TaxTMI 
TaxTMI 
2018 (11) TMI 289
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....-100', 'Fighter', 'Pelican', 'Venus', 'Vintage', etc. Officers of Central Excise Intelligence conducted simultaneous searches on 21.02.2011 at factory premises of appellant and at few other places. Subsequent to the same they recorded various statements and on the basis of investigations and statements recorded appellants were issued with a show cause notice dated 03.05.2013. The analysis of evidences gathered during the investigation as recorded in Para 27 of said Show Cause Notice are as follows:- "27. The search proceedings were conducted at various premises including the premises of dealers/traders of cigarette located at various places, factory premises of M/s PTI, Kosi and M/s PTC, Faridabad and their undeclared godown premises and residences of relevant persons. The statements of various persons including Directors of M/s PTI, Kosi and M/s PTC, Faridabad, their representatives and various dealers of cigarettes, were recorded during the course of enquiry. On going through the available evidences, it appears that:- (i) M/s PTI, Kosi, had stored unaccounted for 289 boxes of cigarettes, as detailed in panchnama drawn on spot, which were not entered in their daily stock accoun....
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....ion of production of cut tobacco and supplying the said cut tobacco to M/s PTI and the said cut tobacco was used by M/s PTI for unaccounted for manufacture of cigarettes. (v) During search at the premises of various delaers/traders located at various places, stocks of unaccounted for cigarettes were found. On being asked, they could not produce any supporting purchase invoices/bills. They also stated that they purchased packets of cigarettes at the price of Rs. 3 to Rs. 4 per packets. Since the duty payable on each packet of cigarettes comes to more than Rs. 8/-, it appears that the cigarettes found at the premises of various dealers/traders, were non-duty paid in nature. (vi) The search was conducted at the premises of M/s Annapurna Stores, 280/2, Kucha Sanjogi Ram, Naya Bans, Delhi and during the search, 1250 sticks of unaccounted for cigarettes were found. The party could not produce any supporting invoice, bill or any other documents in respect of such stock of cigarettes. Accordingly, it appears that the said stock was clandestinely removed from M/s PTI, Kosi on which no duty was paid. (vii) During search at the premises of M/s Ritik Enterprises, 28, Hathi Khana (Behind ....
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....conducted at the premises of Shri Pawan Gupta, 51/104, Sakkarpatti, Lal Phatak, Collectorganj, Kanpur and unaccounted 58,680 sticks of cigarettes manufactured by M/s PTI, Kosikalan were found stored. On being asked, the party could not produce any supporting purchase invoice or bill etc. Accordingly, it appears that the said stock of unaccounted cigarettes was clandestinely removed from M/s PTI, Kosi without payment of duty. (xiii) During search at the premises of M/s Babu Brothers (old M/s Pappu Machis). 51/104, Lal Phatak, Sakkarpatti, Nayaganj, Kanpur, unaccounted 16 packets of cigarettes manufactured by M/s PTI, Kosikalan. On being asked, the party could not produce any supporting purchases invoice bill etc. Accordingly, it appears that the said stock of unaccounted cigarettes was clandestinely removed from M/s PTI, Kosi without payment of duty. (xiv) The search was conducted at M/s Laxmi Traders, 15-8-332/4. Feelhana, Begum Bazar, Hyderabad. During search, 42000 sticks of cigarettes manufactured by M/s PTI, Kosikalan were found stored. On being asked, the party could not produce any supporting purchase invoice or bill etc. Accordingly, it appears that the said stock of una....
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....opposite the factory premises of M/s PTI, Kosikalan incriminating documents mentioned at S.No. 27 (Pages3 & 4) were resumed, which reveal that M/s PTI, Kosi engaged in unaccounted for manufacturing of cigarettes and clandestine removal thereof without payment of duty amounting to Rs. 5,26,981/- (xxi) During search at undeclared premises situated at G-38, Kosikalan situated opposite the factory premises of M/s PTI, Kosikalan incriminating documents mentioned at S.No. 29 & 27 (Pages36 & 64) were resumed, which reveal that M/s PTI, Kosi engaged in unaccounted for manufacturing of cigarettes and clandestine removal thereof without payment of duty amounting to Rs. 14,63,69,518/-. (xxii) An enquiry was conducted at the end of M/s Gravure Printers & Converters Pvt Ltd, Kolkata who are manufacturer and supplier of printed CT Paper. The enquiry revealed that M/s PTI, Kosikalan have procurd huge quantity of CT papers from above party but have not entered the same in their input stock register and used the same in unaccounted manufacturing of cigarettes. It appears that M/s PTI, Kosikalan have used unaccounted 2146 babbins of CT paper in the manufacturing of 21460 CFC of cigarettes which ....
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....ssing the material facts with intent to evade payment of duty, in contravention of the above mentioned provisions of Central Excise Rules, 2002, and thus, have rendered themselves liable to penal action under Rule 25 of Central Excise Rules, 2002 read with Section 11AC of the Act and duty involved on such cigarettes is demandable from them under the proviso to erstwhile Section 11A(1) of the Central Excise Act, 1944 {now Section 11A(4)} invoking the extended period of limitation;" 5. In view of the same through the said show cause notice appellant were called upon to show cause as to why Central Excise Duty amounting to Rs. 39.97 crores approximately should not be demanded under extended period of limitation by invoking proviso to sub Section (1) of Section 11A of Central Excise Act, 1944. Further the remaining two appellants were proposed with imposition of penalty under Rule 26 of Central Excise Rules, 2002. Appellant submitted their reply dated 04.03.2014 to the said notice. The appellant submitted before the Original Authority that the factory of the appellant was working under strict supervision of local Central Excise Officers and even when the officers of Central Excise In....
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....notice which was issued on 03.05.2013 for the period from 09.04.2008 to 16.02.2011. Without appreciating the above stated contentions the Original Authority confirmed the demand and imposed equal penalty. Further he has imposed penalty under Rule 26 of Central Excise Rules, 2002 on both the Directors to the tune of Rs. 5 crores each. While recording his findings inter-alia he has recorded as follows:- "35. I find that duty of departmental officer during production and sealing and de-sealing of machine by him could not deter the combined willpower of evades of Central Excise duty in collusion with technical experts. I also find that there is no law/rule which puts the cigarette units under physical control. There is Rule 6 of the Central Excise Rules, 2002 which is related to "Assessment of duty" and is reproduced as - "The assessee shall himself assess the duty payable on any excisable goods. Provided that in case of cigarettes, the Superintendent or Inspector of Central Excise shall assess the duty payable before removal by the assessee." I also reproduce Para2.2/Chapter 4 of CBEC's Supplementary Instruction as "In respect of cigarettes, each invoice shall also be countersigned b....
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....ds manufactured. He has relied on the ruling of Tribunal in the case of Hyderabad Deccan Cigarette Factory Pvt. Ltd. vs. Commissioner of Central Excise (A-II) reported at 2010 (259) ELT 307 (Tri. Bang.). He has submitted that this Tribunal has held in the said case that if the factory is under physical control of Central Excise Officers then no occasion may arise for removal of finished goods with intent to evade payment of duty. Further in respect of allegation of clandestine removal of cigarette in respect of which Central Excise Duty of around Rs. 15 crores was demanded he has submitted that the said allegations were based on some rough vague informations scribbled on papers which were found at the residential premises of one worker and that the auther of said scribbling was also not identified and put to cross examination to know in respect of what the said scribbling was made and, therefore, such documents which did not have any corroborative of evidence of manufacture and clearance of goods was not sufficient evidence to make allegation of clandestine removal against the appellant particularly when none of the directors of the company had accepted that the said documents whic....
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....the appellant company is purchasing CKT papers from M/s. Gravure Printers & Converters Pvt. Ltd. without any accountal and record. b. The learned Commissioner has failed to appreciate that the Invoice No. 10 dated 09.04.2008 which was relied upon by the department to prove un-accounted purchase of CKT papers is nothing but a fake and false documents as same do not contain the required details as required under Rule 11(2) of the Central Excise Rules,2002. The said Invoice do not contain mode of transportation, GR Number and Vehicle Number. The learned Commissioner also fails to adduce any substantial evidence for consumption of the said CKT papers alleged to have been received by the appellant under Invoice No.10. The mode of transportation on the said invoice is written 'by road' but no Motor Vehicle Registration No. is mentioned. There is no mention of Gr number and no mention of any carrier. It is an incomplete and unauthenticated document on which it is presumed by the Department that the Appellant is receiving CKT papers without accountal and record. Except invoice no. 10 there is no documentary evidence to prove that the CKT papers were purchased by the Appellant Company from....
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....und the seal to be broken or manipulated. Similarly, cross-examination of Shri B.K. Dixit who was also posted in the Appellant's factory stated the same. The cross-examination of Shri Harish Chandra Srivastava, a retired Superintendent was posted during the period September, 2009 to 4th July, 2011 was also recorded and he also accepted that no case of evasion was detected by him at the said factory. He also accepted that machines were duly sealed and de-sealed by the Inspector posted at the said factory. He also stated that verification of seals on the next day was regularly conducted by the Inspector. He also stated that seal was never been broken or manipulated. Therefore, it is an admitted fact that machines were duly sealed by the department since 2009 till the date of search by the officers. It is also accepted that on the date of the visit by the officers of DGCEI the inspector was posted at the premises of the appellant and the machines were duly sealed. f. The cross examination of Shri. Sudhir Sharma, authorized signatory of the appellant firm was also recorded wherein he stated that the cigarette seized by the officers at the time of the search were not fully finished and....
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..... Further he has submitted that in view of fact that the demand is not sustainable the personal penalties imposed on two directors are also not sustainable. 9. Heard the learned AR who has supported the impugned order. 10. Having considered the rival contentions and on perusal of record we find that though the Original Authority has not accepted that the unit was under physical control however the provisions of Rule 6 of Central Excise Rules, 2002 and Para 2.2 of Chapter IV of CBEC's instructions and cross examination of the officers who were posted in the factory and acceptance of the fact by Commissioner that manufacture used to take place only after de-sealing of the machines till such machines were re-sealed we are satisfied and convinced that the unit was under physical control. Further during recording of his finding at Para 35 of the Order-in-Original the Original Authority has referred the contents at Para 2.2 of Chapter IV of CBEC's supplementary instructions stating that the checks exercised by the officers are as per the instructions contended in commodity manual for cigarette. He has not referred to cigarette manual to know the details about various supervisions the o....