TaxTMI 
TaxTMI 
2018 (5) TMI 658
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.... Rules, 2002 with option to redeem on payment of fine of Rs. 15,000/-. 3. The appellant Shri Abhishek Jain, Proprietor of M/ s S.S. Packers, District-Baghpat, was engaged in manufacture of Gutkha (Pan Masala Containing Tobacco) falling under Chapter Sub-heading No.24039990 of Central Excise Tariff Act, 1985. On intelligence that he is not discharging the due Excise duty liability and the unit is situated in the premises of Shri Leelu at Village-Dagarpur, Distt.-Baghpat, without obtaining the Central Excise Registration. The said premises were visited by the Central Excise preventive officers on 07/09/2012. During the search, it was revealed that the premises were given on rent to one Shri Rajendra Jain of Main Bazar, Baruat. Shri Leelu informed that as per his information Shri Rajendra Jain was using the said premises, as a godown, and it was not in his knowledge whether Gutkha was being manufactured there. Later on, Shri Leelu stated that he had let out the said premises to Shri Abhishek Jain S/o Sri Rajendra Jain for his sweet supari business against rent of Rs. 6,000/- per month, which was paid in cash. Shri Abhishek Jain also arrived soon thereafter and introduced himself as P....
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....8.10 KG per Bag 8.10 KG 7. Menthol Flakes 1 Poly Pack 800 Gm per poly pack 800 Gm 8. Tobacco 1 Bag 10.300 KG per Bag 10.300 KG 9. Oleoresin Capsicum 1 Bottle 1 KG per bottle 1 KG (ii) Packing Material a. Packing Box 3080 piece (iii) Empty bottle/Container/Core a. 2 bottle (6 KG each) Gutkha flavoured Compound b. 1 container (capacity 10 KG) Ferrous Scorbate c. 1 bottle (capacity 1 KG) Elaichi 916 d. 3 bottle (capacity 1 KG) Gutkha fla voured e. 1 bottle (capacity 1 KG) G-7 Chemical f. 34 piece core (core remaining after the use of main packing material) (iv) One Diary (v) One small writing pad 5. Thereafter, the officers sealed the pouch packing machine. Three packets of 'Doon Gutkha' were drawn as representative samples, by sealing them under Panchnama/ signatures. The finished goods available at the spot i.e. Gutkha packets and Gutkha mixture were seized. One Diary and one writing pad....
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....d that he appointed a person named Rakesh of Etawa for the manufacture of Gutkha in his factory, who was on leave for last three months, that he himself carried out the purchase of raw material and packing materials and the manufacture and sale of finished goods and the factory did not have registration of any type. That he have not maintained and record regarding manufacture and sale of Sweet Supari and Gutkha. That some quantity was sold in Delhi through salesmen and some quantity of Gutkha was dispatched to Bihar, Chhatisgarh and Madhya Pradesh. That the raw material and packing material for Sweet Supari and Gutkha was purchased from dealers in Khari Baoli, Delhi, but he was unable to state their names etc. He further stated that there was no bank account in the name of M/S SS. Packers. He being the proprietor and all transactions pertaining to manufacture and sale of sweet supari and Gutkha were done in cash. He had personal accounts with the Baraut Branch of the Union Bank, Canara Bank and ICICI bank. Further, Shri Abhishek Jain handed over to the officers on the spot, 2 cheques, no.851824 dated 07/09/2012 for Rss 10 lakhs drawn on Punjab National Bank and another Cheque No.21....
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....not know anything about M/S S.S. Packers and it was not his firm, he was manufacturing Sweet Supari in the premises of Devkaran S/o Shri Dharampal which he had taken on rent, he had arranged Rs. 80,000/- approximately for this work from his own resources and no accounts were maintained, that for manufacture of Sweet Supari, one supari cutter and 2 dryers along with one generator were used which were purchased in cash from a scrap dealer in Mayapuri, Delhi. No invoice was issued by the scrap dealer and there was no name or signboard on the shop of scrap dealer. He had gone to scrap dealer shop along with an agent named Rashid, and was unable to specify the exact location of the shop of scrap dealer. Further, he stated that he had taken only one room on the ground floor from Shri Devkaran in February, 2012. He asked for the second room in August, 2012, and throughout he had only one room. He had appointed only one person named Rakesh who worked with him from February, 2012 till 05th September, 2012. No other person except Rakesh worked in the said premises and as per his knowledge, he never saw anybody else working in the said premises. He had purchased the pouch packing machine foun....
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....ate of search, the same were sent to CRCL, New Delhi for testing vide test memo dated 06/12/2012. As per the test report the appellant was engaged in the manufacture of Gutkha, i.e. Pan Masala containing tobacco. Further, as per Revenue, the following points appeared to contradict, the stand taken by the appellant subsequently: "No quantity of Sweet Supari either in loose or in packed condition, was found in his factory on day of search. No packing material of Sweet Supari was found. Manufactured Gutkha was found in loose as well as packed condition. Further, a single track FFS machine loaded with Gutkha mixture and pouch rolls for packing the Gutkha mixture was found. Loose packing material for Gutkha as well as different quantities of various raw materials, required for manufacture of Gutkha were found. Further, Shri Abhishek Jain had stated on 7th September, 2012 at the time of search, that he commenced manufacture of Gutkha in March, 2012 which continued for 3 months. The boxes in which pouches were found packed, described the goods as Gutkha and listed the ingredients contained. Further, the retraction by the appellant was found not tenable on the ground that the search proc....
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....iable thereon. Further, appeared that he had no intention to pay the duty and was giving false and misleading statements with the aim to escape the liability to pay the duty. It further appeared that the appellant is liable to pay duty under Section 3A of the Central Excise Act read with the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 which came into effect vide Notification No.30/2008-CE dated 01/07/2008. It further appeared that the packing machine September, 2012, the period for which duty is leviable would be from 01/04/2011 to 06/09/2012 in accordance with Rule 17 (2) read with Rule 7 and Rule 10 of PMPM Rules and read with Clause 2 of Notification No.42/2008-CE. Accordingly, vide show cause notice dated 01/03/2013 the appellant was required to show cause, why not Excise duty amounting to Rs. 3,26,99 999/- be not demanded for the period from 01/04/2011 to 06/09/2012 @ Rs,19 lakhs per machine per month with further proposal to imposition of penalty. 9. The appellant contested the show cause notice. by filing interim reply dated 14th March, 2014 -wherein he requested to allow cross-examination of the Central Excise officers, who condu....
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.... seized and sealed on 07/09/2012. Further, in the statement dated 26/11/2012 the appellant never stated that he ever manufactured any Gutkha other than the Gutkha. which was seized on 07/09/2012. That the offence of the appellant was limited. to the of manufacture of stock of Gutkha which was lying under the seizer and further default by appellant being failure to inform Department. That neither a single pouch of Gatkha eas ever recovered from the market. a single Gutkha manufactured by the appellant, have been found by the Department. If the period of manufacture, as per revenue, of Gutkha is taken as correct for argument purpose, then the appellant would have manufactured 9,65,95,200/- pouches during the period from April, 2011 to 06 th September, 2012. In spite of such huge quantity of manufacturer, the Department had not recovered any stock or consignment of the Gutkha from the market. It is further urged that at best the appellant is liable to pay duty under the PMPM Rules for the period from 02/09/2012 to 06/09/2012. It was further urged that the semi finished goods were valued at Rs. 46,500/- but not liable for seizer, as the same was not marketable and did not classif....
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....o.42/2008-CE and was further, pleased to confiscate Excisable goods, seized vide panchnama dated 07/09/2012 valued at Rs. 53,100/- with option to redeem on payment of redemption fine of Rs. 15,000/- and further imposed penalty of Rs. 5,000/- only upon the appellant, in lieu of confiscation under Rule 25 of CER, 2002. 11. As regards the prayer made for cross-examination of various persons noted herein above, it was observed that the panchnama proceedings were conducted in the premises owned by brother of Shri Leelu namely Shri Devkaran and was conducted in presence of panch witnesses namely Shri Shrinivas and Shri Dharmraj. Further, the appellant were also present at the time of Panchnama proceedings, who had joined later on. None of these persons and/or witnesses had never raised any objection for the manner/ methodology of the search and the facts recorded in the panchnama/ statement tendered on the spot. As regards retraction received by the Department vide speed-post on 17/09/2012, it was observed that the rebuttal is nothing but an afterthought to avoid the tax liability and the penal provisions. It was further observed that the retraction had been made after, about more than ....
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....ith two cheques for Rs. 10 lakhs each dated 07/09/2012 against the duty liability. Further, samples were drawn and sent for testing to CRCL and the report confirms that the product manufactured by the appellant was Gutkha. The appellant had stated that he was manufacturing Gutkha since February, 2012 on the F F.S machine. The contention of the appellant are that this statement was recorded under duress on 07/09/2012 is not reliable. Further, machinery required for Gutkha manufacturing namely pouch packing machine, cutting machine, generator (source of power), different raw materials, packing material, semi finished goods, finished goods and remnants of used raw materials/ packing materials were found, as recorded in Annexure-A to the panchnama. As regards the affidavit of the panch witnesses and Shri Leelu, brother of the owner of the rented premises, relied upon by the appellant in support of its contention that he was compelled to write under duress and pressure of the officers, he wrote according to the desire of the officers, The said contention was rejected by observing that the panchnama proceedings were conducted in presence of independent witnesses, who never raised any obj....
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....It was also observed that the contention of trial production is flimsy, as at the time of panchnama, Printed Wrapper having full details, List of Ingredients, Brand Name, M. R. P., Manufacturer's name, were found present. Thus, there is no force, in the contention of appellant indulging only in test production, Accordingly, it was held that the appellant have contravened the provisions of the Rules read with Section 3A of the Central Excise Act. So far the contention that the Department had a single person or dealer who had purchased Gutkha from the appellant, stated that the said fact is not required under the provisions of Section 3A of Act read with the PMPM Rules, 2008. 14. The contention of the appellant that initially he started manufacturing Sweet Supari and packing the same on the FFS machine and subsequently, he had employed one person namely Shri Rakesh for manufacture and sale of Gutkha, who worked with him for 3 months and thereafter, there is no production of Gutkha. Such facts are not reliable, as the appellant even failed to provide the proper address of the said Rakesh. Further, the claim of manufacture of Sweet Supari prior to 02/09/2012 is also not correct, a....
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.... all the aforementioned firms are In existence and active dealers which is also confirmed from the "Department website/ Tax Information Exchange System Thus, the Department had failed to conduct proper investigation and locate the said persons. 15. As regards the contention of the appellant that the F FS machine was not In working order, when it was purchased and the same was repaired and made workable, by changing the motor, which was purchased from M/S Kapil Trading Company, Meerut on 01/09/2012. The learned Commissioner has relied on the statement of Shri Kamal Gupta, proprietor of M/S Kapil Trading Company dated 17/01/2013 wherein he stated that he had issued the document to one Shri Rajeev Jain, who was known to him, without delivery of any goods. Shri Kamal Gupta on the one hand admitted that he had received the payment of Rs. 4,370/- and on the other hand he stated that he had given the bill without supplying the goods. The learned Commissioner has observed that it is evident that Kamal Gupta have not supplied the Single Phase Motors, nor obtained any cash from Shri Abhishek Jain. 16. The contention of the appellant regarding the transportation receipt given by Shri Dinesh....
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.... Although the officers took the signatures of Shri Abhishek Jain by way of acknowledgement that he had received the copy of Panchnama and other documents but the copies were not given to him. Further, he stated that the appellant Shri Abhishek Jain was forced to write the statement, as dictated to him by the officers. The officer also collected two blank cheques from the appellant. Further, Shri Leelu was also present at the time of search and was given the safe custody of the seized goods, have also stated in his affidavit dated 25/10/2012 that he was called by the officers and after they started the search till end of the search he was present there and they handed over the seized goods to him. The officers also seized the documents of Car No. DL-01 CJ-5769 of Shri Abhishek Jain and collected the original registration certificate and original Driving License of Mr. Jain. Although, the officers were requested by Shri Abhishek Jain to give back the original copies of documents but such copies were not given. During the recording of statements the officers forced to write the statement, as dictated by the officers. At the closer of the Panchnama proceeding, Shri Abhishek Jain again ....
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.... invoice no.50dated 1 st September, 2012 issued by M/S Kapil Trading Company, Meerut, which states that M/S Kapil Trading Company had sold to the appellant one Single phase 1 HP Motor for Rs. 4,370/-. Further, the Proprietor of M/S Kapil Trading Company Shri Kamal Gupta who was examined by the Commissioner have admitted that he received the sum of Rs. 4,370/- and have issued the said invoice. The learned Commissioner has failed to exercise the jurisdiction vested in him in enforcing the attendance of the witnesses, He has shrugged responsibilitv by only issuing summons by speed post which were returned the postal department with remark- 'unclaimed', incomplete address', this firm not found at the address on enquiry'. The learn-ed Counsel have drawn the attention of the Tribunal to said invoices. filed in the appeal paper book. which bear the tin number of the respective parties. Shri Jet Enterprises is registered with the Sales Tax Department and the; also charged VAT on the sale of the Pouch Packing machine. Further. appellant have also filed a downloaded copy of the status report, as regards a registered dealer from the Tax Information Exchange System, website of ....