AI OCR 
TaxTMI 
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2022 (6) TMI 1259
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....r/CEx/IND/2019 dated 09.10.2019 (F. No. V(24) 15-01/2011/Adj-I) SCN No. and date 1. SCN No. 574/CE/97/89/ELR/10/INV dated 11.05.2011 2. SCN No. 574/CE/159/2010INV dated 20.01.2011 3. SCN No. 574/CE/150/ELR/2011/INV dated 16.02.2012 4. SCN No. 574/CE/150/ELR/2011/INV dated 16.07.2013 Period involved August 2008 to February 2011 S. No. Appeal No. Name of party Designation/Address of Company Penalty 1 E/50834/2020 Elora Tobacco Company Duty of Rs.3,844/- Rs.1,03,74,648/- Rs.28,39,43,195/- 14-B, Sector-F, Industrial Area, Sanwer Road, Indore Manufacturer 1. Rs.3,844/- 2. Rs.1,000/- 3. Rs.2,00,000/- 4. Rs.1,03,74,648/- 5. Rs.28,39,43,195/- 2 E/50081/2020 Shyam Khemani Director of Elora Tobacco Company Ltd. 1. Rs.1,00,000/- 2. Rs. 2,000/- 3. Rs.20,00,000/- 4. Rs.3,00,00,000/- 3 E/50835/2020 Ashish Ajmera Godown owner- Plot No. 165, A Sector-F, Sanwer Road, Indore Rs.10,00,000/- 4 E/50836/2020 Charanjeet Singh Bagga Prop. Lucky Bagga Transport Co. Rs.15,00,000/- Rs.1,00,00,000/- 5 E/50837/2020 CMS Althaf Rai....
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....lso removing substantial part of their finished goods-cigarettes clandestinely. Search was conducted by the Officers of DGCEI at the factory premises on 14th May, 2010. It appeared to Revenue that there is unaccounted stock/ cigarettes. Further, it appeared that no raw-material was shown to have been issued for manufacturing of 9,80,000/- cigarettes (98 cartons) which was lying in stock. As it appeared to Revenue that such cigarettes were lying unaccounted in the factory with intention to remove them clandestinely, thus, the same were seized and were handed over to the Director of the appellant Mr. Shyam Khemani, for safe custody. Further, it appeared from Form - IV and raw-material issue register that there are no entry for receipt or issue of raw-material after 28.04.2010. 4. It further appeared from the de-sealing report dated 14.05.2010, that only two cigarette making machines were de-sealed. Further, as per Annexure F submitted by appellant dated 13.05.2010, the production of cigarettes per machine was 72,000 cigarettes per hour. It appeared that from the two de-sealed machines at the start of the shift at 10 hours, a maximum of 2,88,000 cigarettes could have been man....
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....dent was recorded on 14.05.2011 who accepted and confirmed the de-sealing of two cigarette machines on 14.05.2010 at 10 A.M., but avoided questions on facts on the pretext of absence of record. On being questioned regarding the excess stock lying in the factory, Mr. Solanki stated that after de-sealing the cigarette making machines on 14.05.2010, he had left for the Range Office, accordingly, he could not notice excess stock. It further appeared that Mr. Devendra Parmar, Inspector of Central Excise, posted at the factory had facilitated the excess found unrecorded production of cigarettes. 7. Follow-up search was conducted in the premises of dealer(s) of cigarettes, namely, M/s. Shekhawati Trading Co. at Chandpol Bazar, Jaipur on 22.07.2010. The Officers found 7 boxes containing 50 packets of 10 cigarettes and 35 packets of 10 cigarettes totaling 3850 cigarettes of Globus brand manufactured by ETCL valued at Rs.7,123/- which were put under seizure. As per Panchnama, these cigarettes were manufactured in the month of March, 2010. The statement of Proprietor Mr. Rajesh Kumar Tibra was recorded on the same day. He stated that he has purchased the cigarettes found ....
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....hmi Enterprises with respect to the cigarettes found in the premises, manufactured by ETCL. Accordingly, these cigarettes were put under seizure. The statement of Shri Tikamchand, Proprietor was recorded on 21.02.2011 wherein he stated that he had purchased the seized cigarettes without any bill from one Mr. Ashok of Ashapuri Marketing, R.G. Street, Coimbatore in cash. He also stated that the cigarettes were purchased at the rate of Rs.3/- per packet of 10 cigarettes each. He further sold these at the rate of Rs.3.50 per packet. As per his understanding, the cigarettes had come from North India without payment of excise duty. 12. Further, in follow up search the officers searched the go-down of Maheshwari Agency, R.G. Street, Coimbatore on 21.02.2011 where they found Globus and Harbour brand cigarette packets bearing the name of manufacture as ETCL, Indore. As no documents/ bills/ invoices were produced, the cigarettes were put at seizure valued at Rs.16,477/-. 13. Further, follow up search was conducted at M/s. Sri Samunda Trading Co., Coimbatore Proprietor Shri Mangal Ram Raj Purohit on 21.02.2011 wherein the officers found cigarettes packets of Harbour/ Opera H....
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....e and take delivery. The Officers detained the cigarettes with direction to not release the same without permission. The detention was later on converted to seizure. 15. Similar search and seizure was conducted also at the following places:- 1. M/s. Shanthi Guru Marketing, 338, Big Bazaar Street, Trichy - 8. 2. M/s.Goutham Fancy Store, 95, East Car Street, Tirunelveli - 627006. 3. M/s. Sri Ram Traders, D. No.14-5-404, Baidarwalli, Begam Bazar, Hyderabad- 12. 4. M/s. Venkatesh Traders, 51/104, Lal Phatak, Sakarpatti, Nayaganj, Kanpur 5. M/s. Prem Agency, 51/104, Lal Phatak, Sakarpatti, Nayaganj, Kanpur. 6. M/s. Babu Brothers, 51/104, Lal Phatak, Sakarpatti, Nayaganj, Kanpur 7. M/s. Khurana Brothers, 52/44, Nayaganj, Kanpur 8. M/s. Ajay Zarda, 78/268, Pan Dariba, Latouche Road, Kanpur. 9. M/s. Pawan Gupta, 51/104, Lal Phatak, Sakarpatti, Nayaganj, Kanpur. 10. M/s. Harshin Enterprises, at 9/419-K, Poonthala Building, Pan Bazar, Mavumkunnu Road, Tirur. 16. In the course of investigation the statement of Shri K. Venkatesw....
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.... Budget, Globus, Forever, etc. 27.02.2011 Godown at Plot No. 165/A, Sector-F, Industrial Area, Indore 1,21,83,390 Raw Materials 16.03.2011 19. Similarly, DGCEI, Hyderabad also inspected the premises of Shri Ram Traders, Hyderabad and residential premises of Proprietor Shri.K. Venkateshwarlu. They found cigarettes stored therein, alleged to be manufactured by ETCL. 20. From the aforementioned search and seizures, it appeared to Revenue that appellant ETCL was involved in manufacture and clandestine clearance of cigarettes by suppressing the actual production. Accordingly, Revenue issued Show Cause Notice to the dealers / distributers a common Show Cause Notice No. 574/CE/182/2011/ I & B dated 12.08.2011 proposing confiscation of the seized goods with proposal to impose penalty. 21. Further, search was done in the premises of M/s.Lucky Bagga Transport Company, Hyderabad on 21.02.2011, incriminating records were resumed which indicates that cigarettes have been transported under the description, such as, - POP, Alu Pappdi/ Aloo Popdi etc. Further, G.R. issued by 'Sree Kaleswari Mail Lorry Service'....
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....viz. M/s. Mahalakshmi Enterprises, Mateshwari Agencies, Sri Samunda Trading owned by Shri Mangal Ram Rajpurohit and from office of the Chief Parcel Supervisor Railway, Coimbatore; Shanthi Guru Marketing, Trichy, Goutam Fancy Store Tirunveli, Sri Ram Traders, Hyderabad; M/s Venketesh Traders, Prem Agency, Babu Brothers, Khurana Brothers, Ajay Zarda, Pawan Gupta all situated at Kanpur; M/s Harshin Enterprises, Tirur, M/s Shri Gopal Krishna General Stores Vijayawada proprietor Shri KothaVenkatleswarlu and statements of some of the above persons. The show cause notice also relied upon the seizure of cigarettes and raw/ packing material of cigarettes from godown of M/s Kushwaha Agro Trading Co. and one godown situated at Sanwer Road from where the ECTL brand cigarettes and raw material/ packing material were seized, documents seized from office of transporter M/s Lucky Bagga Transport Co. which allegedly showed transportation of cigarettes under the description of goods as 'Aalu Papdi and 'Pop' from Indore to Hyderabad and the GRs issued by the Kaleshwari Mail Lorry Service showing transportation from Hyderabad to Vijaywada. The show cause notice relied upon statements of employ....
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....ployees of M/s LBTC Indore and Hyderabad office. Demand of Rs. 28,39,43,195/- alongwith interest and penalty was proposed against M/s ETCL on the basis of records viz. challan/ kaccha slips and records of transporter M/s Lucky Bagga Transport Co. and private records as well as documents seized from Railway Agent Shri CSM Althaf. The statements of clerks of M/s Lucky Bagga Transport and Shri CSM Althaf were relied upon to allege that cigarettes were transported under the cover of such documents describing the goods as 'Pop/ Allu Papdi'. Penalty was also proposed on director Shri ShyamKhemani and other co-appellants viz. transporter Shri Charanjeet Singh Bagga, proprietor of Lucky Bagga Transport, Shri Andela Krishn Yadav, proprietor of M/s Kaleswari Mail Lorry Service and Shri CSM Althaf, Railway Agent. The Inspectors who were having physical control over factory i.e Shri R.S. Gogiya, R.S. Gogiya, Devendra Parmar, Kailash Verma, K.K. Uikey, K.K. Patel, M.S Damor, P.F. Raut, S.R Parate, K.C. Mandal, S.K. Mandal and C.K. Patley were also proposed for penalty under Rule 26 (1) of C.E. rules. 24. The appellants filed reply to show cause notices contesting the al....
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....shwari Mail Lorry Service, Hyderabad, Rs. 25 Lakhs on CSM Althaf Railway Agent was imposed under Rule 26 and of Rs. 1 lakh each on the Inspectors Shri R.S. Gogiya, Devendra Parmar, Kailash Verma, K.K. Uikey, K.K. Patel, M.S. Damor, P.F. Raut, S.R Parate, K.C. Mandal, S.K. Mandal and C.K. Patley under Rule 26 (1). 26. Being aggrieved, the appellants are in appeal before this Tribunal. 26.1 Learned Senior Counsel Shri V. Nankani appearing for Appellant M/s ETCL urges that as far as case of confiscation of 692000 cigarettes and imposition of penalty is concerned the impugned order is erroneous as there was no excess stock on the day of visit on 14.05.2010. At the time of visit of the officers on 14.05.2010 i.e 1200 Hrs, the production was going on from 10am and continued throughout the day till 6 PM, which is an accepted fact. No production for 12.00 noon to 6 PM has been shown separately either in panchnama or in SCN and the fact is that the alleged excess shown stock of 692000 cigarette, is the production from 1200 Hrs to 6 PM on 14.05.2010. As per SCN the production of each machine is 72000 pieces per hour and hence the production of two machines from ....
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....ppearing for the co-appellants/officers, Shri Devendra Parmar and Shri J.C. Solanki reiterates the written submission. He submitted that it was alleged that both the officers had de-sealed filter cigarette manufacturing machine whereas in stock the plain cigarettes were also found. He submits that this is lame reason to allege or find their fault. The filter attachment can be mounted or dismounted within minutes. It is an absurd proposition to penalize them as if non mention of the filter attachment points out any wrong doing on the part of Appellants. Considering the recorded fact that cigarettes were being manufactured and packed in the presence of the full team of visiting officers who wrongly recorded the manufactured stock as pre- existing and overlooked the fact of production of filter and non- filter cigarettes on 14/05/2010, there is no excess stock. The officers posted at the factory has not shown any carelessness or failed to act diligently. Even if the intimation letter of M/s ETCL did not have number and type of machine to be opened or de-sealed, but the fact remains that the de-sealing report of the Appellant officer always had number of machine de-sealed by them. Shri....
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....me of M/s ETCL. It is also appended in show cause notice that M/s Chirag Tobacco Co. (P) Ltd. Varanasi has been manufacturing cigarettes in the brand name of 'Red Rose' also, which have been treated as manufactured by M/s ETCL, Indore in the SCN. The demand is based upon third party statements without any corroboration and hence not sustainable. The duty of Rs. 3844/- is merely on basis of presumption/ assumption and hence not sustainable. 28. As regard demands confirmed against the Appellant M/s ETCL in show cause notice 16.02.2012 and 16.07.2013, the Ld. Counsel submitted that the demand in show cause notices dt. 16.02.2012 has been confirmed by the adjudicating authority by relying upon the statements of traders from whom cigarettes were seized, seizure of documents from office of transporter M/s Lucky Bagga Transport Co. and statements of its clerks; Records seized from Railway Agent Shri CSM Althaf and his statement; statement of godown owners from where the cigarettes and raw/packing material of cigarettes was seized. The demand was computed on cigarettes seized from traders at Coimbatore, Vijaywada, Trichy, Tirunelveli, Hyderabad, Kanpur and Tirur and godowns of....
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....d not be relied upon by the revenue to support the case sought to be made out in the show cause notice. The said order of the CESTAT was challenged by the revenue before Hon'ble High Court, which vide order dated 18.05.2017 upheld the Tribunal's order and later by the Hon'ble Apex Court vide order dt. 19.02.2018, 09.03.2018 & 07.03.2018 in four different SLPs. That subsequently they had requested that Shri Kotha Venkateswarlu, Proprietor of M/s Gopala Krishna General Stores, Shri Mangalram Raj Purohit of M/s Samunda Trading Company, Shri CSM Althaf-Railway Agent, Shri K. Devendrappa, Shri Balbeer Singh Thakur who are Office Clerk of M/s LBTC, Shri Andela Krishna Yadav, , Proprietor of M/s Sree Kaleshwari Mail Lorry Service, Shri Radha Mohan Pandey-Clerk of M/s LBTC, Shri Rajendra Prasad Kothari, Clerk of M/s LBTC, Shri Charanjeet Singh Bagga, Partner of M/s LBTC, Panch witnesses of the Panchnama proceedings dated 21.02.2011 and 24-02-2011 and Central Excise Officers who visited the transport on 21.02.2011 and 24.02.2011 be allowed to be cross examined with reference to their statements. However only Shri Mangal Ram Rajpurohit, Proprietor of Shri Samunda Trading, Railway Agent Shri ....
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....as in closing paras of the original statements. In some cases, the simple letters of the deponents have been accepted as affirmation of facts, without even attendance of the witnesses. There are no applications or reasons on record for grant of exemption from attendance under Sec 132 or 133 of CRPC, 1908. There is no determination on these submissions. Contrary to examination-in-chief, during cross examination, the persons were asked specific question and the answers are in direct confrontation with the contents of the original statements. The impugned order placing reliance on such statements is fit to be set aside on this ground alone. The adjudicating authority has confirmed demand by holding that cigarettes bearing brand name was seized from the traders. No trader except the two named above have stated to have received cigarettes from ETCL or any person connected with them. There is no evidence that such cigarettes were manufactured and cleared by the Appellants. With reference to cigarettes and raw materials seized from different godowns, the adjudicating authority and the SCN has placed reliance upon statements of godown owners and held that the cigarettes and raw material/ p....
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.... He also confirmed that shown signatures of Shyam Khemani do not match with signature of Shyamlal Sindhi as on the agreement. The Appellant also submitted that in any case the seizure of raw material on 16/3/2011 is in any way irrelevant with the alleged clearances which are up to January 2011 only, and hence no case is made out. The Appellant submitted that it is apparent from the cross examination of the above persons that M/s ETCL or its director Shri Shyam Khemani has no concern with the seized goods and the statements of above persons are not sustainable in view of no cross examination. 28.2 In case of SCN dated 16.07.2013, duty demand of Rs.28,39,43,195/- has been demanded from ETCL on the basis of cryptic entries found in uncorroborated third party records, which were in the form of kaccha slips/ challans/ slip pads or loose sheets of following persons : (i) Transport documents of M/s Lucky Bagga Transport Co, Hyderabad / Indore (LBTC) for transport of Alu Papdi/ POP. (ii) Loading- Unloading Charges entered in private diaries of Railway Agent Shri CSM Althaf (iii) The reference to selected Railway receipts mentioning good....
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....rendering such machines unable to produce unless such seal is removed. In case of alleged transport by railways, it was never investigated as to how the consignments reached Itarsi railway station, which is the railway junction for trains running in East - West and North- South railways. 28.3 The records of transport firm M/s Lucky Bagga was retrieved in presence of its clerks and their statement were recorded to the effect that cigarettes were transported under false description of goods as Pop/ Allu Papdi on challan and transport document. Similarly the Railway booking Agent Shri CSM Althaf from whom the seizure of his personal record and other documents were made had stated that the said records contained details of transportation of cigarettes. The adjudicating authority did not summon any of the clerks of transport company for cross examination in-spite of the fact that the statements and the records seized from their offices were made basis to compute the quantum of cigarettes allegedly transported on the basis of number of bundles transported. It is also on record that Shri Charanjeet Singh Bagga, Partner of M/s Lucky Bagga Transport Company in his state....
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.... submits that in absence of cross examination the statements given by the other persons cannot be relied upon. He relied upon judgments in case of 2016 (15) SCC 785- Andaman Timber Industries Vs. CCE, Kolkata-II; 2019 (4) TMI 996 - CESTAT New Delhi- M/s. Shri Ram Wires, M/s Chaurasia Abrasive and Steel Pvt. Ltd., Shri Ram Chandra Jaiswal, M/s Maa Durga Wire Vs. CCE, Raipur; 2017 (4) TMI 1288 - Delhi High Court- CCE Delhi-II Vs. Balajee Perfumes ;GTC Industries Limited Vs CCE, New Delhi - 1997 (7) TMI 125 - supreme court; Surjeet Singh Chhabra Vs UOI 1996 (10) TMI 106 - Supreme Court; Superintendent of Customs Vs Bhanabhai Khalpabhai Patel - 1992 (3) TMI 89 - Supreme Court; Jethamal Pithaji Vs Assistant Collector of Customs, Bombay and Another - 1973 (9) TMI 55 - Supreme Court; Kanungo & Co. Vs Collector of Customs, Calcutta and others - 1972 (2) TMI 35 - Supreme Court; Commissioner of Central Excise, Delhi-1 Versus Vishnu & Co. Pvt. Ltd. & Others, G.G. Carriers, Laxmi Freight Carriers (P) , Ltd., Mohammed Kayum Khan, R.K. Tripathi, Santosh Tobacco, Gopi Road Lines, H. Sunder, Harsh Transport Pvt. Ltd., Singhal Transport Co., Paramjeet Singh Kakkar, Delhi Indore Transport Co., Param....
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....The appellant submitted that there is no evidence that any of the seized cigarettes were manufactured and cleared by M/s ETCL. He also relied upon the show cause notice issued to one M/s Maa Santoshi of Nagaur, Rajasthan and seizure of truck carrying counterfeit cigarettes bearing brands of M/s ETCL, which was later on settled by M/s Maa Santoshi before settlement Commission accepting their duty liability. The Appellant also cited the police complaints made by them regarding manufacture of fake/counterfeit cigarettes in name of M/s ETCL. 31. No record/ document was recovered from factory of M/s ETCL which can show clandestine receipt of raw material and clandestine manufacture and removal of cigarettes. There is no evidence of sale of cigarettes. No primary evidence of receipt of consideration by M/s ETCL. Only basis of the demand is the number of bundles contained in Railway Receipts or Lorry Receipt records, multiplied with assumed quantities. The demand is merely based on Railway Receipts and vague records. They relied upon judgments in case of M/s Arya Fibres Pvt. Ltd, M/S Nova Petrochemicals Ltd. and Others Vs CCE Ahmedabad-II 2014 (311) ELT $29 (Tri.- Ahmd.), Oudh Su....
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....1) ELT 529 (Tri.- Ahmd.), Kuber Tobacco. Pro. Ltd. Vs. CCE, Delhi 2013 (290) E.L.T. 545 (Tri. - Del.) confirmed by Apex Court 2015 (317) E.L.Y. A159 (SC) and T.G.L Poshak Corp. v CCE, 2002 (140) ELT 187. 33. The private record of transporters and railway agent are mere entries in notebooks or diaries of third parties and cannot be concluded as evidence of removal of goods clandestinely by M/s ETCL. The private records do not even refer to quantity of cigarettes. Such agents handle multiple commodities and consignments and cannot be assumed to be relevant to alleged transportation. Except the third party records, there is no material to show that cigarettes has been removed clandestinely. In absence of corroborative evidence the third party records cannot be considered as basis to demand duty. He placed reliance upon rulings in case of Aswani & Co. Vs. CCE, DELHI-12015 (327) E.L.T. 81 (Tri. - Del.), Phil Ispat Pvt. Ltd. &Othrs. Vs C.C.E. & S.T. - Raipur 2018 (11) TMI 912 - CESTAT-New Delhi, CCE, Delhi-1 Vs, Vishnu & Co, Pvt. Ltd. - 2016 (332) ELT 793 (Del.), Commissioner Vs. Motobhai Iron and Steel Industries - 2015 (316) ELT 374 (Guj), CCE Vs. Brims Products - 2011 (271) E....
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....e of Flevel International Vs. Commissioner of Central Excise - 2015 (9) TMI 1151 - Delhi High Court, Atul Bansal, Bansal Castings Pvt. Ltd., HimanshubhaiNandlalJagani Vs. C.C.E. & S.T. -Rajkot, Bhavnagar - 2019 (8) TMI 959 - Cestat Ahmedabad, Sunshine Corporation Vs. Commissioner of Central Excise - 2019 (8) TMI 379 - CESTAT Ahmedabad and M/s. Kuchchal Light Metals Pvt. Ltd. &Othrs Vs. Principal Commissioner of Central Excise And Service Tax, Madhya Pradesh & Others - 2019 (7) TMI 101 - Cestat New Delhi and Ganpati Structures Private Limited and Ashok Joshi Vs. Commissioner of CGST, Central Excise, Indore - 2019 (6) TMI 869 - Cestat New Delhi and Lucky Tobacco Company Pvt. Limited Vs. CCE 2019 (5) TMI 369 - CESTAT New Delhi. The Appellant submits that they have never transacted with transporter M/s LBTC and not a single evidence is on record that any of the persons connected with M/s ETCL has sent the consignments through said transport firm. No freight payment in on record. There is no evidence of sale of goods. The Ld. Counsel submitted that in view of above facts and circumstances, the impugned order is fit to be set aside. 36. The Ld. Counsels appearing for....
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....and. He relies upon the cross examination of Shri Mangal Ram Rajpurohit, Shri CSM Althaf and godown owners at Indore that none of them has dealt with M/s ETCL or its director Shri Shyam khemani. The allegation in show cause notice dt. 16.02.2012 and 16.07.2013 is based upon third party records and statements which are inconclusive. They have performed their duties in good faith and the action against them is barred by Section 40 (2) of the Central Excise Act, 1944. The allegations against them are on assumption only, without even a single cogent evidence They have neither any knowledge nor any involvement so as to attract penalty under Rule 26 of CER, 2002. Section 40 is squarely applicable in their case. He relied upon the judgments in case of Rajiv Kumar Agarwal 2007 (217) E.L.T. 392 (Tri.), Ruchika International &Othrs. 2015 (7) TMI 850 - Cestat Mumbai, Sunshine Overseas 2011 (263) E.L.T. 617 (Tri. - Ahmd.), M. Naushad - 2007 (210) E.L.T. 464 (Tri.-Bang.), Hargovind Export - 2003 (158) E.L.T. 496 (Tri.-Delhi.), M.I. Khan - 2000 (120) E.L.T. 542 (Tri.-Delhi.), A.P. Sales - 2006 (198) E.L.T. 309 (Tri.-Bang.) He submits that there are no evidence that the Appellants gai....
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....n of filtered cigarette from 28.04.2010. During search on 26.02.2011 at godown of Shri Gopal Goyal, cigarettes worth Rs. 96,20,000/- and on 27.02.2011 at another godown of Gopal Goyal raw material and packing material duly printed with details of ETCL, valued at Rs. 48,17,414/- were found. On 14.03.2011 during search at Godown of M/s. KushwahAgro Trading Co., of Shri Shiv Narain Kushwaha, 15400 Nos Harbour brand cigarette manufactured by ETCL and large quantity of raw material & packing material duly printed with brand names and name of manufacturer as ETCL, valued at Rs 23,97,097/- were found. On 16.03.2011 raw material & packing material duly printed with brand names and name of manufacturer-ETCL valued at Rs 1,21,83,390/- were found from the godown belonging to Ashish Ajmera. No documents evidencing payment of duty on cigarettes and raw material/packing material could be produced. Shri Gopal Goyal in his statement dt. 14.03.2011, Shri Shiv NarainKushwah in his statement dt. 14.03.2011 and Shri Ashish Ajmera in his statements dt. 16.03.2011 and 21.03.2011 stated that Shri Shyam Khemani of ETCL is using their godowns on rent. 40. Search were also conducted at Samunda Trad....
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....scription of POP/Allu Papdi, which shows that cigarettes were transported from Indore to Hyderabad and which were further transported to Vijyawada under the cover of separate GRs prepared by Shri Kaleshwari Mail Lorry Service. The staff of M/s LBTC Shri Rajendra Prasada Kothari in his statement dt. 24.02.2011 stated that he was preparing GRs for transporting Cigarettes under description of POP and Aloo Papdi. Shri K. Devendrappa, Office clerk of M/s LBTC, Hyderabad dt 21.02.2011 stated that some of kaccha slips recovered were scribed by him and that Kaccha slip dt 12.12.2009 was for 70 cartons of cigarettes which he has written as POP. This consignment was sent to Vijaywada through Shri Kaleshwari Mail Lorry Service. Shri Balbeer Singh Thakur, Office Clerk of M/s LBTC, Hyderabad in his statement dt 22.02.2011 stated that POP is code word used for transportation of cigarettes and consignment were sent to Vijaywada through Shri Kaleshwari Mail Lorry Service. Shri Radha Mohan Pandey, Clerk of M/s LBTC, Indore in his Statement dt 24.02.2011 stated that POP and Allu Papdi written on the bilties is as per direction of owner from the Head Office, whereas these consignments were of Cigaret....
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....ked after by Shri Shyam Khemani, Director of ETCL. Shri Shyam Khemani, Director of M/s ETCL, Indore in his statement dt 09.12.2010 agreed with the proceeding of Panchnama dt 14.05.2010 and stated that they have issued invoice as per name and address given by the buyer and cash sales were made. He did not appear on summons and did not co-operate and gave evasive answers. He sent his retraction in the form of affidavit on 17.05.2011. The Registrar of Trade Mark Authority of India, Mumbai vide their letter dt 09.02.2012 forwarded details of brands owned and registered in the name of ETCL. This proves that ETCL was brand owner of cigarettes which were seized at different places. That in his statement dt. 22.02.2011, Shri Tikamchand, owner of M/s. Mahalakshmi Enterprises and Shri Mohanlal owner of M/s. Matheshwari Agencies, both admitted purchase of cigarettes without any bill from M/s. Ashapuri Marketing, Coimbatore. In his statement dt. 22.02.2011, Shri Chaganlal Dharmaram, Proprietor of M/s. Ashapuri Marketing, 330A, RG Street Coimbatore agreed to sale of cigarettes without bill to Shri Tikamchand owner of M/s. Mahalakshmi Enterprises and Shri Mohanlal , Owner of M/s. Maheshwari Agen....
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....he clandestine clearance; they have not followed Trade Notice No. 7/2009 dt 25.11.2009 in letter and spirit and in sealing report they did not specify the type of machine sealed i.e. whether filter or non-filter. That they avoided answers to question put to them on pretext of absence of records. Shri J C Solanki, Superintendent was made co-noticee for the purpose of penalty only. However, Shri J C Solanki along with other officers- noticees proceeded to cross examine the witness by himself. When any of statement was not recorded against their role and none have alleged about their role, the cross examination by them is beyond the purview of Section 9D of CEA and shows that he acted for or on behalf of the assessee. That only an assessee has the opportunity to test the evidence by cross-examination of the makers of the said statements, but the officers has also done cross examination which is null and void and cannot be relied upon by this Tribunal. 42.3 He submitted that department has arrived at the quantity and value of clandestinely cleared cigarettes based on the evidence recovered and no duty was demanded on goods seized from dealers who have not received cigarettes d....
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.... of brands after 2008. No civil suit filed under Trademarks Act, 1999 (effective from 15th Sept 2003). As per this Act, the owner of a registered trademark may commence legal proceedings for trademark infringement to prevent unauthorized use of that trademark. 42.4 In case of seizure of brands manufactured by other manufacturer i.e. Seizure Report at customer places viz. M/s Mahalakshmi Enterprises, Coimbatore wherein the panchnama states that the officers came to search for clandestine purchases from units in North India and brand of ETCL along with other 4 brands cigarettes were seized; In case of Panchnama/Seizure Report at M/s Sri Samunda Trading Co., Coimbatore which states that consignments have been received from various factories from North India; Panchnama/Seizure Report at customer places (M/s Babu Brothers, Kanpur mentioned that "seizure report of the cigarettes manufactured by Chirag Tobaco Co (PK) Ltd, Varansi, the Ld. AR submits that cigarettes seized from different dealer were not received directly from ETCL. Normally, people do not make difference between North India and Central India. Merely saying that cigarettes were received from North India....
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....n had been sought by Shri J C Solanki, officer-Noticee and other Noticee-officers, who were not an assessee in the case, but co-noticees. Statement was recorded on their role of aiding and abetting in the evasion. On the contrary, the assessee defended their case among many grounds including the ground that there was no connivance between officers and ETCL. In view of the provisions of Section 9D and law laid down by Hon'ble HC, any cross examination by a person which is not admitted, in evidence, against him do not qualify admittance and considered null and void. In such a case, the statement of statement maker duly supported and admitted during Examination-in-Chief are admittable, in evidence, as such. In view of law laid down, all cross examination sought and conducted by Shri Solanki and other officers noticee are null and void ab initio and cannot be relied upon by the Hon'ble Tribunal in the case. 42.8 He further submits that the cross examination of investigating officer is not under purview of Section 9D, as his statement was not recorded. Further the reliance by the appellant-assessee on Cross Examination of Shri A. A. Sharma, SIO to show that entire case is built....
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.... HYD.-II 2005 (184) E.L.T. 263, POWER CONTROL CORP. Vs. C.C.E. & S.T., JAIPUR-I 2019 (369) E.L.T. 471 (Raj.), N.R. SPONGE PVT. LTD. Vs. CCE, RAIPUR, 2020 (372) E.L.T. 321 (Chhattisgarh High Court). He submits that confessional statements are out of the ambit of Section 9D as held in case of SILICONE CONCEPTS INTERNATIONAL PVT. LTD. Vs. CCU, ICD, TKD (IMPORT), NEW DELHI 2019 (368) E.L.T. 710 (Tri. - Del.). That demand based on confessional statement is justified as held in case of CCE, MUMBAI-V VS. NIPON ZIP INDUSTRY PVT. LTD. 2009 (236) E.L.T. 554 (Tri. - Mumbai) and JJ. K.I. PAVUNNY Versus ASSTT. COLLR. (HQ.), C. EX. COLLECTORATE, COCHIN 1997 (90) E.L.T. 241 (S.C.). Reliance has also been placed on case of CCU, MADRAS & OTHERS Versus D. BHOORMULL 1983 (13) E.L.T. 1546 (S.C.), N.S. MAHESH Versus CCU, COCHIN 2016 (331) E.L.T. 402 (Ker.) and 2017 (351) E.L.T. 264 (M.P.) R.S. COMPANY Versus CCE, INDORE. 43. Having considered the rival contentions and on perusal of records we find that the demand and penalties in the present case were proposed by way of issuance of four show cause notices. In case of SCN dated 11.05.2011 confiscation of alleged excess stock of 6,92....
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....e of production on 14.05.2010 after 1200 Hrs, nor the adjudicating authority has held otherwise, it is to be construed that the production was continuing and the alleged excess production pertains for the period from 1200 Hrs to 6 PM. We find that during cross examination, Shri Ravidutt Shankar who was heading the visiting officers, in answer to questions has stated that the goods produced on 14.05.2010 might have been seized. We also find that signatures of the Inspector Shri Devendra Parmar who was deputed for physical supervision of factory and was present throughout the proceedings, were not obtained on Panchnama proceedings nor his statement was recorded. Further the investigating officer himself is of the view that the production of 14.05.2010 might also have been seized. In such view of facts it cannot be said that there was excess stock at the time of visit of the officers. Consequentially the confiscation of alleged excess cigarettes is not sustainable. As regard the findings of the adjudicating authority that the trade notice was not followed, we find that even if the intimation letter of M/s ETCL did not have number and type of machine to be opened, but the fact remains ....
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....ere making counterfeit cigarettes under brand name of M/s ETCL and for which M/s ETCL had filed police complaints. Even the department was in knowledge of the said facts. This clearly shows that some cigarettes manufacturers were engaged in clandestine manufacture and clearance of cigarettes bearing brand name of M/s ETCL. Further the cigarettes were found in open market and without any investigation of source of such cigarettes demand could not have been confirmed. These evidences were not appreciated by the adjudicating authority. In the light of above facts the duty demand against M/s ETCL is not correct. 45. In case of demand of Rs. 1,03,74,648/- made in show cause notice dt 16.02.2011, the demand is on cigarettes seized from South India traders viz. from traders at Coimbatore, Vijaywada, Tirur and also from traders of Kanpur. The adjudicating authority relied upon the statements of Shri Mangal Ram Rajpurohit, Proprietor of M/s Samunda Trading Co, Railway Agent Shri CSM Althaf and Shri Kotha Venkatleswarlu of M/s Sri Gopala Krishna General Store to hold that the cigarettes were of M/s ETCL. The adjudicating authority held that railway receipts seized from the possessio....
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.... clearing agent Shri CSM Althaf and his statement. 46. We find from the facts on record that the sole reason for confirming the above demands and imposing penalties on Appellants is alleged incriminating papers/ records seized from third parties viz. traders, railway agent and transporter and their statements. None of the alleged incriminating documents and papers were seized from M/s ETCL or person connected with the said firm. The central excise duty is on manufacture and removal of goods and it can be recovered from the manufacturer when there is evidence of manufacture and removal of goods. The charges of clandestine manufacture and removal has to be shown by adducing evidence of receipt of unaccounted raw/packing material in factory, use of raw material for unaccounted manufacture of finished goods, installed capacity, consumption of electricity, labour employed and payment made to them, clandestine removal of goods with reference to entry of vehicle/truck in the factory premises, loading of goods therein, security gate records, receipt of sale proceeds. We find from the records that not a single evidence to the above effect has been led either in the show cause notic....
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....dated 16/2/2018 while placing reliance upon the judgment of Hon'ble High Court of New Delhi in Para 8 has observed that : 8. Decision of the Hon'ble High Court of Delhi dated 02.12.2015 in the case of M/s Vishnu & Co. Pvt. Ltd & Others in CEAC 62/2014 with 73-90/2014. 8.1 Department has accepted the aforementioned order of the Hon'ble High Court of Delhi where the Hon'ble High Court dismissed the departmental appeal holding that there is no substantial question of law involved. 8.2 In the case, the Assessee was engaged in the manufacturer of 'Vimal' Gutkha/ Pan Masala. DGCEI issued two SCNs alleging suppression of production and clandestine removal. Adjudicating authority confirmed the said demands. On party's appeal, CESTAT confirmed demand, interest & penalty in respect of one order, setting aside the other order observing inter alia that case was based on ambiguous records maintained by transporters and oral statements of employees of transporters. Therefore there was no linkage showing that goods transported were booked by VPCL and were of Vimal brand gutkha and further statements were also retracted in cross examination.....
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....makers has named any person connected with ETCL who has dealt with them. The demands on the basis of calculation of transport records and railway receipt is derived on assumption basis since these are private records. Our views are also based upon judgments in case of CCE, Delhi Vs. Balaji Perfumes 2017 (4) TMI 1288 (Del - HC), Mahavir Metal Industries Vs. CCE & CU, Daman, Vapi 2012 (2) TMI 469 - Cestat - Ahmedabad, Vishwa Traders Pvt. Ltd. Vs. CCE Vadodara 2011 (10) TMI, CEs.- Ahm., Kothari Pouches Ltd. Vs. CCE, New Delhi - 2000 (9) TMI 177 - CEGAT - Delhi that the third parties records and statement, in absence of any corroboration are not evidence of clandestine removal. We also find that the revenue has not produced a single evidence of purchase of raw material and production of cigarettes on which duty demand has been made. 49. The duty amounting to Rs. 28,39,43,195/- demanded in SCN dt. 16/07/2013 is on alleged clandestine manufacture of 31,85,15,200 pcs of cigarettes. No evidence in relation to the raw materials / packing materials required and procured for the manufacture of 31,85,15,200 pcs of clandestinely manufactured cigarettes by M/s ETCL is ....
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....pt by the consignees; (v) Amount received from the consignees, statement of the consignees, receipts of sale proceeds by the consignor and its disposal. In the instant case, no such evidences to the above effect have been brought on record." The above order of the Tribunal has been upheld by the Hon'ble High Court of Allahabad as reported in Commissioner of C.Ex., Meerut-I Vs. R.A. Castings (P) Ltd., reported in 2011 (269) E.L.T. 337(All.) and by the Hon'ble Apex Court as reported in 2011 (269) E.L.T. A-108 (S.C.). The revenue has submitted that the seizure of raw material and packing materials, (third party godown) shows that the above procurement is evidence of manufacture. We find that no evidence to link such seized goods with M/s ETCL is on record. No evidence of storage of such goods by Appellant has been put-forth by revenue. Merely on the basis of retracted statements and without any corroborative evidence M/s ETCL cannot be alleged to have stored such goods. M/s ETCL is not the manufacturer of stored goods and no manufacturer has been identified nor it is on record that M/s ETCL purchased said goods apart from other reasons. Hence the contention ....
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.... CCE, Vadodara, 2013 (293) ELT 689, it was held that reliance on private records maintained by private persons for their own use cannot be the sole basis for demand. There should be corroborative evidence by way of statements of purchasers, distributors or dealers, record of unaccounted raw material purchased or consumed and not merely the recording of confessional statements. 52. Coming to the reliance placed in show cause notices on statements and documents of third parties viz. trader, transport clerks, and railway agent which is sole basis for demand, we find that the Appellant during adjudication had sought cross examination of persons and panchas/witnesses and traders/transport employees whose statements were relied upon in the show cause notices. The adjudicating authority did not permit the cross examination against which M/s ETCL filed appeal before the CESTAT which vide Order No. A/52550/2016-SM(BR), dated 23-6-2016 reported in 2017 (347) E.L.T. 614 (Tri. - Del.) by relying upon the order of Hon'ble Punjab & Haryana High Court in case of Ambika International Vs. Union of India 2018 (361) E.L.T. 90 (P & H) holding that " Statements recorded during investigation, u....
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.... during cross examinations refused their statements (during investigation) and stated that the statements were recorded as per the say of the officers, but still the adjudicating authority considered their statements as reliable holding that these persons during their examination-in-chief have affirmed their statements. We find that during investigation, statements of many traders of Kanpur, Coimbatore, Tirur and Vijaywada were recorded. On perusal of statements of traders we find that only Shri Mangal Ram Rajpurohit of Samunda trading Co. and Shri Kotha Venkatleswarlu stated to have procured cigarettes from ETCL. All other traders in their statements stated that they have purchased cigarettes from hawker/ salesman or from Delhi etc. Shri Mangal Ram Rajpurohit in his statement has stated to have received goods through Shri CSM Althaf from M/s ECTL owned by Shri Kishore Wadhwani. The proprietor of M/s Gopal Krishna General Store - Shri Venkateswarlu Kotha in his statement has stated to have received goods from dealer of M/s ETCL, Shri Jagannathan from Hyderabad for which delivery was taken from Sri Kaleswari Mail Lorry Service and also stated that the cigarettes to Hyderabad were re....
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....upon for cross examination have refused/retracted from their statement and there is no corroboration of their statements from M/s ETCL, hence the statements and their record cannot be made basis to demand duty from M/s ETCL. 53. We also find that though M/s ETCL had requested for cross examination of Shri Mangal Ram Rajpurohit and Shri Kotha Venkatleswarlu but only Shri Mangal Ram Rajpurohit was summoned. The adjudicating authority has contended that during examination - in - chief of Shri Mangal Ram Rajpurohit, has confirmed his statement. Taking such examination-in-chief as basis not only of Shri Mangal Ram Rajpurohit but also of other persons viz. Godown owners at Indore, the adjudicating authority has sought to nullify the result of cross examination and held that the statements are admissible. From the examination-in-chief proceedings undertaken by the adjudicating authority, we find that during examination-in-chief, the adjudicating authority himself did not undertake any exercise to verify the facts or contents of the statement and to independently verify the records on the basis of which the statements were made. Not a single question or enquiry was made from the p....
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....e other person is Shri Mangal Ram Rajpurohit - trader whose statement was made basis for alleging that the cigarettes were supplied by M/s ETCL whose owner is Kishore Wadhwani. In his cross examination dtd. 22.08.2019 with reference to his statement dated 31.05.2011, he answered that he does know ETCL and he has not purchased ETCL branded cigarette from Indore or MP. We also note that the show cause notice and the impugned order has vehemently relied upon the statement of Railway Agent Shri CSM Althaf and Shri Kotha Venkateswarlu. We find that Shri CSM Althaf in his statement dated 12.04.2011 and Shri Kotha Venkatleswarlu in his statement dt. 25.02.2011 as appearing in Para 15 of the impugned order had stated that the brands are manufactured by ETCL whose owner is Kishore Wadhwani. The show cause notice on this basis had proposed penalty upon Shri Kishore Wadhwani. The adjudicating authority has though relied upon the statements and seizure from such person to demand huge amount of duty from M/s ETCL but at the same time did not penalize Shri Kishore Wadhwani holding that he was made noticee on presumption and assumption. This shows that the statements of above persons were not fou....
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....not match with shown signatures of Shri Shyam Khemani. Shri Ashish Ajmera during his cross examination affirmed before the Adjudicating Authority that he gave his shed no. 2 on rent to Shri Shyamlal Prakash Chand Sindhi and only as per the understanding given in Panchanama dated 16/3/2011 he has referred Shyamlal Sindhi as Shyam Khemani. He further stated that the amount of rent and agreement was received from some broker and he has never met any Shyamlal Prakashchand Sindhi nor any Shyam Khemani. He also confirmed that shown signatures of Shyam Khemani do not match with signature of Shyamlal Sindhi as on the agreement. We also find that in the show cause notice, no evidence has been adduced to show that the cigarettes seized either from the traders located at different places and godown were cleared by M/s ETCL. The traders and others who were allowed to be cross examined has refused having dealt with the alleged goods rendering their statements otiose. Even otherwise the statements of third parties cannot be made the stand-alone basis for arriving at an adverse conclusion as held in case of Pullangoda Rubber Produce Company Ltd. State of Kerala, 1972 (4) SCC 683, as such statemen....
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.... 55 - Supreme Court; Kanungo & Co. Vs. Collector OF Customs, Calcutta and Others - 1972 (2) TMI 35 - Supreme Court; Commissioner of Central Excise, Delhi-1 Versus Vishnu & Co. Pvt. Ltd. & Others, G.G. Carriers, Laxmi Freight Carriers (P) , Ltd., Mohammed Kayum Khan, R.K. Tripathi, Santosh Tobacco, Gopi Road Lines, H. Sunder, Harsh Transport Pvt. Ltd., Singhal Transport Co., Paramjeet Singh Kakkar, Delhi Indore Transport Co., Paramjit Singh Kakar, Gopi Road Lines, Laxmi Paraksh Gupta, Sh. Gopal Krishan Parashar - 2015 (12) TMI 593 - Delhi High Court; Flevel International Versus Commissioner of Central Excise - 2015 (9) TMI 1151 - Delhi High Court; Aswani& Co. Vs. CCE, Delhi-I - 2014 (12) TMI 1213 - Cestat New Delhi ; Jagdish Shanker Trivedi Vs. Commissioner of Customs, Kanpur - 2005 (7) TMI 250 - Cestat, New Delhi; Jagmohan Singh Sawhney Vs. Collector of Customs, Delhi - 1994 (10) TMI 163 - CEGAT, New Delhi; Lakshman Exports Limited Vs. Collector of Central Excise - 2002 (4) TMI 66 - SC; Swadeshi Polytex Ltd. Vs. Collector of Central Excise, Meerut - 2000 (7) TMI 85 - SC Order 56. We also find that the Adjudicating authority has not given any findings on the submission of t....
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.... and 20-5-2008 are enclosed for necessary action at your end." The Joint Commissioner also informed that if any further investigation are needed the DC, Vijaywada may provide few sample packets of Harbour brand cigarettes seized by them, so that the batch no., month of manufacture etc. could be verified. That also O.P No./ Carton No. mentioned on CFC/ Cartons may be mentioned so that the same may be matched from the products at the manufacturers end. From the above communication it is clear that even the department knew that fake cigarettes in name of M/s ETCL were being manufactured. It is also on record that cigarettes showing M/s ETCL as manufacturer were also manufactured at Rajasthan. We also find that M/s ETCL has been selling their cigarettes to one M/s Shiv Supari Centre Indore who was the bulk buyer of cigarettes from them. However no investigations were conducted as whether the said concern supplied the cigarettes purchased from M/s ETCL to the persons from whom cigarettes were seized. It was necessary to ascertain as to from where the cigarettes have originated at Indore. Even though the revenue has alleged that the cigarettes were consigned from Indore, but no source....
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.... find that it is evident that the seized cigarettes were received from different places and persons, and were being manufactured at multiple locations. No relation with such supply originating from ETCL have established by Revenue. 58. We also find that there is no evidence of manufacture of excess cigarette by M/s ETCL. The allegation of clandestine production and removal has to be established against any person by independent and tangible evidence in the form of receipt of raw material in factory and non accountal thereof, use of such raw material in clandestine manufacture of finished goods, consumption of electricity, labour employed and payment made to them, packing material used, discrepancy in stock of raw materials and finished products, security gate records, independent evidence of transportation of goods and its linkage from removal from factory, transport documents, receipt of goods by the buyer and receipt of sale proceeds by the consignor. No such evidence has been brought on record. The show cause notice and the impugned order has not found any evidence from factory showing contravention of law. No evidence of clandestine removal of goods from the factory or....
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....hysical supervision of the factory of M/s ETCL, it cannot be concluded that they were involved in helping M/s ETCL in alleged evasion. It is also coupled with the fact that when the factory of M/s ETCL was lying closed during June and July' 2010, even then the cigarettes allegedly manufactured in those periods were found in market, the officers posted at factory were not made noticee on the ground that factory was lying closed. This itself gives credence to the contention made by the Appellants that fake cigarettes were being sold in market. It is noteworthy to mention that the revenue has not been able to even show that the seized goods were manufactured or removed from factory of M/s ETCL, as we have found in above paras. In such case no case is made out against the Appellant officers. No evidence in the form of communication or pecuniary benefits availed by the officers from M/s ETCL is on record, which can indicate any alliance between the Appellant officers and ETCL for any clandestine manufacturing. Further in case of officers who were penalized on allegation of excess stock found in factory, the adjudicating authority has penalized them on the ground that they have not follo....