TaxTMI 
TaxTMI 
TaxTMI 
2019 (10) TMI 849
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....ice dt. 06.02.1995 alleging that during search at various premises, it was found that they have not properly accounted the receipts of various packing material and finished goods in their records and therefore the goods found at factory in Dashrath, Baroda and Godown situated at Jasubhai Fulabhai Godown at N.H. No. 8, Dashrath, Baroda were seized. Also finished goods were seized from Vinayak Agencies, Jodhpur and Jeevan Agencies, Raipur. Search was also conducted at transporters premises. 1.1 During the period 01.04.94 till 11.08.94 the Appellant have received 51,413.47 Kgs of 2 gms PLR and 10,145 Kgs of 4 gms PLR. Out of the above quantities 10,020.551 Kgs of PLR was found in factory and 19,669.351 Kgs was found at Dashrath Godown. Both the quantities were put to seizure. 1.2 The officers conducted trial to arrive at average consumption of PLR (Printed Laminate Roll) for manufacture of 1, 2 and 4 gm Pan Masala Gutka pouches. On the basis of trial run so conducted it was contended that out of roll of PLR of gross weight of 1490 gms and tare weight of 290 gms. i.e net weight of 1200 gms of 2 gms PLRs, 2601 pouches of 2 gms PMGs. were manufacture. The average consumption of PLR for....
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....es 96 cartons of 4 gms PMG and 57 cartons of 2 gms PMGs and 10 packets (inner printed cartons) of 4 gms PMGs were found on which there was no identification marks and no duty paying documents could be produced. 1.5 The show cause notice alleged that the co-appellants in their statements accepted the clandestine removal of goods. Also that the transporter also accepted that the goods not consigned in the name of Appellant were PMGs. It was alleged that the Appellant unit has not accounted for all the receipts of the inner printed cartons in statutory records and also received inner printed cartons without accompanying bills or invoices; not followed the proper procedure for removal of modvatable inputs from factory; not accounted for the entire production of PMG in their record and had cleared unaccounted PMG valued at Rs. 2,77,87,054.86 A duty demand of Rs. 1,38,93,527/- was proposed against Appellant; a duty demand of Rs. 10,32,640/- was proposed on ground that the Appellant has cleared PLR (input) as such to their go-down; demand of duty of Rs. 5,43,750/- was made on the ground that they have cleared consignments clandestinely by booking consignments through Sarco Roadlines, Bar....
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....thority to decide the issue afresh. Resultantly vide impugned order dt. 06.09.2011, the demands as proposed and penalties against the Appellant were confirmed. Hence the present appeals by the Appellant Unit and Co-Appellants. 2. Shri Mayur Shroff Ld. Counsel appearing for the Appellants submits that the impugned order has been passed by overlooking the facts. He submits that duty demand of Rs. 1,38,93,527.43 has been made on the basis of estimated production arrived at on the basis of consumption of PLR (Printed Laminated Roll) during a single run on the packing machine. One roll was put on Fill and Seal machine and it was said that 2601 pouches of 2 gms were manufactured from PLR weighing 1200 gms. On the basis of the experiment a figure of 0.46 gms (1200gms/2601 pouches) was arrived at which was rounded to 0.50. In respect of 4 gms pouches an identical figure of 0.50 was arrived at. The revenue thereafter on the basis of receipt of Plastic laminated rolls during the subject period, arrived at the estimated production. Comparing the said estimated production with the production shown in RG-1, the conclusion was arrived at that the excess quantity so arrived has been cleared clan....
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....efore Tribunal against said order was dismissed. The appeal before Hon'ble Mumbai High Court against the Tribunal order is pending and the order has not been stayed. 2.1 He submits that for manufacture of PMG number of raw materials are required like Supari, Katha, Lime, menthol and tobacco and "Compound S & G" which is major and an essential and indispensable raw material for manufacture of PMG. No discrepancy in any of the above raw material was found neither there is any unaccounted procurement of any of the raw material. Merely on the basis of alleged discrepancy in packing material, the charges of clandestine clearance of PMG cannot be made. He relies upon Tribunal order in case of Ghodawat Pan Masala Products Ltd. 2004 (175) ELT 182 (TRI), Chandan Tobaco Co. 2011 (270) ELT 87 (TRI), M. Veerbhan 2005 (182) ELT 389 (TRI) as upheld by Hon'ble Apex Court reported in 2006 (197) ELTA34 (SC). He submits that the adjudicating authority has erred in appreciation of facts. He points out Para 7.3 of the impugned order wherein the adjudicating authority has observed that wastage is for DIL - V worked out to 0.38 gms for 2 gms pouch and 0.452 gms for 4 gms pouch. The said ratio was for P....
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....tion Manager was recorded. He relies upon Apex Court judgment in case of Vinod Solanki 2009 (233) ELT 157 (SC) to submit that confession which has been retracted must be substantially corroborated by other independent and cogent evidences. Evidence in the form of confessional statements is weak in nature and presumption of innocence is human right. He submits that adjudicating authority has erred in treating he purported removal of Rs. 5,43,750/- as corroborative in nature for the purpose of upholding demand of Rs. 1,38,93,527.43/-. The demand for Rs. 1,38,93,527.43 is for the period 01.04.94 to 11.08.94 whereas the demand for Rs. 5,43,750/- is for the period after 11.08.94. The irregularities found at Bagai Golden Transport in respect of goods transported to Indore, Raipur are not related to removal from factory of the Appellant without payment of duty and the demand is based on third party records i.e transporters. Further no duty has been demanded on the basis of said instance although the seizures were made from M/s Vinayak Agencies, Jodhpur and Jivan Agencies, Raipur. Such miniscule seizures cannot be made basis for demanding huge duty from Appellant unit even if it is assumed....
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....nt officer under section 14 and claims has been made by such persons without any evidence. It is on party to prove that the statements were obtained by exercise of coercion, threat and pressure. The statements constitute valid and substantive evidence. He relies upon judgment in case of Barkat Ram 1962 (3) SCR 338 AND Naresh Sukhwani 1996 (83) ELT 258 (SC). In their reply they did not make any allegation regarding any such threat, coercion or duress. The retraction and cross examination are belated one and cannot be relied upon. He relies upon judgements in case of Shalini Steels Pvt. Ltd 2011 (269) ELT 485 (AP), Systems & Components Pvt. Ltd. 2004 (165) ELT 136 (SC), Naresh J Sukhwani 1996 (83) ELT 258 (SC), KP Abdul Majeed 2014 (309) ELT 671 (Kerala), Singam Mark 2005 (189) ELT 111 and National Boards 2017 (313) ELT 113 (TRI) and other judgments that cross examination is not necessary. He also submits that the demand has been rightly confirmed and takes us through the show cause notice and the findings of the impugned order. He submits that the records were not properly maintained and were incomplete. He takes us through the facts and statements in his submission and reiterates t....
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.... That apart, since the investigation has been carried only at the transporters end, no presumption could be drawn with regard to manufacture and removal of the final product. Presumptions and assumptions cannot take place of positive legal evidence, which are required for proving the charge. Even if, it is assumed that some raw materials were received at the factory of the respondent during the said period, the same cannot become conclusive proof of production and clandestine sale to different parties. Due to lack of positive evidence, benefit of doubt will always go in favour of the assessee. 10. Accordingly, we answer the reference against the Revenue and in favour of the assessee and it is held that the receipt of one of the raw materials, does not conclusively prove clandestine manufacture and surreptitious removal of finished final product. Further, since the charge is regarding clandestine manufacturer and removal of finished product for evading excise duty, the same cannot be held to be proved on the basis of principle of preponderance of probabilities and the Revenue has to prove the same beyond doubt. The reference is answered accordingly." Applying the ratio of said ju....
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....e is no evidence of actual excess production, removal of such excess production, transport of such excess production, confirmation from buyers and receipt of unaccounted cash towards sale of such unaccounted clearances. We find that the department has not done so. Few more cases in this regard are as under :- (i) 2001 (130) E.L.T. 228 (T), Commissioner of C. Ex., Patna v. Universal Polyethylene Industries Clandestine removal and clearance is a serious charge against manufacturer, which is required to be discharged by the Revenue by production of sufficient and tangible evidence. (ii) 2001 (130) E.L.T. 334 (T), Chennai M.T.K. Gurusamy v. CCE, Madurai Clandestine removal - Evidence Standard of - No positive evidence to establish clandestine removal adduced by department - Quantity alleged removal calculated on basis of transport company's records based on presumptions and assumptions not sustainable. (iii) Gurpreet Rubber Industries, 1996 (82) E.L.T. 347 (T) = 1996(63) ECR 68 (T) Clandestine production and removal not proved by any evidence such as installed capacity purchase & utilization of raw materials labour employed, power consumed, etc.....
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....- More positive evidence is necessary to sustain charge. (xvi) 1999 (114) E.L.T. 537 (T) = RLT 35 p. 162 (T) - Arti Steels Ltd. v. CCE Chandigarh No cogent reasons given for figures of production - Co-relation between various other documents - Gap in power consumption - No sufficient materials for establishing clandestine removal. (xvii) 2000 (117) E.L.T. 659 (T) -RLT 35 p. 654 (T) Pepsico India Holding v. CCE Meerut All other parameters as laid down in Rule 173E should also have been taken into consideration. The legal position as brought out in the cases mentioned above leaves no doubt that the demand cannot be sustained on the ground of presumption. 15. From the replies to the show cause notice dated 9-10-97, 6-1-97, 2-2-97, 17-2-97 on pages 120 to 211, it is crystal clear that the appellants have submitted specific replies to the points raised by the department and as such it was incumbent on the department to prove their case beyond reasonable doubt. In the absence of any strict, tangible, direct, positive and corroborative evidence, we do not find any justification to sustain the demand raised in this case. We, therefore, set aside the impugne....
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.... Pan Masala Products (supra), in our view, squarely works in favour of the appellants. The appellants can legitimately claim support from certain other decisions (cited by their Counsel) also. In the case of I.T.C. Ltd. v. CCE, Bangalore [Tribunal's Final Order No. 333/1996-D dated 13-5-1996 [1996 (87) E.L.T. 453 (T)] in Appeal No. E/1318/88-D], it was held that cigarette sample checks undertaken by the Department on 5th, 6th and 8th September, 1986 were not to be made applicable to past clearances of cigarettes. In the case of Sri Sakthi Textiles (P) Ltd. v. Government of India & Others [Madras High Court's order dated 1-4-1972 in W.P. No. 1421/71], it was held that, on the basis of the results of tests on samples of goods, duty could not be levied on the goods manufactured and cleared prior to the period of sampling. The Government themselves had taken the same view in the case of National Textile Corporation [1982 (10) E.L.T. 639 (GOI)], Aggarwal Metal Works [1982 (10) E.L.T. 689 (GOI)] etc. In the case of CCE, Coimbatore v. Cambodia Mills Ltd. [2001 (128) E.L.T. 373 Mad.)], the Hon'ble High Court held, in respect of goods manufactured on the date of drawal of sample, that deman....
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....e to clear such PLR without payment of duty from their factory. Ultimately the said roll after release was consumed in the manufacture by the Appellant. In that case only on the limited ground that the PLR was found at godown of Appellant, the duty demand cannot be made as the goods were not intended to be removed without payment of duty nor there is any evidence to allege so. 9. As regard confiscation of goods worth Rs. 29,12,368.93, we find that the goods were raw material/ packing material except 2 gms PMG pouches which were lying in factory in strips form. As far as the raw material and packing material is concerned, the same were legally acquired and there is no case for seizure/ confiscation of same. In respect of finished goods, we find that the PNG were in strip form awaiting packing in inner cartoon and then corrugated boxes. Even the show cause notice accepts the fact that the PMG Pouches were packed in inner printed cartoon and then into corrugated boxes. This clearly means that the goods did not reached to RG-1 Stage of accounting. We thus do not find any reason to seize/ confiscate the goods when the goods did not reach RG-1 Stage nor there was any preparation on part....