TaxTMI 
TaxTMI 
2022 (9) TMI 126
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.... Central Excise Tariff Act, 1985. Sh. Prakash Chand Purohit (Sh. Purohit in short) is the Managing Director of the appellant company. The appellant company is registered with the Central Excise Department and was operating under compounded levy scheme during the period of dispute from April, 2012 to April, 2013. 3. The Appellant has the following three manufacturing units: (I) Unit-I, located at Upar ki Oden, Nathdwara, and having Central Excise Registration No. AABCM4952DXM001, is engaged in packing of processed chewing tobacco in pouches, using automatic 'Form, Fill & Seal' (FFS) machines; (II) Unit-II, located at Khetan Road, Rabcha, Nathdwara, and having Central Excise Registration No. AABCM4952DXM002, is engaged in mixing of lime and tobacco upon receipt of raw tobacco and selling of entire semi-finished goods to Unit-III upon payment of Central Excise duty; and (III) Unit-III, located at Village Kheda Bhansole, Mavli, Udaipur, and having Central Excise Registration No. AABCM4952DXM003, is engaged in processing of tobacco which includes drying, grading and coating and selling of entire processed tobacco to Unit-I. The appellant company regularl....
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....unt for taxation, for the assessment year 2014-15 with a request not to initiate penal proceedings. The IT Department for the previous year 2012-13 and 2013-14 passed the Assessment Orders, both dated 12.3.2015. Investigation by the Central Excise Department. 6. Pursuant to the information gathered from the IT Department during REIC meeting on 27.3.2015, the officers of the Central Excise Department (CE Department) requested for supply of relevant documents, which were made available by IT Department under their letter dated 14.9.2015. Thereafter, the CE Department conducted investigation against the Appellant by recording statement of Sh. Purohit on 15.6.2016, wherein he reiterated the submissions which were already made before the IT Department regarding the contents of Survey sheet. 7. The Department also conducted verification from various tobacco manufactures and jurisdictional Central Excise authorities of such manufacturers, the details whereof were mentioned in the survey report. Some of the said manufacturers submitted letters and the authorities provided the reports regarding the investigation, the details of which are mentioned below: 1) Letter dated 28....
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....to competitor manufacturers, were also relied upon to allege that the Appellant's explanation regarding the Survey sheet was false and baseless. 9.1 Placing reliance on the appraisal report pursuant to search by the IT Authority, wherein it was presumed that the figures appearing in the red column in the survey sheet are the unrecorded figure of turnover, outside the books of accounts. 9.2 In order to examine the veracity of the survey report as submitted by Sh. Purohit, the Department made further enquiries by issuing letters to the jurisdictional Assistant / Deputy Commissioner of such units/ manufacturers to verify whether the manufacturer names appearing in the survey report are engaged in manufacture of tobacco product with the brand name as divulged by Sh. Purohit and to provide their production and clearance figures and accordingly the reports were received as aforementioned. As per the reports received, there appeared to be variation in the brand name as Sh. Purohit was recording the data in the name of the manufacturing company, instead of the brand name. It appeared that the contention of Sh. Purohit is wrong and misleading. For example, as per the report of Range S....
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....letter dated 20.12.2017 requested the Adjudicating Authority to allow cross-examination of various persons/ officers whose reports/ letters have been relied upon in the show cause notice. Such permission was denied by the Adjudicating Authority vide order dated 08.06.2018. Being aggrieved, the appellant challenged the said order in appeal No. E/51687/2018 before this Tribunal, vide Final Order reported at 2018 (9) TMI 821 disposed of the appeal with the following observations:- "15. In view of entire above discussion, it is held that the request of the appellant in question was a premature request before the Commissionerate hence the Order under challenge needs no interference. However, the Commissioner is hereby required, irrespective of the appellants filing any reply to the Show Cause Notice or not, to follow the principles of adjudication as far as the examination of the witness and cross examination thereof is concerned, as discussed above. The adjudicating authority-Commissioner is required to reconsider the request of the appellant at the appropriate stage. However, keeping in view that the basic concept behind the cross examination is fair play, it being the most e....
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....e of manufacturing process, production of excisable goods of any specified description, extent of evasion or any such other relevant factor. 11.4 Accordingly, the Central Government in exercise of the powers conferred under Section 3A(1), vide Notification No. 10/2010-CE (N.T.) dated 27.2.2010, specified inter alia 'chewing tobacco' falling under Tariff Item 24039910 of the First Schedule to the CETA, which is manufactured with the aid of packing machine and packed in pouches by FFS (Fill, Form and Seal) machines, as notified goods, on which duty shall be levied and collected in accordance with Section 3A. Simultaneously, in terms of Section 3A(3), the Central Government specified the rate of duty applicable in respect of the said notified goods vide Notification No. 16/2010-CE dated 27.2.2010 according to per packing machine per month, depending on different RSP's fixed for per pouch, manufactured in the factory. 11.5 For providing the manner of determination of the 'Annual Capacity of Production' of the factory, factor relevant to such production, collection of duty, etc., Central Government notified the Chewing Tobacco Rules in exercise of the powers conferred under sub-se....
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....es a manufacturer to avail Cenvat credit on notified goods in bulk packs. 12.6 Rule 18 deals with imposition of penalty for contravention of any of the provisions of Chewing Tobacco Rules. And, Rule 19 borrows all the provisions of Excise Act and the Central Excise Rules, 2002, except for those provided under the Chewing Tobacco Rules itself, including relating to recovery of dues. 13. From the above, it clearly transpires that the Compounded levy scheme prescribed under the Chewing Tobacco Rules, is a self-contained code which not only provides for the manner in which duty is levied, but also for calculation of such duty. Thus, duty on notified goods is required to be determined strictly within the four corners of the Chewing Tobacco Rules and in no other manner whatsoever. 14. It is further submitted that duty is leviable on notified goods only on basis of number of operating packing machines installed in factory, meaning thereby that payment of duty under the compounded levy scheme in terms of the annual production capacity determined, is not relatable to actual clearance and sale of goods. Assessee working under the said scheme is bound to pay a particular quantum of d....
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....sideration the speed and maximum production of their declared machines as were operational during the period from April 2012 to April 2013." "43. ... I find that in the instant case the entire issue revolves around the facts that they have clandestinely manufactured the Chewing Tobacco pouches on machines not declared by them. The investigation has revealed that the assessee used undeclared machines for manufacturing the goods and clearing the same without payment of appropriate Excise duty, naturally would not be found installed in the declared premises after two years of detection by the income tax authorities." [Emphasis supplied] 18. On perusal of the above, it is abundantly clear that no such undeclared machines, on which Appellant has allegedly manufactured the notified goods and cleared the same, was ever found/investigated by the department. Accordingly, the duty demand based on theoretical determination of number of alleged undeclared machines operated by the Appellant for clandestine manufacture of goods, is devoid of logic and not tenable. 19. Further urges the duty on notified goods is determined only on the basis of number of machines operating in the....
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....ntelligence (now, Directorate General of GST Intelligence) carried out surprise search at the Appellant's unit on 24.05.2013, which is prior to the search carried by the IT Department in the present case, and no undeclared machines were found. 25. The Ld. Commissioner in Para 43 of the impugned order, has brushed aside the aforesaid documentary evidences by simply holding that Appellant would not operate the undeclared machines from its declared premises. However, it is submitted that even the department has utterly failed to provide a single piece of evidence to corroborate existence of undeclared machines being operated by the Appellant during the relevant period. Thus, such findings are not sustainable. Hence, in the absence of undeclared machines, duty demand cannot be confirmed against the Appellant. 26. Without prejudice to above, assuming without admitting that even if there was extra production of goods during the relevant period, duty demand is not sustainable since duty is levied on the basis of number of machines operating, and not based on the actual production of goods. 27. Amount of Rs. 92,12,154/- pertained to outstanding dues of Uma Polymers which remained ....
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.... disclosure of income, if any, before the IT Department cannot be treated as sale proceeds of clandestine manufacture activity on the part of Appellant, in the absence of corroborative evidences to the contrary. Reliance in this regard is placed on the following decisions: • Trikoot Iron and Steel Casting Ltd. v. Commissioner of C. Ex., Meerut, 2015 (315) E.L.T. 65 (Tri. - Del.). • Ravi Foods Pvt. Ltd. v. Commissioner of C. Ex., Hyderabad, 2011 (266) E.L.T. 399 (Tri. - Bang.). • Commissioner of Central Excise, Ludhiana v. Zoloto Industries, 2013 (294) E.L.T. 455 (Tri. - Del.) 30. THE SURVEY REPORT WAS PREPARED VIDE TELEPHONIC SURVEYS OF DEALERS, AND THE APPELLANT'S EXPLANATION THEREOF CANNOT BE DISREGARDED ON THE BASIS OF REPORTS/ LETTERS. IN ANY CASE, NO RELIANCE CAN BE PLACED ON SUCH REPORTS/ LETTERS. 30.1. In the present case, Department has discarded the Appellant's explanation regarding the contents of Survey sheet by holding that such sheet is a private document(s) containing the clandestine clearances of Appellant, and chose to rely on the reports/ letters relating to the competitors, to raise duty demand against the Appellant. Su....
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....e Ld. Adjudicating Authority has passed the impugned order, denying such request. 33.2 It is submitted that reports/letters in the present case, are in the nature of statements tendered during the course of an inquiry or proceeding under the Excise Act. Accordingly, Section 9D of Excise Act requires that the truthfulness of such factual statements made, is required to be accepted only after the same has been complied with the requirement of cross-examination. In the absence of such cross-examination, the reports/letters cannot be made the basis for discrediting the explanation provided by the Appellant. Such reports / letters are required to be discarded. 33.3 It is further submitted that not providing the opportunity of cross examination in the present case, is also violation of the principle of Natural justice. Reliance in this regard is placed on the following decisions, where cross-examination of Chemical Examiner was allowed by this Tribunal to ascertain the veracity of the test reports relied upon by department against the assessee. Therefore, the ratio of such decisions equally applies to the present case, and categorically rebuts the finding recorded by Ld. Commission....
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....sumed undeclared packing machine(s). Demand can only be raised under the compounded levy scheme read with notification, if the Revenue finds any undeclared machine installed in the declared premises or undeclared premises. Admittedly, in the facts of the present case, no such undeclared machine have been found either in the declared premises or anywhere else. 37. It is further urged that Revenue has totally misconceived itself by giving a total goby to the compounded levy scheme which provides for manner of determination & collection of duty based on the capacity of production and have rather adopted an imaginary method of assessment of duty, which is not permissible under the Act or Rules thereunder. 38. In view of above submissions, it is urged that the extended period of limitation is not invokable. Further submits that no penalty is imposable on the Appellant Co. as well as on Sh. Purohit. It is further submitted that when demand itself is not sustainable, penalty is not imposable, and interest is also not recoverable. 39. In light of the above submissions, the Appellant prays that the impugned order passed by the Ld. Commissioner is liable to be set aside and the pres....