TaxTMI 
TaxTMI 
2019 (5) TMI 1015
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....age, Kundli, Sonepat. Searches were conducted simultaneously at the factory premises of M/s Som and at the residence of Shri Manoj Rajouria on 20/10/2007 by the officers of Anti-Evasion, Central Excise, Rohtak. At the time of search, the factory was found operational and was engaged in the manufacturing of Pan Masala, Gutkha and Khaini of various brands. During the course of search, the stock was verified and certain documents were resumed. It was revealed that a shortage of stock of 18480 poly packs of Gutkha involving central excise duty of Rs. 3,45,474/-. M/s Som could not explain the shortage and voluntary debited the amount of duty of Rs. 3,45,474/- through PLA. The search conducted at the residence of Shri Manoj Rajouria resulted in the recovery of certain incriminating documents, which were resumed. These records mainly included loose slips about various raw materials for manufacturing gutkha/pan masala/khaini, private records of datewise production and dispatch of gutkha/pan masala/khaini by M/s Som and the consignment notes in respect of dispatch of finished goods through various transporters including certain central excise invoices issued by M/s Som. On the basis of thes....
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....ment at the rate prescribed under notification issued from time to time under Section 11AB of the Central Excise Act, 1944 readwith Section 174 (2) of CGST Act, 2017. 3. I impose penalty of Rs. 13,41,65,685/- under Rule 25 of the Central Excise Rules, 2002 readwith Section 11AC of the Central Excise Act, 1944 readwith Section 174 (2) of CGST Act, 2017 upon M/s Som Sugandh Industries Limited, Sonepat. They shall be eligible to pay penalty equivalent to 25% of Rs. 13,41,65,685/- in terms of proviso to Section 11AC of the Central Excise Act, 1944, subject to the condition that duty confirmed at (1) above is fully paid alongwith interest and 25% of the penalty within 30 days of the receipt of this order. 4. I impose penalty as follows, under Rule 26 (1) of the Central Excise Rules, 2002 readwith Section 174 (2) of CGST Act, 2017 :- a. Shri Satish Seth, Director Rs. 1 crore (Rupees one crore only) b. Shri Ashok Nahata, Director Rs. 25 Lakhs (Rupees Twenty Five Lakhs only) c. Shri R.K. Jaggi, Rs. 5 Lakhs (Rupees Five Production Supervisor Lakhs only) d. Shri Gyan Chand Sharma Rs. 5 Lakhs (Rupees Five Authorized Signatory Lakhs only) ....
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....o procurement of other materials/packing materials. 5. During the course of investigation, statement of Shri Satish Seth dated 13/11/2007 was recorded and was asked to reveal the name of the raw material suppliers. He gave a list of 22 suppliers supplying him all the raw materials, packing materials. There is no investigation from any of the suppliers. 6. She further submits that no evidence of clandestine manufacture and clearance were submitted before the Settlement Commission. She submitted that as the proceedings were not settled before the Settlement Commission and the appellants have not admitted clandestine manufacture and clearance thereof, therefore, approaching the appellant Tribunal before Settlement Commission, does not prove that the appellants were engaged in clandestine manufacture and clearance of dutiable goods. She further submits that no evidence with regard to use of extra labour for manufacture of goods or use of extra power has been brought on record by the Revenue. 7. It is her submission that admission of shortage of small quantities of raw material and finished goods is not conclusive evidence that the appellant manufactured and cleared huge quanti....
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....nt. The said order was challenged by the Revenue before the Hon'ble High Court of Punjab & Haryana and the Hon'ble High Court of Punjab & Haryana asked the Revenue to file an affidavit why the directions of the Tribunal's have not been complied with. Before filing the affidavit before the Hon'ble High Court, the impugned order has been passed. 12. In this case, another fact has also been brought to the knowledge of the Bench by the learned Counsel of the appellants that during the course of investigation, cheques of about rupees more than 5 crore were also taken from the appellant and the same were dis-honoured. Against those cheque bouncing, the Revenue approached to the Criminal Court for initiating the proceedings under Section 138 of the Negotiable Instrument Act. During the pendency of those proceedings, the appellant approached to the Hon'ble Punjab & Haryana High Court and the Hon'ble High Court has stayed those proceedings as there was no demand for the amount for which cheques were dis-honoured. As the impugned order has been passed, therefore, the said proceedings before the Criminal Court shall revive. On that apprehension the appellants have approached to this Tribun....
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....ailway receipts, sometimes of different dates to correspond with the quantity of Gutkha shown as transported in the resumed documents. It is not correct as there are several gutkha manufacturers in and around Delhi who transported their goods through railways but no efforts have been made to ascertain whether the gutkha has been sent by M/s Som. On careful analysis of various evidence on record, the following points are noted as relevant : a) On the date of physical verification of records and stocks at the factory premises of M/s Som, there was a shortage of 18,480 polypacks of gutkha. As the shortage could not be explained, the appellant discharged duty of Rs. 3,45,474/- on the same. There is no context on this liability. This is apparently admitted unaccounted clearance of gutkha. b) Officers could collect private records, loose slips showing raw materials for manufacturing gutkha/pan samala/khaini, date wise production, dispatch, consignment notes, central excise invoices etc. The corroborative/evidentiary value of these are to be appreciated in proper perspective. c) The allegation in the notice was that during the relevant period, M/s Som m....
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....ods by the appellants have been fabricated and the said person has admitted that he has fabricated these fake documents, therefore, how can be these documents can be the basis to rely and alleged clandestine manufacture and clearance of the goods by the appellant. This shows non-application of mind by the Adjudicating Authority while passing the impugned order. Therefore, on the basis of these documents, this demand cannot be confirmed. We also find that investigations have also not established the authenticity of these documents by any corroborative evidences. 15. Further, with regard to the railway receipts after examining the same this Tribunal has held that these railway receipts cannot be relied upon to allege clandestine removal of goods as recorded hereinabove. 16. With regard to transport receipts and statement of Shri Pitamber Sharma, who stated that they have supplied supari to the appellant on various dates. Admittedly, the vehicles have been operated by the drivers and no statement of any of the driver has been recorded to support the statement of Shri Pitamber Sharma. Moreover, in the cross examination also, Shri Pitamber Sharma has stated that he does not issue ....
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.... from duty or whether the same was in form of plain reel hanks which is fully exempt from duty under Notification No. 8/96-C.E. The department's allegation is that this yarn was in cone form and not in form of plain reel hanks and this allegation is purely based on the documents recovered from their customers, M/s. Laxmi Trading Company/M/s. Laxmi Industries and statement of their employees. On the other hand, neither any documents indicating the clearance of yarn in cone form to Laxmi Trading Company/ M/s. Laxmi Industries have been recovered from the premises of appellant nor any such admission has been made by Shri Nand Lal Arora in his statement. Except for recording the statement of Shri Nand Lal Arora no other inquiry has been made at the end of the appellant, in regard to the allegation being made by them. The Tribunal in the case of Rhino Rubbers Pvt. Ltd. (supra) and Kothari Synthetics Industries (supra) has held that it is not safe to rely only on the third party's evidence for making the allegation of duty evasion against an assessee. Other than the records recovered from M/s. Laxmi Trading Company/M/s. Laxmi Industries and the statement of their employees, there is no o....