TaxTMI 
TaxTMI 
TaxTMI 
2005 (7) TMI 96
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....s. R.K. Patel & Co., Tobacco Manufacturers, (RKPTM), (main appellant), are the manufactures of branded chewing tobacco, commonly known as Jarda, falling under sub-heading No. 2404.41 of the Central Excise Tariff Act, 1985. 4. The case of Revenue is that on specific information that M/s. RKPTM are engaged in the clandestine removal of branded chewing tobacco and to camouflage this illicit activity, firms under fictitious names have been floated, therefore, the officers of Central Excise, Special Preventive Cell, stationed at Nashik kept surveillance at Dhule from 5-9-97 onwards. On 6-9-97, the officers spotted vehicle No. MH-19-5159, which was regularly used for removal of Jarda, plying towards Malegaon. The officers intercepted the vehicle near Zodge village on Dhule-Malegaon Road. On checking, the vehicle was found carrying 90 cartons of "Gai Chhap Patel Jarda" covered by a bill bearing No. 24 dated 6-9-97 of M/s. Ganesh Trading Co., Malegaon, Navalnagar Branch. Shri Ratilal Raghunath Bhawsar, a Salesman of M/s. R.K. Patel Tobacco Manufacturers, was accompanying the vehicle and Shri Dilip Devidas Patel and Shri Sanjay Bhimrao Patel were driver and cleaner, respectively. 5. Preli....
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.... drivers, cleaners and other employees, who had abetted M/s. RKFFM and its partners to remove excisable goods without payment of Central Excise duty. 8. The Commissioner, Central Excise & Customs, Aurangabad, decided the issue vide Order-in-Original No. 49/CEX/2000, confirming the duty demand up to February 1997 on the quantity of Jarda removed clandestinely of Rs. 3,76,49.018/- and imposed equal penalty under Section 11AC on the assessee and ordered recovery of interest on total demand under Section 11AB of the Act. The seized goods of 90 cartons containing Jarda and the vehicle were confiscated, but allowed release of the same on payment of redemption fine of Rs. 16,000/- and Rs. 50,000/- respectively. Personal penalties were also imposed on other Noticees. 9. The assessee had filed an appeal before CEGAT, Mumbai, against the Order of the Commissioner and mainly contended that they were denied opportunity to cross examine all the material witnesses as listed in their letter dated 29-5-2000. Considering the contentions raised by the assessee among others, the Tribunal, vide its Order C-II/102-143/WZB/02 dated 10-1-2002 [2002(142) E.L.T. 366 (Tribunal)], remanded back the matter ....
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....en cleared from the factory premises of M/s. R.K. Patel & Co. Tobacco Manufacturers, Amalner, Unit No.1 at 15.30 Mrs., without cover of Central Excise Invoice and without payment of Central Excise duty". 13. In para 199, the ld. Commissioner observed the modus operandi adopted by M/s. RKPTM, Amalner, for suppression of production of Jarda and its disposal/sale without payment of duty has come to the notice on 6-9-97, when vehicle No. MH-19-5159 was intercepted with 90 cartons of Gai Chaap Patel Jarda. It was found that Jarda cartons were removed clandestinely without payment of duty from the factory of M/s. RKPTM, Amalner, and cleared from the trading firm, M/s. Ganesh Trading Co., Navalnagar. Therefore, the same were seized along with vehicle No. MH-19-5189. 14. Lastly, in the concluding para, it is observed as follows "On careful consideration the issue can be summarized as follows. After interception of vehicle No. MH-19-5159 on 6-9-97, which was found loaded with 90 cartons of 'Gai Chapp Patel Jarda', the officers on the basis of the disclosures made by Salesman, Shri Ratilal Raghunath Bhavsar, recovered documents of fictitious firms from his residence as well as from the re....
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....ade Central Excise duty as per the statement given by Shri Madhukar Hari Patil. (viii) The statement of Shri Ravjibhai Ashabhai Patel with regard to the consignments made to the appellants, (ix) Handing over documents by Shri Birjeshkumar Gupta and Shri Sunilkumar Gupta. (x) The details of clearance of clandestine removal of Jarda were not available and therefore, demand was calculated on the basis of unaccounted raw tobacco received by the appellants and lastly the deviation from the original stand by the appellants in respect of duty liability on their part and admission of liability to the extent of 59 trucks of Jarda manufactured out of the consignment of raw tobacco received by them. 16. We have heard both sides in detail and at length. We have also considered the written submissions filed by both sides at the time of hearing of the case and gone through the oral and documentary evidence of record. As this case mainly based on oral statements of the witnesses concerned, including that of the assessee and his employees, together with the available record of the suppliers of raw tobacco and transporters,, the matter essentially involves appreciation of the direct and circums....
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....by the appellants, the Department is required to prove the same by positive and cogent evidence. Equally it has to prove in satisfactory manner, the receipt of raw materials and unaccounted production. The ld. Commissioner appears to have mainly relied upon the statements recorded from the transporters and suppliers of raw materials and others. As seen from the record, many of them have retracted their submissions immediately. The raw material suppliers from Gujarat have given their statements first to the Gujarat Central Excise Officers in Gujarathi not known to them. Their statements were also recorded on second time. Again after long gap, the Central Excise Officers of Nashik have recorded their statements in English language. These statements are the improved version than the earlier statements and the same have been relied upon by the ld. Commissioner. Such variations, inconsistency and improved version can be found from the following personnel. (a) Shri Shashikantbhai Bhailalbhai Patel, Raw material supplier from Gujarat. His first statement was recorded on 6-2-98 at Anand by local Central Excise Officers. It is stated by him that 816 monnes (approx. 2 trucks) supplied to t....
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....0-3-98 at Farukhabad in Hindi. He stated that he has sent 26 consignments. In his second statement recorded on 24-6-98 by Nashik Preventive at Dhulia, he stated that he has supplied 35 to 40 trucks. During the cross examination held on 18-6-2003, it is stated that he has supplied raw tobacco to three firms in Amalner. Further he confirmed that during the search, the Central Excise Officers took photocopies of the relevant documents and that he was detained by them for 72 hours continuously and he had sent a police complaint by registered post at Amalner and also to the Commissioner of Central Excise, Aurangabad and Additional Commissioner of Central Excise, Nashik. Further it is stated that his signature was obtained on the statement without reading and explaining the same to him. 20. These are some examples, which could be extracted for ready appraisal. The record on hand shows that most of the witnesses have retracted their statements and further complain that under duress and coercion their statements were recorded by the authorities concerned and the same is not voluntary one. 21. The ld. Commissioner appears to have relied upon the improved version of the witnesses concerned....
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....arks indicated on the cartons. It is pointed out by the ld, Jt. CDR that there was a gap of six months during the clearance under the invoice and the subsequent dispatch by M/s. Ganesh Trading Co. However, he admits that no exercise was done during the course of investigation with regard to the goods cleared from the appellants' factory on payment of duty to M/s. Ganesh Trading Co. and the quantum of sale by M/s. Ganesh Trading Co., to establish any excess sale by it. In this context, it is to be observed that the reliance placed by the Commissioner on some statements, which have been retracted subsequently, without there being any corroborative evidence, is not proper and it cannot establish clandestine removal of the goods. 24. The impugned order points out the modus operandi adopted by the appellants for suppression of production and its disposal without payment of duty has come to the notice when the vehicle was intercepted on 6-9-97 carrying 90 cartons of Jarda. This clearance has been satisfactorily explained under 3 invoices as under :- Invoice No. 257 dated 31-3-97 Invoice No. 259 dated 31-3-97 Invoice No. 1 dated 10-4-97 Under these 3 invoices, cartons were cleared o....
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....mitted these facts. 26. The cross-examination of Shri Purshottamdas Rambhai Patel reveals that he had supplied 31 trucks of raw tobacco to the appellants after verifying the receipts prepared by him. Earlier, in his statement recorded by the Officials concerned, it is stated that he supplied 17 trucks. It is pertinent to note that the demand was raised basing on the entries in the diary allegedly maintained by him, but witness denied of having maintained such a diary. Therefore, demand was dropped ultimately. The effect is that it disproves the receipt of unaccounted raw tobacco. 27. Shri Sunil Kumar Varma in his cross-examination said that he purchased six drafts and the material was sold to Shri Desaie and Shri Pawar and that they could have sold 4 trucks to others for profit. He is the supplier of raw tobacco from Kayamganj. He also stated that he sent complaints to police to the effect that his signatures were obtained on the statements forcibly by detaining him in a Hotel for 3-4 days. Shri Bhagwant Singh Sakhya states that he used to supply the raw tobacco to three firms of M/s. R.K. Patel & Co. at Amalner. His statement was recorded after a gap of 36 hours and he does not ....
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....ion wherein it is revealed that he became hostile to the appellants. No credit can be attached to such a statement. At one stage, he reveals no personal knowledge about the evasion of duty by the appellants. Before officials, he gave statement basing on his personal knowledge. His entry to the company was restricted from 1993 onwards. Shri S.K. Patil was suspecting that his other brothers were obtaining information from Shri Madhukar H. Patil and he was not taken into confidence by the appellants. Therefore, it is quite unsafe to rely on his version. His attending to excise work was very rare. After September 1996, he took employment with M/s. R.K. Patel & Co. Tobacco Processors the competitors of appellants. 32. The ld. Commissioner has also relied upon the statement of Shri Premsingh R. Mahajan, Accountant of the appellant, and Shri N.D. Patel, Annexure C to the Show Cause Notice gives list of relied upon documents. Since many of the documents were not supplied along with the Show Cause Notice, the appellants made request for supply of these documents. Sr. No. 74 of Annexure-C is a residuary entry. The appellants repeatedly by letters dated 26-7-99, 4-8-99 and 15-9-99 requ....
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.... manufactured out of the consignments of raw tobacco received in 59 trucks. However, we find that the appellants in their letter dated 20-6-2000 and written submission dated 23-8-2003 have unambiguously qualified their submission "Without prejudice" and thus the appellants plea to restrict the demand to only 59 trucks as the consignment in their name and the transport challans and the same is alternative argument. If is not a deviation from their stand. 35. The ld. Commissioner has referred to a letter dated 23-8-2003 submitted by Shri Brijeshkumar Gupta after his cross-examination, which was over on 18-6-2003. It is strongly contended on behalf of the appellants that the Commissioner is not justified in relying this document, which was obtained from him subsequently, and the appellants had no opportunity to traverse the same. 36. Lastly, the ld. Commissioner has referred to the bank drafts out of unaccounted amount paid towards unaccounted raw tobacco supplied by U.P. supplier was around Rs. 50,00,000/- and concluded that the appellants were procuring raw tobacco and using for the manufacture of Jarda to be cleared without payment of duty. We find from Annexure B(a) the details ....
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....ts. Explanation for this major discrepancy is not forthcoming from the records, If the basis for issuing Show Cause Notice is that U.P. suppliers, were converting cash into D/D at Amalner for raw tobacco supplied by the appellants, how can there be such a vast difference between value of raw tobacco supposed to have been supplied and the amount of D/Ds n those, cases where names of the D/Ds and names of the suppliers of raw tobacco tallies. We have seen the statement of Shri Surajpal Gupta dt. 30-7-98 that he has supplied 10 trucks of raw tobacco and the D/Ds received are as under :- Rs. 5,68,000/-.... D/D in the name of Purshottam Narayan Gupta and Purshottam Kumar Gupta Rs. 2,74,500/-.... -do- Surajpal Gupta Rs. 4,55,000/-.... -do- Ramnarayan Gupta Rs. 12,97,500/- However, we find that the D/D taken in the name of Surajpal Gupta is only for Rs. 2,74,500/-. As per his statement, he came to Amalner only in May/June 1994 and thereafter he got his name registered with Krishi Mandi Utpadan Samiti in July August, '94, however, the dates of D/D are as under: 28-1-94, 19-2-94, &nb....
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.....L.T. 258 (S.C.) in the case of Shri Naresh J. Sukawani v. Union of India, to stress on the proposition that a statement before a Customs Officer is a material piece of evidence and certainly can be used as substantive evidence. As stated supra, all the statements given by the witnesses have been retracted and there is no corroborative documentary evidence to substantiate such statements. Therefore, in the absence of any link document to establish a fact, it is not proper to rely upon such statements to come to conclusion in cases of this nature where clandestine removal is alleged. This view is supported by the judgment of the Supreme Court in the case of State of Maharashtra v. Shri P.K. Pathak reported in 1983 (13) E.L.T. 1628 (S.C.). The ld. Commissioner relied upon this judgment, but has not followed its implications un denying the ratio. 40. On the contrary, the ld. counsel for the appellants has relied upon the following judgments in support of their contention. (i) M/s. Rajesh Casting Pvt. Ltd. v. Commissioner of Central Excise, Nagpur- 2004 (178) E.L.T. 698 (Tri.-Mumbai). It is held in this case that clandestine removal of C.T.D. bars alleged on the basis of receipt of....