TaxTMI 
TaxTMI 
2022 (10) TMI 874
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....ts 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 Purva Enterprises to cover up their illegal transaction, wherein Smt. Gita Anil Govindbhai Metaliya,....
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....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, Partner of M/s. Micro Seal Packaging in his statement dated 11.10.2011 agreed to have sold 700 kgs of Flexi....
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....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 process, the matter was adjudicated vide Order-In-Original No. BVR-EXCUS-000-PR.COM-002 and 003 -17-18 dated....
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....gard 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 factory premises of the Appellant or from the premises in possession of the Appellant. 2.4 As regarding the duty confirmed on Pan Masala containing Tobacco, commonly known as ....
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....nless 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 both sides. 4.1 The appellant raised the issue of infraction of principles of natural justice on the part of the adjudicating authority by not permitting cross-examination of the witnesses sought by the appellant. It has been contended by the Appellants that this amounts to non-observance of the provisions of Section 9D of the Central Excise Act, 1944. They have also relied on case laws in which the Hon'ble High Court and Tribunal has held that the provisions of Section 9D will be e....
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....s 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. The legislative scheme, therefore, is to ensure that the statement of any person which has been recorded during search and seizure operations would become relevant only when such person is examined by the adjudicating authority followed by the opinion of the adjudicating authority then the statement should be admitted. The said provision in the statute book seems to have been made to serve the statutory purpose of ensuring that the assessee are not subjected to demand, penalty interest on the basis of certain a....
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....hhabra (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 judgment read as under: "In an adjudication proceeding which is adversarial in nature, a party adducing evidence through a natural person is required to allow cross-examination of such natural person, to the other side. In the present case apparently the prosecution was relying upon evidence adduced by natural persons in the proceeding. The prosecution, therefore, ought to have allowed such persons to be cross-examined. The petitioner made a request to the adjudicating authority for an opportunity to cross-examine. ....
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....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 powers or not, the conclusion is irresistible, namely, the provision is not uncanalised or uncontrolled and does not confer arbitrary powers upon the quasi-judicial authority. The very fact that the statement of such a person can be treated as relevant only when the specified ground is established, it is obvious that there has to be objective formation of opinion based on sufficient material on record to come to the conclusion that such a ground exists. Before forming such an opinion, the quasi-judicial authority would confront the assess....
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....ndent 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. Adjudicating authority are on different facts and distinguishable. Non-production of witnesses for cross-examination, it was held, is violative of principles of natural justice. All these judgments in the matter of cross-examination are at the stage of adjudication. The law, therefore, at that stage, need not be elaborated, as it is the right of an assessee in the event the Revenue seeks to rely on the statements of witnesses recorded by it and whose statements are sought to be relied upon at the stage of adjudication to make available the said witnesses for cross-exam....
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.... 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 Pvt. Ltd. [2014 (308) E.L.T. 655 (Guj.)] wherein Gujarat High Court rejected the appeal of the Revenue by making following observations in Para 10. "10. All the appeals are based predominantly and essentially on factual matrix. The Tribunal elaborately and very correctly dealt with the details furnished by both the sides and rightly not sustained the demand of Rs. 1.85 crores, which had no evidences to bank upon. Confessional statements solely in absence of any cogent evidences cannot make the foundation for levying the Excise duty on the ground of evasion of tax, much less the retracted statements. To ....
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....ssentially 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 alone cannot be made the basis for arriving at a finding of clandestine removal. As analysed from the facts presented in these cases under appeal, it is apparent that even the statements given are not giving any categorical details of the quantum of manufacture and clearance of non-duty paid items. Annexures to the show cause notice which stands confirmed in toto, cannot be considered as an admissible way of calculating duty liability under any provisions of law. 4.11 Further, the clandestine manufacture and removal of excisable goods is to be proved by tangible, direct, affirmative and incontrovertible evidences re....
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....he 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 (all.)] * balashree metals pvt. Ltd. V. Uoi [2017 (345) e.l.t. 187 (jhar.)] * cce, meerut-i v. R.a. Castings pvt. Ltd. [2012 (26) s.t.r. 262 (all.) = 2011 (269) e.l.t. 337 (all.)] * popular paints and chemicals v. Cce & customs, raipur [2018 (8) tmi 473 (tri. - delhi)] 4.13 The entries made in the Kaccha Chits may create doubt but it cannot take place of evidence. It is observed that the allegation of suppression of production and clandestine removal is a serious allegation and it has to be established by the investigation by affirmative and cogent evidence. CESTAT in the case of Sober Plastic Pvt. Ltd. v. CCE [2002 (139) E.L.T. 562 (T....
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....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 Polymers Ltd. v. CCE, Jaipur [2004 (173) E.L.T. 385 (Tri.)], CCE v. Sumangla Steels [2004 (175) E.L.T. 634 (Tri.)], CCE v. Sangamitra Cotton Mills [2004 (163) E.L.T. 472 (Tri.)], CCE v. Velavan Spinning Mills [2004 (167) E.L.T. 91 (Tri.)]. In the matter of K. Rajagopalv. CCE [2002 (142) E.L.T. 128 (Tri. - Mad.)] the Tribunal held that -Private notebooks not a conclusive piece of evidence to prove clandestine removal. No other corroborative evidence with regard to purchase of raw materials and sale and purchase by particular persons. Clandestine manufacture and removal not substantiated - Demand not sustainable.The ratio of these decisions is applicable in the instant case. Since....
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....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 manufacture of Pan Masala/Guthka in the factory premises, there being no further investigation of unaccounted purchases of supari, main ingredient. there is failure on the part of revenue to collect any evidence in relation to either procurement of raw materials by the appellant or production of huge quantity of final goods alleged as removed clandestinely to sustain the charge of clandestine removal.Hence, the impugned demand is not sustainable for lack of evidences. 4.16 With regard to the cash recovered from the residential premises of Shri Anil Govindbhai Metaliya, on going through the observations made by the learned Adjudicating Authority, we are in disagreement with that. The....
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....f 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 clandestinely. Therefore, we are of the considered view that confiscation of the seized currency of Rs. 17,50,000/- is not sustainable accordingly, cash of Rs. 17,50,000/- is ordered to be released to the appellant by setting aside the confiscation. 4.17 We also gone through the Judgments relied upon by the Ld. Departmental representative and noticed that the fact of each judgments varies from the fact of the present case, hence in our view as per facts of the present case these judgments are not applicable. 4.18 As regards the confiscation of the goods for which redemption fine has been imposed, we find that during the search proceedings at the factory premises of Appellant, finished goo....