AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2022 (10) TMI 874
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....llant Demand 1. E/11756/2017 Patidar Products Confiscation of Seized Cash and goods, total amount of Rs. 18,43,000/- fine imposed, Duty demand of Rs. 9,68,12,975, penalty of Rs. 9,68,12,975/- 2. E/11835/2017 Mahashakti Sales Agency Penalty of Rs. 10,00,000/- 3. E/11836/2017 Tulsidas & Co. Penalty of Rs. 2,00,000/- 4. E/11837/2017 Radheshyam Transport Co. Penalty of Rs. 2,00,000/- 5. E/11838/2017 Kiritbhai Bachubhai Finava Penalty of Rs. 5,00,000/- 6. E/11839/2017 Bintu Stores Penalty of Rs. 3,50,000/- 7. E/11843/2017 Shivam Marketing Penalty of Rs. 40,00,000/- 8. E/11889/2017 Milan Transport Penalty of Rs. 2,00,000/- 9. E/10230/2018 Ashwinbhai Pragjibhai Ambaliya Penalty of Rs. 5,00,000/- 1.1 The relevant facts of the case, in brief, as per records are that an intelligence was gathered by the DGCEI, Ahmedabad that M/s Patidar Products were engaged in evasion of Central Excise Duty by way of clandestine manufacture and removal of their finished products particularly "Flavoured Tobacco" and Gutkha under brand name "Patidar". They also floated fictitious firm viz., M/s Pur....
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....d the details of the clearance of the goods manufactured by M/s Patidar to its various dealers. During the scrutiny of the 24 coupon books, recovered & seized from the residential premises of Shri Kirti Bachubhai Finava, Supervisor of M/s Patidar, it appeared that these books contain details such as number of free coupons, name & place of the retailer/ dealer of M/s Patidar and number of each and every coupon, so given to the retailer/ dealer of M/s. Patidar. The officers recorded the statements of various persons in this matter. From the circumstantial/corroborative evidences in the form of documents/ records/ books seized and confessional statements it appeared that M/s Patidar had been indulging in large scale evasion of Central Excise Duty for last five years. Shri Sanjay Patel, Director of M/s Yesh Lamiprint Pvt. Ltd., Ahmedabad, in his statement dated 17.10.2011, has admitted to have sold roughly 5500 kg. of Flexible packing materials for Patidar Gutka to M/s Patidar during January 2009 and 10,000 pieces of outer plastic bags during the February 2009. He also explained that the quantity of pouches per Kg. could be 1200 pieces approximately. Similarly Shri Mahendra Patel, Part....
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....scheme, as stipulated in Notification No. 42/08-C.E. dated 01.06.2008. According to the said Notification, the Central Excise duty on Pan Masala containing Tobacco, commonly known as Gutkha, falling under Chapter heading 24039990 having MRP of Rs. 0.50 per pouch, is stipulated to Rs. 12.50 Lakh per machine per Month. It appeared that during the period September 2008 to April 2011 M/s Patidar had manufactured Gutka having MRP of Rs. 0.50 per Pouch with the help of one machine. Accordingly, Central Excise Duty payable by M/s. Patidar comes to Rs. 4,00,00,000/-(i.e. for a total period of 32 months @Rs. 12.50 Lakhs per Month per Machine) 1.7 In the impugned matter two show cause notices were issued to the Appellant. First show cause notice dated 11.01.2012 was issued to the Appellant for confiscation of seized excisable goods i.e Patidar Brand Zafrani Zarda, Mini Truck Eicher and unaccounted currency seized and for imposing the penalty under Rule 25 of Central Excise Rules, 2002. After the completion of investigation second show cause notice dated 21.03.2013 was issued to the appellant proposing demand of Central Excise Duty on Flavoured Tobacco (Zafrani Zarda) and Gutkha. After due....
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....onding Central Excise Invoice, the same was liable to confiscation; that the watchman who was present at that time was not in a position to show supporting document in regard to the said goods. The Panchanama itself shows that the goods were not cleared from the factory and goods were lying within the factory premises. Therefore, there is no offence. Hence the goods seized from the factory of the Appellant is not liable to confiscation. 2.3 He also argued that the case against the Appellant is essentially based on the materials in the form of Kachcha Chits, note books and Bill Book and other evidences on records is in form of statements of parties. The credibility of the documentary evidence, which is relied upon to hold that the Appellant was involved in clandestine removal of the products, is disputed on various grounds. Firstly, the seizure proceedings are themselves contended to be illegal, secondly, the panchas of those documents have neither been examined nor produced for cross-examination, thirdly, the documents are merely duplicate copies, fourthly, the contents of those documents are not proved to be true and in any case, the said documents were not seized from the fact....
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....& Others • 2018(15)GSTL 298 (Tri. Bang)- Paragon Steels Pvt. Ltd. Vs. CCE, Calicut • 2014(300) ELT 119 (Tri. Mum)- Ahmedabad Rolling Mills P Ltd. Vs. CCE, Aurangabad. • 2017(347) ELT 413 (Bom) - Sharad Ramdas Sangle Vs. CCE, Aurangabad • 2011(269)ELT 485 (AP)- Shalini Steel Pvt. Ltd. Vs. CCE, Hyderabad • 2018(360)ELT 255(AP)- Manidhari Stainless Wire Pvt. Ltd. Vs. Union of India • 2010(255) ELT 68 (H.P.) -CCE Vs. International Cylinder Pvt. Ltd. • 2005(184) ELT 263(Tri. Bang) -Gulabchand Silk Mills Pvt. Ltd. Vs. CCE, Hydrabad -II • 2014(304) ELT 591 (Tri. Mum)- SM Steel Ropes Vs, CCE • 2004 (165) ELT 136(SC) -CCE, Mandra Vs. Systems & Components Pvt. Ltd. • 2018(362) ELT 559 (Mad)- Lawn Textiles Mills Pvt. Ltd. Vs. CESTAT, Chennai • 2004(172) ELT 433 (SC)- CC, Kandla Vs. Essar Oil Ltd. • 2009(235)ELT 587 (SC) CC (P) Vs. Afloat Textiles (I) Pvt. Ltd. And other. 04. We have heard both the sides and have considered the submissions made at length by both sides and perused the records and also considered the case laws quoted by bo....
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....ourse of inquiry or proceeding under the Act shall be relevant for the purposes of proving truth of the facts which it contains only when it fulfills the conditions prescribed in clause (a) or as the case may be, under clause (b). While clause (a) deals with certain contingencies enumerated therein, clause (b) provides that statement made and signed would be relevant for the purposes of proving the truth of the facts contained in that statement only when the person who made the statement is examined as witness before the Court. 4.3 A conjoint reading of the provisions therefore reveals that a statement made and signed by a person before the Investigation Officer during the course of any inquiry or proceedings under the Act shall be relevant for the purposes of proving the truth of the facts which it contains in case other than those covered in clause (a), only when the person who made the statement is examined as witness in the case before the court (in the present case, Adjudicating Authority) and the court (Adjudicating Authority) forms an opinion that having regard to the circumstances of the case, the statement should be admitted in the evidence, in the interest of justice. ....
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....examination before the adjudicating authority in the proceedings instituted upon show cause notice was not recorded nor formation of an opinion that it requires to be admitted in the interest of justice. 4.4 The Learned Adjudicating authority relied upon a decision of the Hon'ble Supreme Court in the case of SurjeetSingh Chhabra v. Union of India reported in 1997 (89) E.L.T. 646 (S.C.) and held that cross -examination of witness is not necessarily required to be allowed. However, in the case of Surjeet Singh Chhabra (supra). the gold was recovered at the airport and SurjeetSingh Chhabra admitted the smuggling of the gold. In these circumstances, when Surjeet Singh Chhabra retracted from statement, the Hon'ble Supreme Court held that the statement made under Section 108 of Customs Act, even retracted, can be used against SurjeetSingh Chhabra. In the present case, the facts are different. 4.5 We find that the Supreme Court in Lakshman Exports Ltd. 2002 (143) E.L.T. 21 (S.C.) (supra) while considering proceedings under the Central Excise Act, 1944 has held that, a noticee has a right to cross-examine the persons making statements against the noticee. The relevant para of jud....
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....h it cannot be denied that the right of cross-examination in any quasi-judicial proceeding is a valuable right given to the accused/Noticee, as these proceedings may have adverse consequences to the accused, at the same time, under certain circumstances, this right of cross-examination can be taken away. The court also observed that such circumstances have to be exceptional and that those circumstances have been stipulated in Section 9D of the Central Excise Act, 1944. The circumstances referred to in Section 9D, as also in Section 138B, included circumstances where the person who had given a statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay and expense which, under the circumstances of the case, the Court considers unreasonable, it is clear that unless such circumstances exist, the Noticee would have a right to cross-examine the persons whose statements are being relied upon even in quasi-judicial proceedings. The Division Bench also observed as under :- "29. Thus, when we examine the provision as to whether the provision confers unguided....
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....ortunity of cross-examining the witnesses examined by that party. In the present case, neither any speaking order has been passed nor the respondent justified in not permitting the petitioner to cross-examine the above said eight witnesses. Thus, such attitude of the respondent shows that the petitioner was not given fair opportunity to defend their case, therefore, not providing an opportunity to cross-examine the above said eight witnesses, in my view, would violate the principles of natural justice. Accordingly, the impugned order is set aside and the respondent is directed to permit the petitioner to cross-examine the above said eight witnesses and pass appropriate orders on merits and in accordance with law. Such exercise shall be completed by the respondent within a period of 45 days from the date of receipt of a copy of this order. 9. In fine, for the reasons stated above, the writ petitions stand allowed. No costs. Consequently, connected miscellaneous petitions are closed." 4.6 From the above discussions and following the judgments cited above, we are of the considered opinion that the denial of cross-examination is unjustified. The decision relied by the Ld. A....
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.... CCE - 2020 (33) G.S.T.L. 419 (Tri. - All.) 4.9 It is well settled law that clandestine removals cannot be arrived at based upon the confessional statement of persons only. The statements itself are not sufficient for holding so. There is catena of judgments laying down that the inculpatory statements alone cannot be made the basis for arriving at a finding of clandestine removal. In a nutshell, it has been the constant stand of quasi-judicial and judicial appellate forums that for establishing the fact of clandestine removal, there need to be sufficient evidence on record leading to conclusive proof of production of goods, their removal from the factory by any mode of transportation and clandestine clearance to the buyers. Mere doubts, howsoever strong cannot take the place of evidence required to be produced by the Revenue. The onus to establish such clandestine activities, resulting in confirmation of demand is placed heavily on the Revenue and is required to be discharged by production of sufficient evidences. Further a case of clandestine removal cannot be upheld on the basis of certain statements alone as held in the case of Commissioner of Central Excise v. Saakeen Alloys....
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....d is itself not sustainable. There is no details of procurement of raw materials (except statement of the suppliers of packing materials) or details of clearance to various buyers (except the statements of five buyers), money payment, etc. We also find that neither the department nor said alleged buyer, packing materials supplier and transporters produced any details in the form of documents /records in support of their statements. Thus, in the facts of the present case, the examination of the packing materials suppliers, transporters ,the buyers and other persons whose statements were relied by department of was essentially required. As the examination and cross-examination have not been done in the course of the adjudication proceedings, in spite of Appellant requests, we are of the opinion that none of the aforementioned statements can be relied upon for proving the allegations against the appellants. After discarding the statements, as aforementioned, we find that other than the bald allegations, there is no other cogent and corroborative evidences on record in support of the allegation of the Revenue.There is a cantina of judgments laying down that the inculpatry statements al....
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....ngs, no evidence, much less corroborative evidence, has been adduced to show that input goods have been procured to manufacture goods for clandestine clearance. No efforts have been made by the investigating agencies to establish the existence of any unaccounted manufacturing activity in the form of unaccounted raw material, shortage of stock, shortage of raw material/finished goods, excess consumption of electricity, unaccounted labour payments, interrogation of buyers/transporters or any incriminating record/document to suggest any flow back of cash etc. The Revenue authorities in this case have failed to discharge the burden of proving the serious charge of clandestine clearance with cogent and clinching evidence. It has been consistently held that no demand of clandestine manufacture and clearance can be confirmed purely on assumptions and presumptions and the same is required to be proved by the Revenue by direct, affirmative and incontrovertible evidence, as has been held in the following cases :- • bihar foundary & castings ltd. V. Cce, ranchi [2019 (8) tmi 527-cestat, kolkata] • continental cement company v. Union of india [2014 (309) e.l.t. 411 (a....
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....s, sale of final goods clandestinely is necessary. The allegations are not sustainable in absence of evidences. CESTAT in case of CCE v. Shree Narottam Udyog (P) Ltd. [2004 (158) E.L.T. 40 (Tri.)] has dealt with the allegation of clandestine manufacture and removal of goods and held that settled law is that the charge of clandestine removal being a serious charge required to be proved beyond doubt on the basis of affirmative evidences. CESTAT in case of Jagatpal Premchand Ltd. v. CCE [2004 (178) E.L.T. 792 (Tri.) held that it is settled law whenever charge of clandestine removal made revenue has to prove assessee procured all raw materials necessary for manufacture of final product. The allegations are not sustainable if no investigation conducted by the revenue in respect of raw material essential for production of final goods and no evidence regarding removal of such final product brought on record by revenue. Similar view has been taken by the CEGAT in several other cases such as Jangra Engg. Works v. CCE [2004 (177) E.L.T. 364 (Tri.)], Premium Moulding & Pressing Pvt. Ltd. v. CCE [2004 (177) E.L.T. 904 (Tri.)], Vakharia Traders v. CCE [2004 (173) E.L.T. 287 (Tri.)], Nutech Poly....
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....cannot be sustained on such suspicion. 4.15 Without prejudice, as regard the duty confirmed on Pan Masala Containing Tobacco, commonly known as Gutkha , we find that during the search and panchnama proceeding there is no working machine was found by the department from the factory premises of Appellant. The Panchnama drawn at the factory and alleged godown of the Appellant has not described that how many machines in the factory of the Appellant were in working condition or were actually working and what the production capacity of each of those machines. Further working of the machines in the appellant's factory was not tested or certified to ascertain the production capacity of the machines installed. There is no record/ evidences to show that the appellant were working for manufacture of alleged Gutkha in the factory premises or any other premises. There is no evidence of additional employees having been employed to enhance the production, nor is there any evidence of excess wages having been paid to the existing employees. there is no evidence of purchase of main raw materials 'Betel Nuts', Tobacco, Perfume, Lime, etc. in cash, brought to factory, and used in unaccounted manuf....
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.... in the case of Commissioner v. Pandit D.P. Sharma [2003 (157) E.L.T. A201 (S.C.)]. To the same effect is another decision of the Tribunal in the case of S. Kotteswaran v. Collector of CE (Customs), Madras [1997 (91) E.L.T. 435 (Tribunal)]. It stands held in the said decision that mere non-accountal as to receipt of money is not sufficient so as to hold it as sale proceed of smuggled silver, the same is not liable to confiscation under Section 121 of the Customs Act. Further Tribunal in the case of Collector of Central Excise v. Sudhir Electronics [2000 (123) E.L.T. 1054 (Tribunal)] has held that inasmuch as the Indian currency is not one of the specified items under Section 123 of the Customs Act, Department has to establish the sale of the smuggled goods and the identity of the seller and the producer and confiscation of the same cannot be made solely on the retracted statement. Law is settled on the above issue in the absence of any affirmative, tangible and positive evidence. Therefore, we hold that the seized currency during the course of investigation cannot be confiscated without proving that the said seized currency is the sale proceeds of excisable goods cleared clandestin....