TaxTMI 
TaxTMI 
TaxTMI 
2018 (6) TMI 320
X X X X Extracts X X X X
X X X X Extracts X X X X
....f invoices. The search at the factory resulted into shortage of 3506 Kgs of Whole Leaf Chopadiya, 1378 Kgs of Fol Patti, 2735 Kgs of Tayar Kandi, 45487 kgs of raw material i.e WIP. The excess quantity of 646 Kgs of Loose Zarda and 31903 Kgs of Dust/ Rawa/ Bharda was found. No difference in quantity of Loose Hookah Tobacco was found. Statements of raw tobacco suppliers were recorded. In case of supplier M/s Mohanbhai Desabhai Patel it was found that five consignments supplied by him were not recorded by the Appellant M/s R.K. Patel & Co. in case of supplier Shri Sanjaybhai Babubhai Darbar, seven consignments were found to be not entered in raw material record by M/s R.K. Patel & Co. In case of supplier M/s Krishna Kripa Tobacco, statement of Shri Kirankumar Sureshbhai Patel was recorded and it was found that M/s R.K.Patel & Co. has not recorded receipt of two consignments supplied by him. In case of Shri Sureshbhai Ambalalbhai Patel he stated that he had sent two consignments of Desi Kala Chopadiya/ Fol weighing 13000 kgs to M/s RKP but the same was not found entered in books. In case of supplier Shri Subhashbhai Desaibhai Patel, Proprietor of Shreeji Tobacco Trading Co. he stated t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... recorded balance. Shri Himmat Patil, Ex- Manager of M/s RKP in his statement stated that M/s RKP received unaccounted tobacco and payments were made in cash to the suppliers. Also Shri Kalyan. S. Patil employee of M/s RKP accepted the fact of unaccounted production. The officers found three parallel invoices indicating evidence of clandestine removal. In one parallel invoice, Shree Pramodchandra, Proprietor of M/s Sanjay Trading admitted that he has received the consignment. Based upon unaccounted procurement of raw material and considering 15% process loss, it was alleged that the said quantity has been used in unaccounted production and clearance of Zarda during the period Dec' 2002 to Oct' 2006 involving duty of Rs. 1,93,40,854/. It was also alleged that the other co- appellants i.e partners Shri Sahebrao Kalu Patil, Shri Kalyan Sahebrao Patil and Shri Pravin Sahebrao Patil are beneficiaries of the illgotten money earned by M/s RKP. That employee Shri Premsingh, Shri Hiralal, Shri Prakash and Shri Himmat played effective role in abetting the clandestine activities and thus liable for penalties. Penalties were also proposed upon dealers of RKP who has supposedly received Zarda u....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ess of his statement wherein he had stated that the consignment under the parallel invoice no. 102 dt. 22.10.2003 was received by them. Also that the statements of alleged suppliers of raw material and the persons whose statements were relied upon for demanding duty against the Appellant did not appear for cross examination and hence their statements cannot be relied upon in absence of any independent and corroborative evidence. The demand based upon the allegation that Appellant M/s RKP has procured raw tobacco and used them for clandestine manufacture and clearance of Zarda without accounting is unsustainable. That there were three factories manufacturing chewing tobacco in the area where Appellant's factory is located and the whole leaf chopadiya is basic raw material. Hence the mere transportation of raw tobacco from Gujarat to Amalner where the Appellant factory is located even if the same was in the name of Appellant cannot be a conclusive proof to show that the Appellant received such goods. No statement of any of the drivers of the Truck was recorded to verify the facts of the transportation. During stock verification of raw material at the factory of Appellant no excess st....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uded that the goods were consigned to the Appellant Unit. The Appellant had requested for cross examination of the suppliers and persons whose statements were relied upon. Either the said persons did not appear for the cross examination or the persons who appeared for cross examination have resiled from their statements. No statement of driver of any of the vehicle was recorded to ascertain the actual place where the raw material was actually delivered. The investigating officer in his cross examination stated that he did not conduct any investigation as he did not feel any need to conduct such enquiry. During physical verification no excess stock of goods i.e raw material tobacco was found. One of the supplier Shri Sanjaybhai Darbar who appeared for cross examination stated that he has supplied only two consignments which were recorded by the Appellant. Though in his statement he had stated that he has supplied seven consignments. We find from the submission made by the Appellant that earlier also a case was booked against the Appellant towards alleged evasion of duty on the ground of illegal and unaccounted receipt of raw material. The major supplier in said proceedings and in th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....putes and the complaints made by the family members of the appellants landed them in trouble in facing these proceedings, as otherwise nothing incriminating was found in the factory premises of the appellants during previous raids at relevant time. The evidence gathered, during the course of this investigation, is found insufficient to establish unaccounted production and clandestine removal of Jarda as alleged. Thus, the Department has failed to establish its case in satisfactory manner as alleged in the Show Cause Notice. 43. Therefore, we hold the impugned order confiscating of 90 cartons of Jarda, the vehicle and the demand of Central Excise duty on the main appellants; imposition of penalty and interest cannot be sustained. Consequently, the penalties imposed on the other appellants under Rule 209A is also not sustainable. 44. Since we are allowing the appeals on merits, we are not inclined to go into other alternative arguments regarding valuation and rate of duty raised by the ld. counsel in the appeal and during the course of hearing. 45. Accordingly, we set aside the impugned order as far as these appellants are concerned and allow the appeals with consequential r....