679200 44008272 1320248.16 45328520.16 5 Apr'07 81 8400 26.25 320 4800 124416000 62208000 41057280 1231718.4 42288998.4 6 May'07 81 11500 26.25 438 4800 170294400 85147200 56197152 1685914.56 57883066.56 7 Jun'07 81 8400 26.25 320 4800 124416000 62208000 41057280 1231718.4 42288998.4 8 Jul'07 81 14000 26.25 533 4800 207230400 103815200 68386032 2051580.96 70437612.96 9 Aug'07 81 15000 ....
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....Montage Enterprises, Noida, in which an amount of Rs. 18,30,000/- has been shown to be reflected against the name of Shri Nissar Hussain. However, Revenue did not carry out any investigation at the premises of M/s.Montage Enterprises. Further ld.original authority has recorded that the contents of the said show cause notice dated 21.01.2008 nowhere revealed that the investigation was made in respect of locations in the factory premises where M/s.Som Aromatics stored the raw materials and the space occupied by M/s.Som Aromatics was sufficient for storage of such huge quantities of raw materials. He has also recorded that neither the documents in the form of private records, nor deficiency during the stock challenges was noticed by the officers to the effect that M/s. Som Aromatics had purchased the raw materials in excess of recorded balances. Therefore he has come to the conclusion that the investigation did not reveal illicit procurement of raw materials, transporation of said raw materials to the factory premises, storage and storage related documents at the factory premises in respect of such unrecorded procured raw material and payment details in cash or otherwise for such raw ....
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....les made there-under. 6. I impose penalty of Rs. 10,00,000/- (Rs.Ten Lakhs only) on Sh. Nissar Hussain under the provisions of Rule 26 of the Central Excise Rules, 2002 for contravention of Central Excise Act, 1944 and rules made there-under. 4. Aggrieved by the order dropping the demand amounting ot Rs. 52,14,80,837/- Revenue has preferred appeal before this Tribunal, which is bearing No.E/55092/2013. Aggrieved by confirmation of demand of Rs. 61,63,517/- and imposition of penalties M/s.Som Aromatics, Shri Atul Agarwal, Shri V.K.Bansal and Shri Nissar Hussain have filed present appeals. 5. The grounds of appeal filed by Revenue are as follows:- (i) The case of the department was already established on the basis of the statements and records. However, if the adjudicating authority were to give opportunity of cross examination to the appellant he has not given any reason why such opportunity was also not given to the Department. This appears to be so in the light of para 10 of Hon ble CESTAT s Final Order No.198-201/2010 EX(DB) dated 07.04.2010 that it will be in the fairness of the things for both the parties to allow the appellants to cross examine Shri Sha....
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....tion during the course of cross examination made after over 4 years that the sale of the entire quantity of diesel was shown in the accounts in the name of 2-3 persons only at the end of the day because it was not possible for him to show it in the name of all the small customers. Documentary evidence cannot be rebutted by a general oral statement when the existence and preparation of the document has been admitted by the same person in the course of sale of HSD to M/s.Som Aromatics who were admittedly their customer. (vi) Based on the belated retraction and afterthought the adjudicating authority did not accept all the above facts put forward by the department and accepted the retracted statement of Shri Sharma despite the fact he had earlier stated categorically that Som Aromatics was one of the few parties who purchased HSD in bulk on credit and which was substantiated and corroborated by the Ledger. It was a grossly belated retraction against his own categorical records. Further, nowhere has Shri Sharma stated that the entries in his ledger folio in respect of M/s.Som Aromatics were false. There is no denial during cross examination that the entries in the Ledger folio....
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....n statement made by Mr.Sharma does not meet the requirement of rebuttal and thereby cannot be taken on record as having evidentiary value. As per law of the Section 114(g) of the Indian Evidence Act, the adjudicating authority ought to have ignored the belated and bare statement of Mr.Sharma, which was bereft of any basis. (vii) In order to quantify the production of Gutkha vis a vis procurement and average consumption of HSD the factory premises of the party was visited by the officers of Central Excise and the consumption of diesel required to run the DG set of 380 KVA was verified in the presence of Shri V.K.Bansal, Manager and two independent witnesses and the per hour consumption was found to be 26.25 Lts. Per Hr. The proceedings were duly recorded under panchnama dated 31.10.2007. Similarly the consumption of HSD in 275 KVA DG set was verified on 02.11.2007 and was found to be 39.34 Ltrs. Per Hr. The fact was also recorded in the panchnama bearing the signatures of all the three parties namely the officers, the Manager of the party and the independent witnesses indicating therein that the verification was done to the complete satisfaction of the party as well as the ....
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....id manufactured and clandestinely cleared goods. (x) In this connection it is very much relevant to mention that Hon ble Tribunal in their F.No.198-201/10-Ex. Dated 07.04.2010 while remanding the matter to the Commissioner (which resulted into the impugned Order) have observed at para 9 as under- Undoubtedly, the analysis of the evidence of the record disclose that apart from the statement of the Shri Shama and the ledger book, there are also other materials which are sought to be analysed to arrive at the finding of the liability for payment of duty quantified under the impugned order. 6. Heard Shri Rajeev Ranjan (Joint commissioner)(AR) AND Shri Pawan Kumar Singh (Supdt.)(AR) on behalf of the Revenue, who has presented the said grounds as scripted above. He has also submitted that the period of show cause notice is prior to the issue of Notification under section 3A of Central Excise Act, 1944 notifying Gutkha as notified goods. 7. Heard Dr.Seema Jain (Advocate) and Shri Abhishek Srivastava (Advocate) on behalf of other appellants. They brought our attention to the said Annexure A and Annexure B to the show cause notice through which the quantification of demand....
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....r hour. She further submitted that the presumption that 81 (eighty one) machines were working all throughout was also not correct because Shri Atul Agarwal, partner in his statement informed that generally 25 to 30 machines used to work at a time. She has further submitted that statement is on record which indicates that for running two machines, three workers are required. Statement is also on record which states that at any point of time around 30 workers were working which indicates that around twenty machines were working and no more than 20 machines could be working at any point of time. Further to run 80 machines 120 labourers were required and Revenue has not brought any evidence to show deployment of 120 labourers. She further submitted that there were no documents of transportation in respect of such huge quantity of HSD to the premises of M/s.Som Aromatics and that there was no evidence of payment of freight for transportation of HSD. Proprietor of M/s.Sharma Filling Station, in his cross-examination on 13.12.2011 stated that entire sale of diesel was shown in the account of 2 or 3 persons at the end of the day because it is not possible to show it in the name of all cust....
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....ation shows sale till 16.10.2007. * The Ledger of M/s.Som shows purchase of 3000 litres of HSD on 22.10.2007 vide bill dated 22.10.2007. The said bill was not entered in the Ledger of Sharma filling station which questions the entries in the ledger. 4. The Ledger was never shown to Sh Atul Agarwal, partner, who was the person placing order for HSD. 5. The ledger was not shown to Nissar Hussain who was partner. 6. The ledger was shown only to Sh shrivastava, Manager (Admn) who neither ordered the HSD, nor had any knowledge of the consumption of HSD. 7. The other grounds on which the Commissioner dropped the demand have not been contested. 8. Diary of M/s.Montage Enterprises, Noida without statement of any person from M/s.Montage Enterpries, Noida explaining the entries is only an assumption that lamination was purchased clandestinely. 9. In respect of grounds of appeal on the basis of para 9 of Final Order of this Tribunal dated 30.03.2009 she has submitted that Revenue has quoted only part of the said para. Subsequent to the sentences quoted by Revenue subsequent sentence contains as follows: However, the fact remain....
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....re A which quantified the demand was based on various presumptions including the quantity of HSD required for running for one hour, the number of pouches that can be manufactured per hour from each machine and that 81 machines were running all throughout. Further the evidence of consumption of HSD was based on the record collected by Revenue from fuel stations and the same record was not confronted before the partner of the appellant M/s.Som Aromatics and therefore the said evidence became third party evidence in view of the pronouncement of the Hon ble High Court of Delhi in the said case of L.K. Advani (supra), and therefore, such third party evidence is not admissible. It was held in para 97 of the said ruling as follows:- 97. In the present case there is no evidence against the petitioners except the diaries, note books and the loose sheet with regard to the alleged payments (vide Mr Nos.68/91, 72/91 and 73/91). The said evidence is of such a nature which cannot be converted into a legal evidence against the petitioners, in view of my above discussion. 10. We are, therefore, in agreement with the ld.Counsel for M/s.Som Aromatics that the entire show cause notice is ....