AI Drafter 
TaxTMI 
TaxTMI 
2022 (3) TMI 1253
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....a and Dipak Bhogilal Kothari is equal proportion i.e. Rs. 1.14 crores each under section 11A(1) of Central Excise Act, 1944 and Rule 17 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008. (3) Imposition of penalty at the rate of Rs. 1.14 crores each against persons mentioned in Sno. (2) above. (4) Demand of interest under section 11AB of the Central Excise Act, 1944. (5) Imposition of penalty of Rs. 1.14 crores against each person mentioned in Sno. (2) above. Revenue has also filed an appeal against the said order. In the said appeal memo of the Revenue's appeal, it was found that the name of Shri Kiransingh Pradhanji Thakor, Shafi Mohmmad Faiz Mohmmad Pathan, Himanshu Jasubhai Shukla and Dipak Bhogilal Kothari were not appearing and the cause title was referred to as Royal Marwar Tobacco Products Pvt. Ltd. and others. Revenue filed Miscellaneous Applications no. 10088, 10179- 10183 of 2021 for incorporating the names of Kiransingh Pradhanji Thakor, Shafi Mohmmad Faiz Mohmmad Pathan, Himanshu Jasubhai Shukla and Dipak Bhogilal Kothari which was allowed by Miscellaneous Order no. M/10128-10133/2021 dated 08.06.202....
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....acture of excisable goods. It was further alleged that they consciously & with a clear knowledge and Intent had come together to carry out the clandestine manufacture of sub-standard Gutkha. Show Cause Notice was issued to (1) M/s Royal Marwar Tobacco Products Pvt Ltd, Gandhinagar (ii) Shri Kiransingh Pradhanji Thakor (iii) Shri Shafi Mohmad Faiz Mohmad Pathan (lv) Shri Himanshu Jasbhal Shukla and (v) Shri Dipak Bhogilal Kothari, proposing confiscation of "the seized goods values at Rs. 68,42,940/- under Rules 25 (1) (b) & (c) of Central Excise Rules, 2002; demanded Central Excise Duty amounting to Rs. 22,80,00,000/- under the proviso to Section 11A (1) of the Central Excise Act, 1944 read with Rule 7 and sub-rule (2) of Rule 17 of Pan Masala Packing Machines (Capacity Determination & Collection of Duty) Rules, 2008. The notice also proposed to impose penalty in terms of the provisions of Rule 17 of the Pan Masala Packing Machines (Capacity Determination & Collection of Duty) Rules, 2008 read with Section 11AC of the Central Excise Act 1944 and Rule 25 & 26 of Central Excise Rules, 2002. The notice also proposed to recover interest under Section 11AB of Central Excise Act 1944. The....
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.... the date of raid by police on 4.2.2009, therefore, there was enough evidence to suggest that production could not have started prior to January, 2009 and not later than 04.02.2009. Therefore, duty can be demanded only for these two months of January February, 2009. Accordingly, the duty payable comes to Rs. 5,70,00,000 in terms of Notification No.42/2008-CE dated 1.7.2008. Accordingly, Commissioner has passed order to the effect that: (i) confirming confiscation of seized goods totally valued at Rs. 68,42,940/- under Rule 25(1)(b) & (c) of Central Excise Rules, 2002 read with Rule 17(1) of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008; (ii) confirmed the amount of Central Excise duty of Rs. 5,70,00,000/- against all the five noticees, in equal proportion I.e. Rs. 1,14,00,000/- against each of the noticees, under the proviso to Section 11A(1) [now Section 11A(4)] of CEA, 1944 read with Rule 7(2) and Rule 17 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008. (iii) Imposed a penalty of Rs. 5,70,00,000/-, in terms of the provisions of Rule 17(1) of the Pan Masala Packing M....
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....Tobacco Products Pvt. Ltd. was manufacturing "Goa 1000" brand gutkha under the agreement with the brand owners. He pointed out that such goods were being manufactured by many units under different agreements with brand owners. He argued that in such circumstances the duty liability of production of such "Goa 1000" brand Gutkha at the premises at "Ginning Place" Kherwa, Taluka of Patdi, Distt Surendranagar cannot be affixed on the appellant namely M/s Royal Marwar Tobacco Products Pvt. Ltd. 2.5 Learned Counsel argued that the Commissioner has failed to appreciate that the material supplied by M/s Shree Raj Exports Private Ltd., Jodhpur had cleared 1500 kgs of lamination rolls and 4,56,000 pieces of outer pouches "as such" to M/s Royal Marwar Tobacco Products Pvt. Ltd., Gandhinagar under invoice no. 123 dated 03.11.2008 which was also shown in their ER-1 return for the month November, 2008 filed by M/s Shree Raj Exports Pvt. Ltd. He pointed out that the said unit M/s Shree Raj Exports Pvt. Ltd. had closed down their manufacturing activity with effect from 01.09.2008 as reported by the Assistant Commissioner, Central Excise, Division, Jodhpur vide letter dated 11.02.2009. The said ....
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....refore no liability can be fastened. 2.6 Learned Counsel further argued that the impugned order relied heavily on the fact that Shri Dipak B Kothari, Shri Dilipbhai Amrutlal Jani, Director of M/s Royal Marwar Tobacco Products Pvt. Ltd. was in frequent touch with a mobile no. 9375793632 (held by Shri Kiran Singh Thakor). Learned Counsel pointed out that Shri Shafi Mohd. In his statement dated 19.03.2009 that the said Mobile no. was one amongst mobile numbers used by persons involved in clandestine manufacture of Gutkha at village Kherwa. Learned Counsel argued that Shri Dilipbhai Amrutlal Jani had shown ignorance about the said number. He argued that even if there was frequent interaction between the cell no. 9825010386 of Shri Dilip Jani and the number 9375793632 used by the person allegedly involved in clandestine manufacture of Gutkha, it does not become any evidence to prove the involvement of Shri Dilip Jani or M/s Royal Marwar Tobacco Products Pvt. Ltd. in the clandestine manufacture of Gutkha at Kherwa. Learned Counsel further pointed out that Shri Dilip Jani, Director of M/s Royal Marwar Tobacco Products Pvt. Ltd. had clearly stated that there was no inward entry in respe....
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....eemed to have been in operation since the 01st July, 2008. Relying on this condition of the rules, duty was demanded in the show cause notice from 1st July, 2008 to February, 2009. Learned counsel pointed out that after considering various evidences, the Commissioner has held that there is enough evidences to suggest that production could not have started prior to January, 2009 and not later than 04 February, 2009. Therefore, the duty demand of Rs. 5.7 crores for the period of two months January-February, 2009 was confirmed. Learned Counsel pointed out that the Commissioner has ignored the evidence that the production has commences only on 31^st January, 2009 and may have continued till 04.02.2009 when police sealed the premises. In these circumstances total duty of Rs. 18,83,333/- applicable to 15 PPMsat the rate of 19 lakh per PPM for 05 days. He argued that in these circumstances, demand of Rs. 15,83,333/- could have been confirmed against all the noticees and out of the said demand Rs. 3,16,667 could have been demanded from the M/s Royal Marwar Tobacco Products Pvt. Ltd. 2.9.1 Learned Counsel further pointed out that in para 37 of the Show cause notice has fixed a fair....
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....upply of DG sets on rent and he had given DG set to Shri Kiransingh Thakor. He pointed out that this fact does not make him a manufacturer. He further pointed out that statement dated 12.03.2009 of the appellant himself stated that Shri Kiransingh Thakor had approached appellant Shri Dipak Kothari for help in regard to purchase of generator and appellant had recommended him to Shri Jayantibhai Parekhdas Patel of Mehsana. In another statement relied upon of Shri Shafi Mohammd Faiz Mohammd Pathan dated 19.03.2009 mentions that Shri Kiransingh Thakor had told him that they needed generators for their work and they had suggested him to contact Shri Dipak B Kothari, the appellant. He argued that in these circumstances no evidence has been produced against the appellant Shri Dipak B. Kothari to establish that he was in any way involved in the manufacture of goods. In these circumstances, the demand of duty as well as penalty cannot be imposed on the appellant. 3. Learned Authorised Representatives relied on the grounds of review filed along with appeal of Revenue. He pointed out that Commissioner has simply relied on various statements. As discussed in para 36.1 of the Order in Origin....
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.... premises on 05.02.2009. It was found that the said premises was being used for exclusive manufacture of "Goa 1000" brand Gutka, exclusively falling under chapter 24 of Central Excise Tariff Act, 1985. The said premises was not registered. It was found that there were 15 pouch packing machines for packing Gutka and there was finished good of totally value at 68,42,940 lying there. The said material was seized and handed over to Shri Nareshbhai Chaturbhai Patel, co-owner of premises under superintendence. The statement of Shri Nareshbhai Chaturbhai Patel was recorded on 06.02.2009 and he informed that the said premises belong jointly to him as well as his brother Shri Kantilal Chaturbhai Patel. He pointed out that his brother has signed he rent agreement with Shri Kiransingh Thakor on 31.01.2009 for a monthly rent of Rs. 5,000. He also pointed out that Shri Kiransingh Thakor was recommended by Shri Himanshu Jasubhai Shukla. He also stated that Shri Kiransingh Thakor had contacted him around 25 days prior to start of factory and the rent agreement was executed on 31.01.2009. He also stated that work of building walls had started before 31.09.2009 & factory was ready and started produ....
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....ated 06.03.2009 has stated that after speaking with Shri Himanshu Shukla, there was call from Shri Jasubhai Shukla after 10 days from his mobile phone and a rent of Rs. 5,000 was fixed for the factory premises. After that the working in the factory started which was looked after by Shri Himanshu Shukla and Jasubhai Shukla. 4.4 Shri Nareshbhai Chaturbhai Patel in his statement dated 06.03.2009 stated that on his land, the construction for the godown for making Gutka started 15 days before the agreement was made with Shri Kiransingh Thakor. He also stated that most of the work was done by Shri Himanshu Shukla son of Shri Jasubhai Shukla. He also stated that between 29/09/2009-31/01/2009 in the night the Gutka making raw material and machines arrived in Eicher Trucks. He also stated that the generator had come a day or two before the starting of manufacturing of Gutka and unloaded via tractor trolley. He also stated that while the gutka was made, a lot of vehicles used to come but he does not remember the vehicles. He also stated that in an expensive car, a person used to come who they said is their boss and his name is Rajeshbhai. 4.5 Shri Deepak Kothari in his statement dated ....
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.... material. That night at around 1 o'clock, raw material and packing roll came in a truck. In the next afternoon around 3 o'clock he and Shri Kiransingh Thakor went to Ahmedabad and around 6 o'clock in the even when they reached Sarkhej highway, Himanshu Shukla called them and told that Police has raided their factory. Thereafter they left for Visnagar. 4.7 Statement of Shri Himanshu Jasubhai Shukla was recorded on 23.03.2009 wherein he submitted that in the 2nd or 3rd week of December he met Shri Kiransingh Thakor and Shri Shafi Mohd. Faiz Mohd. Pathan. Shri Kiransingh Thakor told him that he is looking for some place for business in the district Surendranagar. He suggested to him the place of his father's friend Shri Kanthibhai Chaturbhai Patel in village Kherwa, Taluka Patdi, District Surendranagar in the month of December. He took them to Shri Kantibhai Patel where they spoke and a deposit of Rs. 25,000 was given and a rent of Rs. 5,000 was fixed. Shri Kiransingh Thakor also agreed to give him Rs. 2.5 lakhs for preparation of shed. The work of construction lasted for one and a half month. He further stated that in the end of January, three machines came first and after 5-6 da....
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....anverlal Gehlot, Driver of vehicle having registration No. RJ 19 GA 1066 On the strength of the statements of above show cause notice was issued seeking to demand Central Excise duty on the 15 machines found in the premises. The show cause notice invoked the provisions of Pan Masala Packing Machines (Capacity and Determination and Collection of Duty) Rules, 2008 to demand duty of Rs. 22,80,00,000/- for the period 01st July, 2008 to 08th February, 2009. The Show Cause Notice invoked sub rule 2 of Rule 17 of Pan Masala Packing Machines (Capacity and Determination and Collection of Duty) Rules, 2008 which states that if it is found that goods have been manufactured in or cleared from a unit which is not registered with the jurisdictional Central Excise Office, then the duty liability of such unit shall be determined on the basis of number of packing machines found available in the premises of the unit and the retail sale price of the pouches manufactured with the aid of such packing machines and unless evidence to the contrary is provided to the satisfaction of the Central Excise officer, such machines shall be deemed to have been in operation since the 1st July, 2008 and shall be ....
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....rds following in respect of the demand of cross examination: "33.1 As regards the contention to cross examine the investigating officer and other co-noticees, it is stated that due or non-traceability or non-honouring the summons for hearing/cross-examination by the co-noticees, the same could not take place. The Counsel of Shri Dipakbhai Kothari was also requested to make efforts to locate and bring the co-noticee for cross examination. However, all efforts to serve summons/ notices failed." The exact nature of effort made to cross-examine and how the statements become relevant under section 9D of Central Excise Act has not been stated. The appellant Shri Dipak Bhogilal Kothari has in his appeal specifically raised a plea of failure of Adjudicating Authority to grant cross examination. It is seen that the relief granted by the Commissioner is solely based on the statement of persons recorded during investigation. It is a fact that the machines were found present in the premises and as per Rule 6 read with sub rule 2 of Rule 17 of Pan Masala Packing Machines (Capacity and Determination and Collection of Duty) Rules, 2008, in such case involving clandestine manufacture t....