TaxTMI 
TaxTMI 
2019 (5) TMI 508
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....he Commissioner had confirmed the duty and penalty imposed on the Respondents in original order No.12/CEX/2004 on 23rd August, 2004. Demand of excise duty of Rs. 5,67,86,460/and the demand of penalty of similar amount under Section 11AC of the Central Excise Act, 1994 (hereinafter referred to as "the Act") was made. There was a demand of interest under Section 11AB of the Act. Ketan Shah, a Director and Respondent was directed to pay penalty of Rs. 25,00,000/in accordance with the demand made under Central Excise Rules, 2001-2002. There was a demand of Rs. 5,00,000/as penalty as against other director Sanjay Shah under similar Rules. There was a demand of penalty of Rs. 2,00,000/as against M/s. Vishnu Vijay Packaging concern. There was a demand of Rs. 2,00,000/from Suresh Nagindas Soni, who was employed by assessee. There was a demand of penalty of Rs. 10,000/from V.V. Mule, who was authorized signatory of Respondent, assessee. There was a demand of Rs. 50,000/as penalty from Sudhir Khanna, representative of the assessee, who was working at Delhi. All these demands were confirmed by the Commissioner after considering the material and the contentions of the present Respondents, b....
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....e manufacturing activity was going on, were transferring goods for sale to office of company viz. M/s. Sanket Food Products Private Limited, A 7/1 Additional MIDC, Jalna. iv. The proceeds of sale were received at M/s. Sanket Agencies situated at HIMCO House, 1st Floor, Nehru Road, Jalna. v. The assessee was a franchisee of M/s. J. M. Advertising Company and the assessee was using the band name "Goa Gutka" for selling the Gutka as a franchisee. The assessee was manufacturing the Gutka under his own brand names also like Satyam, Shahi, Bazigar, Mini and Pan Masala. vi. On 8th March, 2002, the officers of the DGCEI searched the various premises of the aforesaid assessee simultaneously. During visit, inquiry was made with the staff of the company and record was also taken over from the aforesaid places. vii. There is no dispute over the aforesaid circumstances at (i) to (vi) made out by the department. viii. The assessee was availing CENVAT in respect of raw material like Printed Laminated Rolls (PLRs). On other raw material like Supari, Catecho, lime, scent excise duty was not payable. ix. During search of the aforesaid premises and ....
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....e private documents. These private documents were then compared with the aforesaid statutory record including RGI register. The comparison revealed that only some transactions and manufacture only to some extent was mentioned in statutory record of the assessee. It revealed that more quantity of goods were manufactured and cleared, but they were not shown in the statutory record. Interrogation was first made with the officials of the factories, who were working at the aforesaid two units. The interrogation revealed that the goods, which were not shown in statutory record, but which were shown in the private record, were manufactured and were cleared though they were not recorded in statutory record. This record was confronted to the concern including the two Directors of the company when their statements were recorded under Section 14 of the Act. xiii. During search of M/s. Sanjay Agencies where the sale proceeds were being collected, cash amount of Rs. 17,38,230/was recovered on 8th March, 2002. Sanjay Shah was present in the office at the relevant time. The documents, which were recovered from this office revealed more information about evasion of excise ....
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....erred and sale was not mentioned in the statutory record. xvi. During search of unit No.1 of the assessee, a private file was recovered in which there was a mention about daily stock of raw material, daily brand-wise production of Gutka etc. The statement of Joshi, Production Manager, was recorded on 9th March, 2002 by confronting the documents, which were in the file. He disclosed that those documents were private containing the information regarding actual daily stock and actual production. Many figures were mentioned in the record and Joshi explained the meaning of those figures. Said record did not tally with the RGI register of unit No.1. Many entries, which were appearing in the file were not made in RGI register. Joshi gave explanation that as per the instruction of Ketan Shah, the statutory record was created. In the statement dated 11^th July, 2002 Ketan Shah admitted that the quantity mentioned in the private record recovered from unit No.1 was the quantity of goods manufactured, but most of the quantity was not recorded in RGI register. The officers verified each page of the private record after comparing it with RGI register for every day activity. For gi....
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....but M/s. Vishnu Vijay Packaging Limited was having printing cylinders of "GOA PLUS INNER" (8 numbers) and "GOA PLUS OUTER" (8 numbers). Thus, M/s. Vishnu Vijay Packaging Limited was having cylinders of Goa brand, which was the production of the assessee. There was a record to the effect that flexible laminated plastic of "YAHOO" brand was supplied to M/s. Sanket Industries, Jalna, but there was no cylinder of that brand with both these sister concerns. Thus, by showing the supply of film of brand "YAHOO", the film for Goa brand was supplied. It was shown to be supplied to M/s. Sanket Industries Limited, but it was actually supplied to M/s. Sanket Food Products, assessee. This supply was found to be of 21344.38 kilograms. The record showed that the printed laminated film of 100.25 kilograms was supplied to the assessee for the period 1st April, 2001 to 28th February, 2002. The record showed that M/s. Vishnu Vijay Packaging had printing cylinders of "Goa 1000" and "Goa Plus" also. Two sets each of these cylinders were there. Information revealed that one time use of each cylinder gives 4 to 8 tons of printed films. After that the cylinder requires re-engraving. The facilitie....
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....ited in respect of this excess quantity. Similarly, there was shortage of 1412 kilograms of plain polyester film. The record of M/s. Orian Laminators Limited showed that the finished goods were not recorded in RGI register. The statement of Jhunjhunwala, Managing Director of M/s. Orian Laminators Limited was recorded on 8th March, 2002. He admitted that without accounting any RGI register and without making payment of excise duty, they had cleared goods, which were delivered to the assessee. When it was found in possession of the aforesaid material, there was no record of order of printed laminated films from the assessee and Jhunjhunwala gave information that the assessee used to give orders orally and so the record was not kept. Information was collected from Sharma, Production Manager of M/s. Orian Laminators Limited about the capacity of the factory to manufacture on the basis of existing numbers of cylinders. He admitted that the quantity of 1412.2 kilograms of polyester film was used for giving delivery to the assessee of Goa Gutka and it was of printed laminated film. He admitted that in respect of the delivery already given, no account was maintained. This stock matched wit....
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....2001, the amount of Rs. 89,02,458/was paid by him to Ketan Shah and remaining amount was due from Khanna. The purchase rates record is there and as per this record, amount is calculated. Profit figure was also there on record. No written agreement was brought in existence and Khanna disclosed that there was oral agreement with the assessee through Soni. He revealed that for Delhi unit, Jalna factory was manufacturing Gutka prior to December 2001 and after that Delhi unit started manufacturing activity. It is not disputed that Khanna was First Appeal 1003 of 2007.odt working as Sales Manager since December 2000. Inquiry revealed that Khanna was being paid Rs. 32,000/per month for discharging the duty. Record is collected to show that 1801 boras of Gutka were removed to Delhi from Jalna by evading excise duty. Record is collected like railway receipts to show that from Delhi office of assessee, Goa Gutka was dispatched for areas of northern India like Dehradun, Akbarpura, Shahganj, Sultanpur, Saharanpur etc. This record is of pre December 2001 period. Statement of one Gupta, employee of assessee, who was also working at Delhi about these dispatches is recorded. Sta....
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....nal about the circumstance that all these witnesses retracted their statements and denied the contents of the documents. The Commissioner had considered the circumstance that only Khanna had retracted from the statements dated 8th March, 2002 and 24th April, 2002 immediately. No other Respondents had retracted from the statements till they were cross-examined by their own counsel. Many statements of these witnesses were recorded after keeping gap in consecutive statements, but in subsequent statements also, previous statements were not retracted by these Respondents and this circumstance is considered as relevant by the learned Commissioner. The learned Commissioner has considered the circumstance that the record recovered prior to the statement and after the statement was found to be consistent with the contents of the statements of Respondents. The learned Commissioner has considered the date-wise production, date-wise removal of finished goods and those figures were compared with the statements and the private record created by the Respondents and further there was independent record of packaging material collected from aforesaid three concerns. There was another circumstance li....
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....ned before the adjudicating authority and there was material like record of M/s. Orian Laminators Limited showing supply of laminated film, which was not accounted by the assessee. There is huge material in support of the statements given, which is already quoted and that record is not at all touched and appreciated by the Appellate Authority. While deciding the appeal, the Tribunal ought to have touched that material and ought to have given reasons for setting aside the findings of the adjudicating authority but that is not done. In such a case, when the material of aforesaid nature is available, the burden or proof also shifts and assessee is required to explain the things made out by the material. For that, the provisions of Sections 106 and 114 of the Evidence Act can be used. That approach was not adopted by the Appellate Tribunal. In view of the provisions of the Act, the proceeding before the adjudicating authority needs to be treated as judicial proceeding and so, such approach was possible. This Court has no hesitation to hold that the circumstance that most of the raw material except laminated film was not covered by the Central Excise Act was misused by the Directors of ....