TaxTMI 
TaxTMI 
2022 (6) TMI 1259
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....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 Railway Agent, Coimbatore Rs.25,00,000/- 6 E/50661/2020 Shiv Narain Kushwaha M/s Kushwaha Agro Trading Company Rs.10,00,000/- 7 E/50121/2....
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....n 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 manufacture by 12 (noon) on 14.05.2010, at the time of stock taking. However, the physical stock reflected 9,80,000 cigarettes at 12 hours. There appeared to be unaccounted stock of 6,92,000 cigarettes. It further appeared that as only two machines were working from 10.00 A.M. on 14.05.2010, appellant co....
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....e 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 and seized of Globus brand, without any bill from Tulsiji, who was running his office at Opp. Sinddhi Camp, Jaipur. Mr. Tibra in his further statement recorded on 10.01.2011 and 15.01.2011 stated that Globus brand cigarettes were received by them under scheme (Trade Promotion) from M/s. Rajasthan Trading Co....
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....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 House and Impact brands bearing the name of manufacturer as ETCL, Indore. As the Proprietor did not produce supporting documents, the total cigarettes found 76,500 were put under seizure valued at Rs.1,38,525/-. Further search was done on the same day at the Godown of Sri Samunda Trading Co. located at Richwell Complex ....
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....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. Venkateswarlu the Proprietor of M/s. Sri.Gopala Krishna General Stores, Vijayawada was recorded on 25.02.2011 who inter alia stated that apart from the cigarettes of ITC, he was also dealing in cigarettes of brands- Forever, Harbour, Opera House etc. and most of which are the brands manufactured by ETCL, Indore, which is owned by Shri Kishore Wadhwani. It is further informed that ETCL sent the cigarett....
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.... 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' having the description of goods as POP was also recovered wherein transportation from Hyderabad to Vijayawada is mentioned with the name of consigner and consignee as M/s. Lucky Bagga. 22. The Kacha slips found mentioning the description of goods as POP under Kacha slip dated 01.06.2010, 12.12.2009, 21.01.2010 and 12.12.2009. Further, from the different premises of M/s. Lucky Bagga Transport Company, Indore in the course of search on 24.02.2011 incriminating documents, namely, bilties were resumed, under which cigarettes a....
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....se 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 employees of M/s. LBTC Shri Rajendra Prasad Kothari and others and private records of CSM Althaf, Railway Agent at Coimbatore and his statements. The show cause notice proposed demand of duty of Rs. 1,03,74,648/- alongwith interest and penalty from M/s ETCL and penalty on traders, Godown owners viz. Shri Shiv Narain Kushwaha, Gopal Agarwal, Shri Ashish Ajmera, Transporter Shri Charanjeet Singh Bagga and others. As the factory of M/s ETCL was under Physical supervision of the department, hence the Central Excise Inspectors who at the relevant period were deputed....
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....sed 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 allegations made in show cause notice. Cross examination of some of the persons who were permitted to be cross examined was also conducted. 25. The adjudicating vide Order-in-Original dt. 09.10.2019 confirmed the demand of proposed duty along with interest and penalty as under : (i) In case of SCN dt. 20.01.2011, demand of Rs. 3844/- was confirmed against M/s ETCL alongwith interest and penalty u/s 11AC read with Rule 25 of CER, 2002 and Rule 27 of CER, 2002. Penalty of Rs. 2,000/- was imposed upon Shri Shyam Khemani, Director of M/s ETCL u/r 26 (1) o....
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....s 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 10 Am to 1200 Hrs was 288000 cigarettes. The production of 6 hrs i.e. 1200 hrs to 6 PM comes to 8,64,000 cigarettes which is far in excess of 6,92,000 cigarettes alleged to be in excess. During cross examination on 25.07.2016 of investigating officer- Shri Ravi Dutt Shankar, he has clearly stated that the goods produced on 14.05.2010 might have been seized. It is apparent from the cross examination of the investigating officer, that no reliance can be placed upon the Panchnama proceedings. The machines were working for whole day i.e 10.00 hrs to 6PM but the officers did not consider the production....
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....ere 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 J.C Solanki, Superintendent has responsibly carried out his duty of sealing and de-sealing and submitted proper information to Divisional office by mentioning in Diary XT - 1, which he did every time the machine were sealed/de-sealed. There is no lapse on their part and no reason to issue them notice. No specific role/inaction or intentional lapse has been pointed out in SCN. Though the SCN and impugned order alleged that the procedure as per Trade Notice 7/2009 dt. 25.11.2009 was not followed, but does not state a single word about which procedure was not followed. Hence no penalty is imposable up....
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....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 M/s Kushwaha Agro Trading, Indore and another godown at Sanwer Road Indore. He submitted that none of the traders in their statements except Shri Mangal Ram Rajpurohit and Shri Kotha Venkateswarlu has stated to have received goods from M/s ETCL. All the traders except above two stated that the cigarettes were bought from hawker, salesman or from other states/places. They did not name M/s ETCL as supplier of cigarettes nor there is any evidence. No investigation was done by the department to ascertain the source of such cigarettes and hence no demand is sustainable in respect of such cigarettes. The tra....
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....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 CSM Althaf and three godown owners were summoned for cross examination. The adjudicating authority in gross violation of this Tribunals direction in the present case, did not summon the remaining persons/traders/transport employees whose statements were relied upon. Shri Mangalam Raj Purohit of Samunda Trading Co. in his cross examination dated 22.08.2019 with reference to his statement has clearly stated- that in his statement he has just copied what was handed over to him by officers in Hindi and he was not aware of the facts. On being further asked about the charts referred in his statement dated 31.....
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....e 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/ packing material was kept by Shri Shyamlal Khemani, the director of M/s ETCL. These statements have no evidentiary value. During cross examination dated 22.08.2019, Shri Shiv Narayan Kushwaha, owner of Godown, 143/A Sector-F, Industrial Area, Sanwer Road, Indore was questioned about his statement- that he has given his godown on lease to Shri Shyam Khemani or M/s. Elora Tobacco Company Ltd. In response to same he stated that some people came to him saying that Shri. Shyam Khemani and M/s. Elora Tobacco Company Ltd required his godown on lease, but he had not spoken directly to Sri Shyam Khemani. On being f....
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....n 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 goods as POP / Packaging Materials; (iv) statements of the third parties, such as the clerks of the Transporter M/s LBTC The duty has been worked out merely on the basis of Kaccha slips, challans, G/R's, and loose papers seized from Offices of the transporter- M/s Lucky Bagga Transport Co. and slip pads, diaries/ long registers and loose papers seized from the railway agent Shri CSM Althaf. The statements of employees of Transporter firm- M/s Lucky Bagga Transport was recorded to the effect that cigarettes were transported under the false description of "POP/ Allu P....
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.... 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 statement dt. 03.12.2011, has clearly refused knowing about M/s ETCL and stated that the goods were transported as per description given in challans. In such case, the statements of the transport clerks who were not called for cross examination and the records upon which their statements are based, has no evidentiary value. During his cross examination Shri CSM Althaf admitted to be a Parcel Agent handling commodity such as Shoes, Rubber, Motor parts, stationary as POP, Printing materials, banana chips and hosiery. He could not show specific entries of such goods in records seized from him. For one alleged entry on which demand is raised in SC....
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.... - 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., 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) TM....
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....f 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 Sugar Mills Ltd. v Union of India, 1978 (2) ELT (J172) (SC), Deena Paints v CCE: 2001 (43) RLT 805, Brims Products v CCE: 2001 (130) ELT 719, CCE v Laxmi Engg. Works, 2001 (134) ELT 811 (Tri-Delhi), Hilton Tobacco v CCE, 2005 (178) ELT 378, Vishwa Traders Pvt. Ltd v CCE, 2012 (278) ELT 362, CCE Vs. Dhariwal Industries Ltd, 2012 (283) ELT 113, 32. The Department has not been able to adduce any 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, Indore. For the manufacture of the said quantity of cigarettes the follo....
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....ords 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) ELT 184 (Pat), Indo Green Textile Pvt. Ltd. vs. CCE, Thane, Mumbai - 2007 (212) ELT 343 (Tri-Mum), Kothari Pouches Ltd. vs. CCE, New Delhi - 2001 (135) ELT 531 (Tri. - Del), Rama Shyama Papers Ltd vs. CCE, Luck now - 2004 (168) ELT 494 (Tri. - Del). 34. The Counsel submitted that the demands are based upon presumptions that the consignments shown to have been transported in records of transporter and railway agent are of cigarettes, which were clandestinely manufactured and removed by M/s ETCL. He submits that since there in not a single direct and cogent evidence, hence the demands are not sustainable. He relied upon judgments in case of 2019 (5) TMI 369 - Cestat, New Delhi M/s Lucky Tobacco Company Pvt. Limited &Othrs. Vs. CCE & CU; Vinod Solan....
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.... 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 other Appellants adopt the submissions made by the Ld. Senior Counsel and submissions made in their appeal memo and prays for setting aside the impugned order passed against the co-appellants. 37. Shri Ankur Upadhyay appearing for the Appellant officers submits that the penalty on them has been imposed on the ground that the seized cigarettes bearing the manufacture date or month, during which they were deputed to the factory of M/s ETCL, which shows that the cigarettes were cleared clandestinely from M/s ETCL when the factory was under physical control of the department. He submits that the above finding is erroneous There are various instances in show cause notice showing that when the factory of M/s ETCL was lying closed still the cigarettes beari....
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....iv 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 gained any material benefits from manufacturer or other persons. There are no evidence on records to indicate participation of the Appellant in alleged offence or to show that the Appellant had any knowledge of any collusion in the same. As such there is nothing to indicate that the Appellant acted or omitted anything or abetted in any such act or omission, to render the goods liable for confiscation. Hence no penalty under Rule 26 is imposable. In fact in the SCN itself the inference has been drawn against the Appellant without any evidence, which is clear from the averments in SCN, which states that the officers appears to have involved themselves in conniving with M/s ETCL, Indore for facilitation of their clandestine manufacturing and clearances of cigarettes....
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.... 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 Trading Co, proprietor- Shri Mangal Ram Raj Purohit, Coimbatore where cigarettes of different brands of M/s ETCL were recovered without any document evidencing payment of duty. Railway receipts were also recovered. Packing staff -Shri Prakash Kumar Raj Purohit in his statement dt 21.02.2011 stated that no bills were received for such consignments. Statement of Shri Mangal Ram Rajpurohit, Proprietor was recorded on 23.05.2011 who agreed with panchnama proceedings and statement of Shri Prakash Kumar. He admitted that seized cigarettes were received without bill and payment of duty. In his statements dt. 24.05.2011, 25.05.2011, 31.05.2011 & 08.06.2011 Shri Mangal ram Rajpurohit explained his documents towards sale of cigarettes. The search and seizure at the office of Chie....
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....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 Cigarettes packed in cartons. Shri Charanjeet Singh Bagga, Proprietor of LBTC in his statements remained elusive and did not answer simple questions and refused to sign his own bilities. The transport of cigarettes from Hyderabad to Vijaywada was done by Shri Kaleshwari Mail Lorry Service as per statement dt 22.02.2011 of Shri Andela Krishna Yadav, Prop. and admitted that in case of one of the consignments under LR No. 61073 dt 20.01.2011, cigarettes were transported in guise of POP and also admitted that though the description of goods -POP mentioned on all LRs, but actually transported cigarettes. In case of transportation through railways the cigarettes were transported to Southern states. During search at place of CSM Althaf, railway agent, Railway Station, Coimbatore and&....
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....hri 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 Agencies. Shri Rajat Gupta the proprietor of M/s. Babu Brothers, Kanpur in his statement dt. 21.02.2011, 20.06.2011 & 04.08.2011 stated that there are no documents and has made cash payment. The cigarettes were coming without bill. In his statement dt. 24.02.2011, Shri Abdul Lateef, Prop. Of M/s Harshin Enterprises, Tirur admitted purchase of Opera House cigarettes from M/s A.H. Enterprises, Coimbatore. In his statement dt. 25.02.2011, Shri Kotha Venkateshwarlu, Prop. Of M/s Sri Gopala Kishna General Stores Vijaywada accepted dealing in cigarettes manufactured by ETCL, and no duty paid documents was found. One gunny bag contains two cartons of cigarettes were seized. Shri Satish Chandra Gupta, Proprietor of M/s Prem Agency in his statement dt. 20.06.2011 could not present doc....
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....nce 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 directly from ETCL. As regards panchnama at factory of M/s ETCL he submitted that panchnama cannot be disputed by a person who was not party to the panchnama. Shri Shyam Khemani accepted the correctness of panchnama in his statement dt 09.12.2010 and further during examination-in-chief. Nothing against was recorded during cross examination. It is a proceeding witnessed by the Panchas and cannot be construed a statement of panchas under Section 14 of the Central Excise Act, 1944. That consumption of huge quantity of raw material is evident from the recovery of huge quantity of raw material and packing material, valued at Rs 1,93,97,901/- stored in the godowns in the vicinity of factory of production. Shri Shyam Khemani, Director of ETCL accepted in his statement dated 09.12.201....
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....anchnama/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 does not absolve that these cigarettes were not received from ETCL, which is situated in Central India. None of the dealers could reveal name of any other manufacturer, except in the case of M/s Babu Brothers, Kanpur. 42.5 That the Appellants have relied upon the latter of Joint Commissioner dated 08.04.2009, 09.06.2009 confirming counterfeit of brands of ETCL. However the letter was of 2009 and is not applicable to the seizure of cigarettes in year 2011 and an officer will reply in the same manner when he has no evidence of clandestine clearance in the year 2009 against ETCL. That too, when the unit was in physical control. 42.6 In respect of cross examination, he stated that all 34 statement makers were offered for cross examination and letters were sent to the....
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....anki 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 up on brand fetching and there was no evidence of clandestine clearances is also wrong. Shri A.A Sharma, SIO was cross examined before Inquiry Officer on 07.01.2019 and he stated that clearance of brands of cigarette identified as clandestinely cleared were relatable to ETCL, such clearances were associated with ETCL as nothing otherwise surfaced during investigation. That his answer has been misunderstood and misrepresented. He has just stated that advancement in the investigation was based on brands. There is nothing wrong in such statement. It is fact that identity of goods was based on the brands manufactured and registered in the name of ETCL. The cross examination of the officer has no meaning in law as his statement has not been admitted in evidence in the case. He also submits....
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...., 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 6,92,000 has been ordered by the adjudicating authority on the ground that such cigarettes were found unrecorded in Daily Stock account register maintained in the factory during the time of visit by the officers on 14.05.2010 i.e 1200 Hrs. The adjudicating authority also held that there has been violation of procedures prescribed in Trade Notice issued by the Indore Commissioner, by the officers posted as regards the issue of proper sealing/de- sealing of machines or ignoring the unrecorded stock of cigarettes. The director Shri Shyam Khemani director of M/s ETCL confirmed the proceedings of the Panchnama during his statement on 09.12.2010 and did not come up with any objections. In such circumstances the technical issue raised by the ETCL and others in respect of seizure Panchnama dated 14.05....
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....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 that the de-sealing report of the Superintendent and Inspector always had number of machine(s) de-sealed by them. No evidence has been brought on record to show that the Appellant has not carried on their duty diligently and there is no evidence to point out any wrong doing on their part. It is also not forthcoming as to how the officers have violated the trade notice or have not acted diligently. No evidence is on record that they have not acted in good faith. We do not find any fault on the part of officers and there is no ground to penalize them. 44. Coming to the demand of Rs. 3850/- on goods seized from M/s Shekhawati Trading Co. Jaipur, we find that the statement of the proprietor Shri Rakesh Tibra was recorded on dt.22-7-2010, 10-1-2011 and 15-1-2011 wherein he stated that Glob....
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....ywada, 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 possession of Sri Samunda Trading as well as CSM Althaf shows that the cigarettes were being transported through railways by declaring the packages as 'POP'/ Paper etc. He further held that the dealing persons of M/s Lucky Bagga Transport Company confirmed transportation of cigarettes. The challans of M/s LBTC were having cryptic remark of packages of cigarette being transported. The consignments transported through LBTC reached southern cities were transported through LBTC or through Bhopal and Itarsi railway station. The seizure of cigarettes and raw material from godown near the factory has been taken basis to demand duty from M/s ETCL. The godown owners has provided their godown to Shri Shyam Khemani and ETCL in tacit manner knowing the business and activities of ETCL. The act of giving their pro....
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....inished 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 notice or the impugned order. The show cause notice and the impugned order even fails to show manufacture of excess cigarettes. The statement of the director of M/s ETCL Shri Shyam Khemani is exculpatory. No evidence of production staff or labour/ loading person is on record which can show that cigarettes were manufactured and cleared clandestinely. Moreover we find that at the time of visit of officers to the factory of M/s ETCL, only declared machines for which de-sealing was permitted by the department were found to be engaged in production. No excess raw material or any evidence was found. The adjudicating authority has heavily relied upon the records and statements of traders, godown owners, railway agent and transporter staff, and the alleged incriminating papers found from them. However we find th....
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....espect 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. Further it was held that clandestine removal cannot be proved on the basis of third party records without any positive evidence to link them to VCPL. Testing was done on a small quantity of product which is unsafe to be relied upon to establish the identity of product and no buyers were identified. On further appeal by the Department before the Hon'ble High Court, the same was dismissed as there was no substantial question of law and also that view taken by CESTAT is based on a thorough analysis of the evidence on record and is a plausible one. 48. In absence of any linkage of the factory of appellants with the alleged Railway Receipts or third party private records or with third party statements, there are no grounds to hold manufacture and clandestine removal of such huge quantities of cigarettes. The demand....
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....nd 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 on record. We note from the submission made by the Appellant that to manufacture such huge quantity of cigarettes the raw material viz. 254,813 Kgs of Tobacco valued at Rs. 2,03,85,040/-, 3504 Bobins of cigarette paper valued at Rs. 14,54,160/-, 5,57,43,000 cigarette filter valued at Rs. 88,07,394, 1480 PCT Bobins valued at Rs. 11,69,200/-, 3026 Gold Foil (in bobbins) valued at 27,74,842/-, 3,24,85,000 shell valued at 1,03,95,200/-, 3,34,46,000 nos of slides valued at 43,47,980/-, 7963 Kgs of BOPP film valued at 12,34,265/-, 6,68,000/- Wrappers valued at Rs. 10,68,000/-, 668 TOR Bobins valued at 2,81,896/- and 318792 Nos of CFC (Cartons) valued at Rs. 8.91,000/- are required. Thus for manufacture of 31,85,15,200 pcs of cigarettes total raw material valued at Rs.5,28,10,620/- (approx.) is required. The ....
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....sis 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 made by the revenue has no basis. 50. Further in respect of finished goods allegedly cleared by M/s ETCL, no investigation nor any primary or secondary evidence such as transporters statement, truck drivers' statements, loading or unloading evidences or statement of persons handling goods at Itarsi Station or taking the goods to Lucky Bagga Transport is on record. Neither there is evidence of sale or receipt of any consideration by M/s ETCL. The revenue has not brought on record even the primary evidence of any nexus of ETCL with alleged Railway Receipts or Lorry Receipts of Lucky Bagga Transport carrying description of goods as poly bundles, PP, or packaging materials. All the purported documentary evidences with cryptic entries have been sourced by revenue from unrelated third parties No evidence has been seized from factory and hence demand cannot be made from ETCL.....
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....ch 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, under Section 14 of the Act, whose makers are not examined in chief before the adjudicating authority, i.e. before Respondent No.2, would have to be eschewed from evidence and it would not be permissible for Respondent No.2 to rely on the said evidence while adjudicating the matter. Neither, needless to say, it would be open to the Revenue to rely on the said statements to support the case sought to be made out in the Show Cause Notice." The revenue filed petition against the above CESTAT order which was dismissed by the Hon'ble High Court of Madhya Pradesh in Writ Petition No. 3497 of 2011, decided on 20-5-2011 and later by the Apex Court on 19-2-2018 when it dismissed the Special Leave Petition (Civil) Diary Nos. 2261 of 2018 and 2259 of 2018 with I.A. Nos. 21494 & 21496 of 2018 as reported in Principal Commissioner v. Elora Tobacco Co. Ltd. - 2018 (12) G.S.T.L. J140 (S.C.)]. Thus....
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....e 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 received through Transporters M/s LBTC from ETCL. Similarly Shri CSM Althaf, Railway Agent, in his statement dt. 12.04.2011 and Shri Kotha Venkatleswarlu in his statement dt. 25.02.2011 had stated that the brands are manufactured by ETCL whose owner is Kishore Wadhwani. We find that the show cause notice and the adjudicating authority has taken these statements on face value without any corroboration at the end of M/s ETCL. Similarly the statements of staff of Transporter M/s Lucky Bagga Transport Co. and the godown owners has been taken on face value without any investigation or corroboration. We find that no further investigation was undertaken to ascertain the veracity of the facts as the person who supplied goods to Shri Mangal Ram Rajpurohit or Shri kotha Venkatlewarlu should have been ascertained/investigated. How the payments for cigarettes were made by them and how the consid....
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....ority, 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 persons whose examination-in-chief was conducted. The depositions of such persons are neither under oath nor the material facts contained in the statement has been examined by the revenue during examination in chief. The persons were merely given the copies and were asked to verify their statements in same manner as in closing paras of the original statements. This has rendered the examination in chief exercise futile and erroneous. On the contrary during cross examination specific questions were put to such persons whose statements were relied upon. The answers are in direct confrontation with the contents of the original statements. The above facts renders the examination-in-chief unreliable. The impugned order placing reliance on such statements is not correct. Shri CSM Althaf from whom his personal record and other documents were seized to allege clandestine removal of cigarettes ....
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....uthority 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 found to be admissible and correct by the adjudicating authority himself. Further Shri CSM Althaf in his cross examination also stated that he does not know M/s ETCL or Shri Kishore Wadhwani. We find that when the statements of above persons which was basis for proposing penalty upon Shri Kishore Wadhwani has not been taken into account and the person in his cross examination has also stated that he does not know Shri Kishore Wadhwani and the adjudicating authority chose not to rely upon the statement, in that case the statements made before the investigating officers are not reliable against M/s ETCL also. In nut shell the impugned order passed by the adjudicating authority by relying upon partly the statements and not considering the cross examination is not appreciable and erroneous. 54. The adjudicating authority has relied upon the statements of godown owners Shri Kushwah an....
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....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 statements are required to be corroborated by independent evidences. 55. The revenue has not found a single document/ record showing any illicit production and removal of goods from M/s ETCL or its director, nor any consideration against alleged clandestine removal has been shown to have been received by M/s ETCL. Further as regard note book maintained by Shri CSM Althaf, Railway Agent, it is not the case of the Revenue that parcel agents maintained these Note Books under the instructions of ETCL. Further, these Note Books were not in the handwriting of any of the persons of ETCL or its accountant or clerk or any employee. Thus the relied upon document has no probative value. Merely because the document has been produced during investigation, it does not establish its probative value as held by the Hon'ble Supreme Court in case of Bareilly Electricity Supply v Workmen, 1971 (2) SCC 617 ....
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.... - 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 the Appellant that other manufacturers were making fake/ counterfeit cigarettes bearing brand name(s) of M/s ETCL and even the department knew about the same. Vide letter F. No. IV(16)39/2008/P/9466, dt.8-4-2009 sent to Deputy Commissioner, Central Excise & Customs, Hqrs., Preventive Unit, Vijayawada by the Joint Commissioner (Prev.), Central Excise Hqrs, Indore it was informed that after enquiry in respect of cigarettes manufactured by M/s ETCL it appears that fake cigarettes bearing brand of M/s ETCL are being manufactured. The relevant extract of the said letter reads as under. - "It is submitted that the officers of this Commissionerate conducted the enquiry in respect of the cigarettes manufactured by a unit M/s Ellora Tobacco Company Limited, 14-B, Sector-F, Industrial Area, Sanwer Road, Indore and said to be seized at Vijayawada on 23.10.2008 from M/s Bhansali Enterprises Vijayawad....
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....upplied 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 of such cigarette is appearing in the investigation and there is no investigation, leaving the loose end. How such cigarettes were allegedly cleared from the factory and other corroborative evidence has not been found to have been ascertained. Further when the fact of police complaints made by M/s ETCL were on record, it was necessary to ascertain the manufacture. The revenue failed to ascertain facts and findings of police investigations. In one more instance the Panchanama dt. 21/2/2011 drawn at M/s Mahalaxmi Enterprises, Coimbatore, the reason for search explained by the officers to the panch witnesses is that "The officers informed Shri Tikam Chand that they have come to search premises on the reasonable belief that documents pertaining to clandestine purchases of cigarettes from units in North India could be secreted therein and on the reasonable belief that such non-duty paid cigarettes could be se....
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....e 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 any instance is on record. Hence there is no reason to demand duty. Our views are also based upon order in case of Flevel International Versus Commissioner of Central EXCISE - 2015 (9) TMI 1151 - Delhi High Court, M/s. Kuchchal Light Metals Pvt. Ltd. Vs. Principal Commissioner of Central Excise And Service Tax, Madhya Pradesh 2019 (7) TMI 101 - Cestat New Delhi, Ganpati Structures Private Limited and Ashok Joshi Versus Commissioner of CGST, Central Excise, Indore - 2019 (6) TMI 869 - Cestat New Delhi, Shri Srikant Chaurasia& Others Vs. Commissioner of Central Excise & CGST - 2019 (5) TMI 1285 - Cestat Allahabad, M/s Lucky Tobacco Company Pvt. Limited &Others. Vs. Commissioner of Central Excise, Customs, Central Goods & Service Tax - 2019 (5) TMI 369 - Cestat New Delhi, Meenu Paper Mills Pvt Ltd, Manish Kapoor Director ff, Shri Suresh Kumar Garg, Shri Rakesh Kumar Agarwal (Proprietor) Vs. C.C.E. & S.T. -Meeru....