TaxTMI 
TaxTMI 
2022 (1) TMI 1296
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...., M/s S K Supply Agency, Nadeem Ahsan Khan, Shyam Sunder Chaurasia, M/s Singhal Agencies, Ravindra Kumar, Gopal Chaurasia, Ashok Kumar Jain, Waziruddin, Sushil Kumar Gupta, Prashant Agarwal, M/s New Vikas Goods Carrier, M/s Shiva Group of Agencies, Subhash Mishra, Uma Shanker Awasthi, M/s Kanchan Udyog, M/s Trimurti Roadlines, Ms Gopinath Sahu, M/s Hari Om Khadi Gramodyog Sansthan, Pawan Kumar Agarwal, M/s Naseemuddin and Sons, Shri Rajesh Agarwal, G N Chaudhary, Atal Behari Bajpai, Samar Bahadur Singh, Shiv Prakash Trivedi, Ram Kumar Sharma, M/s Keyman Laminators Pvt Ltd, Surya Kumar, M/s Bihar Carrying Company P. Ltd, M/s Abhishek Sales, Jayan Kumar Versus Commissioner of Central Excise, Kanpur. HON'BLE MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) AND HON'BLE MR. P. ANJANI KUMAR, MEMBER (TECHNICAL) For the Appellant : Shri Hari Om Tiwari, Advocate, Shri Amit Awasthi, Advocate & Shri Sandeep Saraogi, Chartered Accountant For the Respondent :Shri Gyanendra Kumar Tripathi, Shri T.M. Siddiqui, Authorised Representatives ORDER ANIL CHOUDHARY: These cross appeals arise from the common order-in-original dated 07.09.2020, whereby four show cause notices have been adjud....
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.... - 1,000,000 19 E/70522/2020- EX[DB] Bihar Traders, Ranchi - - 1,000,000 20 E/70516/2020- EX[DB] Poona Zarda Store, Pune - - 1,000,000 21 E/70090/2021- EX[DB] Nath and Co, Varanasi - - 1,000,000 22 E/70539/2020- EX[DB] Gopinath Sahu, Jamshedpur - - 1,000,000 23 E/70029/2021- EX[DB] Abhishek Sales, Lucknow - - 1,000,000 24 E/70514/2020- EX[DB] Chetan Enterprise, Patna - - 1,000,000 25 E/70520/2020- EX[DB] Shiv Babu Chaurasia, Bhadoi - - 1,000,000 26 E/70519/2020- EX[DB] Mohan Lal and Sons, Mirzapur - - 1,000,000 27 E/70518/2020- EX[DB] D S Enterprise, Chopan - - 1,000,000 28 E/70523/2020- EX[DB] S K Supply, Gopiganj - - 1,000,000 29 E/70515/2020- EX[DB] Purvanchal General Store, Yusufpur - - 1,000,000 30 E/70086/2021- EX[DB] Kaka Enterprise, Allahabad - - 1,000,000 31 E/70542/2020- EX[DB] Naseemuddin and Sons, Sasaram - - 1,000,000 32 E/70529/2020- EX[DB] Ashok Kumar Jain, Kolkata - - 500,000 33 E/70089/2021-....
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.... E/70505/2020- EX[DB] Seema Enterprises 298,262.00 - 298,262.00 S No. Order in respect of Demand cum-scn issued vide C No. 121/INT/DGCEI/HQ/07/4153- 4156 dated 28.05.2008 Duty demanded Redemption fine Penalty imposed 2 E/70505/2020- EX[DB] Seema Enterprises 160,377.00 975,000.00 160,377.00 3 E/70503/2020- EX[DB] Raghunath International - 0 5,000.00 4 E/70029/2021- EX[DB] Abhishek Sales - - 50,000.00 5 E/70090/2021- EX[DB] Nath and Co, Varanasi - - 100,000.00 S No. Order in respect of Demand cum-scn issued vide C No.121/INT/DGCEI/HQ/07/9033-40 dated 07.11.2008 Duty demanded Redemption fine Penalty imposed 6 E/70504/2020- EX[DB] Shankar Enterprises 2,160,745.00 2,250,000.00 2,160,745.00 7 E/70505/2020- EX[DB] Seema Enterprises 340,019.00 200,000.00 340,019.00 8 E/70026/2021- EX[DB] Keyman Laminators 8,501.00 12,000.00 8,501.00 9 E/70028/2021- EX[DB] Bihar Carrying Co. - - 500,000.00 2. The appeals of the other appellants (arising from common impugned order) were also he....
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.... 175840/- 43612/- 2 gms. current Gutkha 1710.28 kgs. (92 bags) Rs.1/ 855140 290662/- Sir 1000 Black Gutkha 913.92 kgs. (24 bags) Rs.1/ 456960/- 155321/- Betal Nuts -605 kgs. Not applicable 27225/- N/A 1757.32 Kgs. of laminates (packing material) Not applicable 237238/- 34210/- 3200 Ns. Of Zipper pouch. Not applicable 4,750/- 685/- 6 09.05.08 M/s Seema Enterprises, 123/778, Fazal Ganj Indl. Area, Kanpur. 406.24 kgs. of laminates of Sir Gold Finest Gutkha (packing matrial) Not applicable 55,655/- 8,025/- 7 09.05.08 Goods pertaining to M/s Key Man Laminators (P) Ltd., 66-B, Co-operative Indl. Estate, Kanpur at the factory gate of M/s Seema Enterprises, 123/778, Fazal Ganj Indl. Area, Kanpur. 400 Kgs. of printed laminated rolls of Sir brand Gutkha (packing material) Not applicable 58,954/- 8,501/- Vehicle No. UP 78 AN-4563 (Vikram Tempo) Not applicable 30,000/- N/A 8 09.05.08 M/s Bihar Carrying Co. P. Ltd., 133/165 P, Rattupurvwa, Transport Nagar, Kanpur. Sir Gold finest Gutkha - 3394.56 Kgs. (96 bags). Rs.1/- 1684800/- 572664/- 9 09.05.08 ....
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....e cleared without payment of duty. The excess stock of duty paid raw materials being Laminates and Zipper Pouches, were also seized. 6. During the search at M/s Seema Enterprises on 9.5.2008, on physical verification - stock taking, some quantity of 406.24 kg. of laminates valued at Rs.55,655/- was found in excess than the recorded quantity in Form-IV Register. Further, on verification of Form-IV Register maintained by M/s Seema Enterprises revealed that, the last entry for receipt of laminates was made on 8.5.2008 and the last entry for issue of laminates was made on 7.5.2008. Thus, it appeared to Revenue that the appellant - M/s Seema Enterprises purposely kept their stock register incomplete, so as to manipulate with ease, in order to evade payment of duty. 7. During the course of search of M/s Seema Enterprises on 9.5.2008, a Tempo-Registration No.UP78AN4568, loaded with 400 kgs. of printed laminate rolls and outer packing of "Sir Brand‟ entered the said premises. It was found that the said tempo with the goods was not accompanied with any challan/bills or invoice. Mr. Ashish Sharma, Driver of the Tempo stated that he had loaded the said goods from the factory premi....
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....6/-). 11. Transportation by New Vikas Goods Carrier, Kanpur On the basis of Lorry challans maintained by M/s.New Vikas Goods Carrier, Kanpur and the disclosures made in this regard, a Chart showing details of Lorry Challans and its comparison with its parallel Lorry Challans was prepared, which revealed that M/s. New Vikas Goods Carrier, Kanpur had transported 3,040 bags of "Sir 2 gms Black Gutkha‟ and 46,960 bags of "Sir Gold Gutkha‟ to Patna, Muzaffarpur, Sasaram, Gaya, etc. during the period from Feb., 2005 to April, 2005 and April, 2006 to April, 2008, respectively, which appeared to be cleared clandestinely without bills by the manufacturers of Sir Brand Gutkha/Pan Masala. Thus, M/s. New Vikas Goods Carrier, Kanpur appeared to have transported 50,000 bags of Sir Brand Gutkha/Pan Masala during the period from Feb., 2005 to April, 2008, which were cleared clandestinely without issuing bills by the manufacturers. The total duty evaded by M/s. RIL, M/s. Seema and M/s. Shankar on 50000 bags of Sir 2 Black Gutkha/Sir Gold Gutkha, transported by M/s. New Vikas Goods Carrier, Kanpur was calculated to Rs.29,78,41,226/- [M/s.RIL : Rs.21,17,77,322/- M/s. Seema : Rs. 6,8....
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....ial in collusion with the said suppliers, for clandestine manufacturing and sale without payment of duty. Further, the bills issued by aforesaid supplier firms, have no correlation with the actual supplies made to M/s RIL, M/s Seema and M/s Shanker. 15. Transportation made through Indian Railways In the searches conducted at the Lucknow, Kanpur and Jodhpur Railway stations, resulted in the seizure of consignments of Sir Brand Gutkha, further enquiries were conducted from various persons from which also it appeared that the manufacturers of Sir Brand Gutkha were transporting clandestinely cleared Gutkha from their factory to dealers by Railways. 16. During the investigation, it appeared that the manufacturers of Sir Brand Gutkha/ Pan Masala namely, M/s RIL, M/s Seema and M/s Shanker during the period September' 2004 to May' 2008 (upto07.05.2008) have clandestinely cleared 44,410 bags of Sir Brand Gutkha/ Pan Masala, without payment of duty from their respective factories, to their dealers based in Howrah, Jodhpur, Jaipur, Pune, Hubli. Based on the quantity of 44,410 bags of Sir Brand Gutkha/ Pan Masala cleared clandestinely by M/s RIL, M/s Seema and M/s Shanker, on ....
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....also perused the evidences, which have been filed in separate paper books, which were referred at the time of hearing. 23. Ld. Counsel for the appellant /assessee urges as follows:- 23.1 The main SCN dated 01.10.2009 alleged evasion of duty basically on three alleged modus-operandi of evasion and raised demand of Central Excise duty under three counts, which have been adjudicated as under: Count A - Clandestine removal of goods (Sir Brand Gutkha/ Pan Masala) allegedly transported through Railways - Total Duty demanded Rs. 33,18,54,918/-, quantified on the basis of 2993 Railway Receipts allegedly used for transporting the goods. Amount of Demand confirmed under the impugned order Rs. 13,69,17,210/- worked out on the basis of 1005 Railway Receipts (out of total 2993 RRs) which are claimed to have been found by the Respondent Commissioner to be supportive of the Department‟s case. Count B(i) - Clandestine removal of goods (Sir Brand Gutkha/ Pan Masala) allegedly transported through Road Transport Co. namely M/s Bihar Carrying Co., total duty demanded in the SCN : Rs. 12,72,32,657/-quantified on the basis of 21,879 bags of Sir Brand Gutkha, allegedly transported throu....
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..../3rd of the RRs) cannot be said to be fulfilling the four point indicator based criterion relied upon by the investigating officers to identify and segregate the RRs and "Forwarding Notes‟ allegedly used for transporting clandestinely removed goods, through the Railways. He has been manifestly adamant in taking a prejudicial in upholding the sanctity of the four point indicator based criterion and erroneously confirmed the demand of duty amounting of Rs. 13,69,17,210/- quantified in relation to 1005 RRs/F.N.‟s. 24.2 As a matter of fact, the Respondent Commissioner has in the impugned order, acknowledged that the SCN issued to the Appellants was itself gravely flawed and defective in as much as the total demand of duty of Rs. 33,18,54,918/- was not based on 2993 RRs, which as stated repeatedly in the SCN, were allegedly segregated and identified on the basis of identification criterion, but was actually based on 2583 RRs. only as relevant details of 410 RRs along with serial nos. for the same were omitted to be mentioned in the chart listing 2993 RRs, and enclosed as Annexure 9 to the SCN. 24.3 The fact that xerox copies of only 2583 RRs and Forwarding Notes were m....
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....urse of cross examination in the adjudication proceedings), the demand in part has been upheld. 26. On the issue regarding Admissibility and reliability of third party documents such as RRs and FNs etc. alone to establish evasion of duty :- 26.1 The sole and exclusive basis of the entire case made out by the department against the Appellants rests on xerox copies of Railway Receipts and Forwarding Notes procured through dubious methods from the Railway Authorities. Respondent Commissioner failed to appreciate the Appellant‟s contention that Railway Receipts and the FNs are mere transport documents created by the Railways or Railway Booking Agents and none of such documents or copy of the same, had been recovered from the possession of the Appellants. The Respondent Commissioner has failed to record any finding on the Appellant‟s contention that all such documents being the third party documents, presumption as to admissibility of such documents as envisaged under Section 36A of the Central Excise Act, 1944, is not available, and therefore, the said third party documents are not at all admissible and reliable as evidence against the Appellants unless the Department....
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....ontention that the multiple oral statements of various persons relied upon by the department were not only full of factual errors, inconsistencies and inherent contradictions manifest in themselves, but were also contradictory amongst and between themselves, as also vis-à-vis the facts and evidences placed on record. The veracity, truthfulness and voluntary character of these statements was therefore clearly questionable and hence being devoid of requisite creditability, no reliance could be placed on all such oral statements as mutually corroborative evidence, to lend support to any of the inferences and allegations drawn up on the basis of such statements. Furthermore, each one of the aforesaid persons, during the course of their respective cross-examination, categorically retracted from their original statements and clearly affirmed that their original statements were involuntary, having been obtained under "duress‟ as per the "dictates‟ of the officers. 26.5 Further, the Respondent Commissioner has recorded a factually incorrect and untenable finding that a clear link gets established between the Appellants and the relied upon Railway Receipts by making a ....
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.... emphasise that while recording his observations in Para 89(6) of the OIO, the Respondent Commissioner has merely attempted to establish and uphold the entire case made out by the department by solely and exclusively relying upon the various oral statements, as originally relied upon in the SCN, thereby wholly brushing aside the contentions put forth by the Appellants. Keeping in view the legal imperative in terms of the mandatory provisions stipulated under Section 9D of Central Excise Act, 1944, the depositions made during their respective cross examination by the persons on whose statement reliance was sought to be placed by the department, needed to be necessarily given due consideration and weightage, and not out-rightly dismissed as has been done by the Respondent Commissioner. 26.9 In support of the above contention, the Appellants placed reliance on the following judgements:- (i) Sainul Abideen Neelam Vs. Commissioner of Customs (import), Chennai reported in 2014 (300) ELT 342 (HC - Madras). (The Hon'ble High Court have distinguished the judgement in the case of Surjeet Singh Chabra Vs. UOI [1997 (89) ELT 646 SC], relied by the Respondent Commissioner) ....
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....arranged or undertaken transportation of any finished excisable goods through railways. 27.4 The Respondent Commissioner has not at all discussed or even touched upon the issue arising from the defence contention that all the sales of finished excisable goods were invariably at the factory gate at ex-factory price and therefore, there did not arise any question of any arrangements being made by the Appellants for transportation through Railways, [even though the Respondent Commissioner has touched upon the issue regarding the sales being at ex-factory gate in the context of transportation of finished goods by road transport companies]. 27.5 No factual evidence whatsoever, whether direct or supported through corroborative evidence, had been relied upon in the SCN to establish link between relied upon RRs/Forwarding Notes and the Appellants or even otherwise to show any business dealings by the Appellants, or any of their employees with Railways. The investigating officers, had clearly overlooked or disregarded the facts evidently manifest during the investigations and acknowledged by them in the SCN, that the Appellants have been selling their goods with the place of delivery ....
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....and Jodhpur Railway Stations. 27.8 The whole thrust and focus of the Respondent Commissioner while recording his observations and findings on the allegation concerning transportation of clandestinely removed goods through Railways is almost entirely and exclusively on oral testimonies of large number of persons, which included mainly the railway booking agents. The Learned Respondent Commissioner failed to appreciate the numerous defence contentions put forth by the Appellants to demonstrate and establish that the entire foundational basis of the alleged modus-operandi of evasion is totally base-less and the whole case has been built up on totally fictitious and bogus exercise to link up 2993 RRs with the Appellants, on the basis of tutored statements involuntarily obtained from the Railway Booking Agents, their employees, tempo drivers and certain other persons. 28. In spite of such categorical denial by the appellant and their responsible staff, the Revenue have not even got the documents verified from the handwriting experts and/or "Government examiner of Questioned Documents‟. Further, it is urged that show cause notice does not disclose or explain clearly the metho....
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....me, no such copy was provided. Thus, in absence of legally authenticated copies of the Railway receipts and forwarding notes, the alleged demand in dispute is fit to be set aside. Further, no correspondence(s) entered by the Investigating Officer with the Railway Officers have been brought on record as relied upon documents (RUD). There is no such requisition letter brought on record issued by the Revenue Authority for supply of any documents and/or criteria for identifying and supplying the copies of such RRs and Forwarding Notes, from amongst thousands and lakhs of such documents lying with the Railways. Thus, the allegation of Revenue is based on some hypothetical model for evasion of duty and thereafter, with pre-meditated attitude, some documents have been procured from the Railways and with the help of the statements of some of the persons obtained under undue influence and coercion, the allegation has been levelled against the appellant of clandestine removal. 30. The appellant have urged before the ld. Commissioner, in the course of search on 1.12.2007, no incriminatory documentary evidence was found indicating any clandestine activity. Even in the subsequent search, aft....
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....veral RRs with the help of such booking agents is a wild guess, having no legs to stand, "Save and Except‟ the incriminating statements of such persons, recorded by the Revenue under undue influence. Thus, show cause notice on this score is presumptive and the demand is not sustainable. As per the allegation in the show cause notice, for the first time, it was D.K. Gupta alias Pappu Mitha, Railway Booking Agent, who suggested criteria (Four Point) on 24.09.2008 to the investigation officers being - (i) Handwriting of the Assistants on the Forwarding Notes, (ii) Destination, (iii) Weight per bag; and (iv) description of goods, as shown by them on the Forwarding Note. The said D.K. Gupta also suggested the name(s) of the destination(s) to which Sir Brand Gutka is dispatched, the average weight per bag of each variety of gutka/pan masala and the description of the goods mentioned on the Forwarding Note from time to time. Shri D.K. Gupta also stated that he could recognize the handwriting of the Assistants on the forwarding notes. Similar statement was also given by another agent- Shri J.K. Rathore, who was working under one Shri Binda Tiwar....
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....a was also a supplier of raw materials to the appellants/manufacturers, mainly of supari. After adjusting the amount towards transportation expenses and supply of supari, he was remitting the balance to these manufacturers. These facts have been corroborated in the statement of Shri Alok Krishan Gupta, recorded during investigation. The average weight of one jute bag of "Sir Brand Gutka‟ or "Sir Mini Black‟ is approximately 45-46 kg. that of Mini Sir Mawa or Sir Current Gutka, is 42 kg and 45-46 kgs respectively, as have been stated by Shri Jayan Kumar (employee) and also corroborated by Shri Dilip Kumar Gupta, Booking Agent. It is further urged by the ld. Departmental Representative that the goods were despatched under code words through Railways, such as "Zarda‟, "advertisement material‟, etc., instead of the actual description of the goods. The manufacturers had contacted one Shri Radhe Radhe @ Binda Tiwari for despatch through Railways, who further arranged the transportation with the help of Bada Bablu @ Jitendra Rathore and Pappu Mitha alias Dilip Kumar Gupta, facilitated the transportation to various destinations like Howrah, Jodhpur, Jaipur, Pune, et....
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.... corroborated with the statement of Shri Binda Prasad Tiwari alias Radhe Radhe, Shri Dilip Kumar Gupta alias Pappu Mitha and Jitendra Kumar Rathore alias Bada Bablu. 33.4 It is further urged that Shri Binda Prasad Tiwari alias Radhe Radhe in his statement recorded on 21.08.2008 and 06.10.2008 has, inter alia, stated and admitted that he was earlier getting Rs.35/- per bag for booking through Railways, which was increased to Rs.45/- per bag. He was getting this amount from Shri Alok Krishna Gupta to meet out the expenses of booking, his helpers and coolie, etc. He further stated that Shri Jayan Kumar and Shri Surya Kumar used to accompany the goods coming from the factory to the Railway Station through tempo and these were delivered to Mr. Pappu Mitha and his staff. He was to settle his accounts for his services through Shri Alok Krishan Gupta. He was also in touch with Shri Rajesh Agarwal. Further, stated that the goods coming to the Railway Station for booking was never accompanied by invoice or bill. The Railways never asked for such documents while booking the goods. The helpers/assistants of Mr. Pappu Mitha used to mention the description of the goods, consignor/consignee as....
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....r handwriting. 33.6 Ld. Departmental Representative further urges that Shri Jitendra Kumar Rathore alias Bada Babloo in his statement recorded on 9.5.2008, 6.10.2008 and 4.4.2009, inter alia, stated that his main work was to get the bags of the finished products unloaded at the Railway Station and then take the same inside and thereafter the preparation of the documentation, for which there is a team of 5-6 persons/boys, who prepared the forwarding notes. Whereas he himself kept the account of the dispatch to various destinations on daily basis, delivered the goods and the forwarding notes to the Railway Office, where the packages are counted and weighed and thereafter, the RRs are prepared. Thereafter ink markings are affixed of the RRs Nos. on the packages. Thereafter, they paid/deposited the freight amount and also got the goods loaded on the respective trains. Usually, the "Sir Brand‟ goods are sent to Howrah, Jodhpur, Jaipur, Pune, Vardhman and Hubly. Usually the consignor/consignee names are fictitious and the description is mentioned as supari and supari mix, etc. All the work is handled by Shri Radhey Radhey, on the directions of Shri Alok Krishan Gupta and Shri D.....
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....es was thereafter shown to the concerned booking agents and assistants viz. Shri J.K. Rathore, Paras, Vikas Kanojia, Rakesh Gupta, Taukir Khan. These persons identified their handwritings on the forwarding notes, which were prepared by them for booking of the goods and accordingly, the charts were prepared compiling the data. Based on such parameters, the quantum of clandestine clearance, cleared or transported through Railways was calculated. 33.9 Ld. Commissioner further observed that the allegation of Revenue is not based on the statements alone but is corroborated by the evidences in the form of seizure of the goods at the 3 Railway Stations, being the goods of "Sir Brand‟, which were not accompanied by any bills/invoice or duty paying documents. 33.10 As regards the objection of the appellants/ manufacturers that handwriting of the person cannot be affirmed and certified with certainty, merely on the basis of the visual examination of Xerox copy or photocopy, unless the document is sent for Forensic testing and scientific verification. Ld. Commissioner observed that the concerned persons /booking agents and his associates have confessed the modus operandi in their ....
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....ctness of such plea. 33.13 As regards the plea taken by the appellant/ manufacturers, admittedly, the documents being relied upon by the Revenue are Xerox copy of the third party document, which have not been found or recovered from the possession of the appellant. Such documents have been collected by Revenue from third parties and thus, presumption as to the admissibility of such documents as envisaged under Section 36 A of the Central Excise Act is not available. Hence, it is for the Revenue to establish its case based on the third party documents, which are normally not admissible, nor a presumption available in law against the appellant. Ld. Commissioner observed that the third parties‟ documents are corroborated in view of the statements of various persons as aforementioned. He further observed that these statements are not contradictory to each other and rather corroborative to each other. It is also observed that the fictitious description of the goods as well as the code description were also found on the consignment/goods seized by Revenue at Kanpur, Lucknow and Jodhpur Railway Stations and thus, the allegations stand corroborated. 33.14 Ld. Commissioner out o....
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....Brand Gutka/Pan Masala‟ were being cleared clandestinely without payment of duty and then booked for transportation, among others, through Bihar Carrying Co. Pvt. Ltd. ("BCC" in short) to various destinations particularly Ranchi and Tata Nagar. Instead of preparing the normal GRs Note, the goods were dispatched on JST slips by mentioning description of goods in code like H.L. Cloth, Mouth Freshner, Supari, Meetha Masala, under fictitious names of consignor and consignee. Since December, 2007, the practice of use of JST slips were discontinued. Thereafter, in the subsequent period from Feb., 2008 to April, 2008, it is alleged that the goods have been transported through M/s. BCC by describing the goods in the Goods Manifest as "Kachri Papad‟. Total demand proposed for the period April, 2006 to April, 2008 was Rs.12,72,32,657/-. 34.1 Ld. Commissioner relied upon the statement of the staff of the transporter, wherein they have stated that they were transporting the "Sir Brand Gutka/pan masala" under JST slips as well as for some other brands. Some of the dealers mentioned in the JST slips, which were also found in loading registers, which contained the details of all th....
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....i, tobacco, katha and packing materials by the appellants /manufacturers. He used to get instructions either from Shri Rajesh Agarwal or Mr. Shri Prakash Agarwal. He also agreed to the quantification as per the charts prepared by the Revenue on the documentary as well as oral information from the premises of BCC. The statements of Shri Uma Shankar Awasthi, Manager, BCC, Kanpur was also corroborated by Shri R.P. Singh-Booking Clerk, BCC at Kanpur. Further, Revenue made follow-up investigation wih Mr. Naseem Ahmed, Partner of Bihar Trader , Ranchi, who also in his statement admitted that he was in constant touch with Shri Rajesh Agarwal, the Authorised Signatory/Manager of Sir Brand Products and, also admitted to be receiving clandestinely removed goods of "Sir Brand Gutka/Pan Masala‟. He also stated that they were also receiving part of the goods along with invoices. He also stated that he used to visit Kanpur once or twice a month to hand over the cash to Shri Alok Krishan Gupta. 34.2 Further, Shri Narayan Sahu alias Babla, Proprietor of M/s. Gopi Nath Sahu, Tata Nagar was also examined, wherein he also stated that he was receiving "Sir Brand‟ goods both with bills a....
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....Shri R.P. Singh in their statements have mentioned and on perusal of the resumed records - JST slips, loading registers, goods manifest and private diary pads, wherein both these destinations (Ranchi and Tata Nagar) are apparent. It was further observed that although "Sir Brand Gutka/Pan Masala‟ was being transported only to Ranchi and Tata Nagar, however, three more brands viz. "Tiranga Gutka‟, "Pan Parag Gutka‟ and "Madhu Sweet Supari‟ were also being transported to the same two destinations i.e. Ranch and Tata Nagar. Therefore, in such a situation, segregation of "Sir Brand Gutka/Pan Masala‟ solely on the basis of the destination alone is not possible. 34.4 The Adjudicating Authority further found that description code is erroneous inasmuch as the codes for goods are the sole pin pointing criteria for identification of different brands of Gutka/Pan Masala. The error in reproducing of description code mentioned in 50 available JST slips, against the corresponding entry in loading registers, puts a serious question mark on the reliability of identification with the help of the loading registers. It is alleged that specific codes are allotted to spe....
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....- Order in Original No. 22/Commissioner/ 2011 dated 22.09.2011 (manufacturer of pan masala/ gutka), wherein under similar facts and circumstances, the "loading registers, bill books and goods manifest registers‟ were held to be not reliable documents. Further, the ld. Commissioner has over-looked that the description of goods in the transporter‟s documents is "kachri papad‟ (in the "goods manifest‟) which does not constitute even a prima facie reliable evidence to conclude that "Sir Brand Gutka/Pan Masala was being transported clandestinely by BCC. Apart from the goods manifest, no other records such as loading registers, lorry receipt/bill book have been relied upon to corroborate that the "Sir Brand Gutka/Pan Masala was being transported in the guise of Kachri Papad. 35.2 The ld. Counsel for the appellant further urged that the alleged modus operandi of transporting the "Sir Brand‟ goods under the guise of "Kachri Papad‟ is based on conjectures and surmises and the demand is presumptive. There is admittedly no evidence that the appellants were packing their products with the outer package labelled as "Kachri Papad‟. In spite of two sea....
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....t prepared by Revenue in consultation with the staff of NVGC. 36.1 Further, Sh. Alok Krishna Gupta, Director of M/s B. G. Products also agreed with the statement of Sh. Subhash Mishra of NVGC, as well as the quantum of clearance calculated on the basis of documents of the transporter. 36.2 Shri Subhash Mishra in the statement recorded under Section 14 on 16.05.2008, 04.10.2008 and 31.08.2009 inter alia stated that certain parties of Kanpur, who are dealers of Kachri Papad used to book "kachri‟ and "pisa bair‟ through their transport. But mostly the description "kachri‟ and "pisa bair‟ are used to transport pan masala/ gutka which do not have any supporting bill/ invoice with them. They usually used the description "pisa bair‟ in the challan made for transportation of Sir brand gutka/pan masala. They do not use the word "kachri‟ for the consignment of sir brand goods, but used it for other consignors. On receipt of the goods from the consignor/ manufacturer, they used to issue cover challan by mentioning the goods as pisa bair. They used to load 60 or 80 bags of sir brand gutka alongwith other goods of different consignors in one truck. For ....
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....e, it is evident that the appellants/ manufacturers were engaged in the unaccounted production and clandestine clearance with the connivance of other persons by adopting a unique modus-operandi/ device for transport of such clandestinely cleared sir brand gutka/ pan masala. The appellant / manufacturer have been allegedly booking their clandestinely cleared goods under description "pisa bair‟ through NVGC, which is evident from the records of the transporter, but still the Adjudicating Authority found the exercise of identification and segregation done as arbitrary and not being precise to clearly distinguish the entries relatable to these manufacturers. It is further urged that the Adjudicating Authority found that there are mutually corroboratory statement of co-noticees, taken/recorded on different date and time. Evidently, the description - "pisa bair‟ in the transporter‟s record should have been definitely considered as clandestine transportation of sir brand gutka/ pan masala. 38. TRANSPORATION BY M/S TRIMURTI ROADLINES (TRL in short) It was alleged in the show cause notice that the appellant/ manufacturer have also clandestinely removed and transporte....
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....stigation was not voluntary and was given under duress, and they have signed on the dotted lines, under pressure. Further, inspite of search at the premises of the appellant/ manufacturers no incriminating documents or any original/ duplicate copy of any GR/ bilty have been found or recovered. Learned Counsel emphasized that the premises of the appellant/ manufacturer was searched twice by the Revenue officers. 40.1 The allegation in the show cause notice is that TRL used to send their trucks alongwith original & duplicate copy of GR/ bilty to the factory premises of the appellant. The trucks were loaded which the finished goods manufactured by the appellant. In view of categorical denial by the appellant/ manufacturers to have resorted to any clandestine clearance - transportation through TRL, the demand have been wrongly confirmed only on the basis of third party record, in which also there is no mention of the name of these appellant manufacturers either as consignor or consignee. 40.2 Learned Counsel further urges that the appellant have categorically stated that they have sold their goods at the factory gate at ex-factory price, which have not been found untrue. It was t....
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....es pertaining to the accounted and unaccounted goods. None of the tempo Driver examined, in their respective statement mentioned that they transported the goods of the appellant - manufacturers to godown of TRL. 40.2 Supporting the findings of the ld. Commissioner, the ld. AR for Revenue urges that the Adjudicating Authority after appreciating the entire evidence on record both documentary and the statements, have rightly concluded that TRL have transported 47660 bags. of Sir mini black pan masala, 1750 bags. of Sir mini pan masala, 190 bags of sir gold gutka to various cities like Varanasi, Allahabad, Bhadohi etc. during the period April, 2005 to April, 2008, which were not duty paid and clandestinely removed from the factory of RIL and Seema. 40.3 It is further urged that the Adjudicating Authority have observed that there is frequency of telephone calls between the key person(s) namely Sh. Rajesh Agarwal, the Manager-cum-Authorised Signatory, with Sh. Alok Gupta the sole distributor for entire U.P. on the landline numbers of all the three manufacturing units, with dealers, raw material and packaging material supplier and also Mr. Sri Prakash Agarwal. 41. Regarding deman....
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....Rs. 2,37,238/- and Rs. 4,750/- respectively, were seized under punchnama along with 605 KG of betel nuts on the reasonable belief that the same were unaccounted and stored with intention to indulge in clandestine manufacture and removal. Thus the allegation is self contradictory, as admittedly there is no shortage. 41.4 Therefore, it is urged that no demand of duty/reversal of cenvat credit can legally be made merrily on the basis of alleged detection of shortage in the stock of said dutiable inputs. That the demand is contrary to the facts on record, the same is fit to be set-aside. Further the allegation of having removed said dutiable inputs - laminates from the factory, without reversal of cenvat credit is wrong and not tenable. 42. Regarding demand of duty Rs. 5,36,99,135/- on M/s Shanker raised in relation to alleged clandestine clearance on alleged receipt of packing material (outer pouches) received from Vinayak Ultraflex Pvt Ltd. Demand dropped by learned Commissioner. 42.1 The show cause notice proposed the aforementioned demand against the appellant manufacturer - M/s Shanker, on the allegation that the appellant appears to have received clandestinely 24,30,540/....
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.... strong, cannot take place of proof. He further held that the investigation has not brought proof beyond reasonable doubt to substantiate the allegation of clandestine removal, based upon monthly manufacture of outer laminate from holographic films and resultant presumable monthly consumption in manufacture and clandestine clearance by M/s Shankar. Therefore, Learned Commissioner held that the duty have been demanded for these two months purely on the basis of hypothetical/mathematical calculation on the assumption that the entire procured material/laminate was consumed or utilized to produce final products, which have been clandestinely cleared. Accordingly, in absence of corroborative evidence on record, learned Commissioner dropped the demand as well as the penalty. 42.3 Learned Counsel urges that Aanand Sales is a trading concern and proprietorship of Mr. Dinesh Dwivedi. The Revenue have showed resumption of one CPU after drawal of Panchnama. Learned Counsel states that the Panchnama have been prepared on 30th June 2009 on the computer, and subsequently, there has been interpolation, the word "CPU‟ have been added or inscripted by the intelligence/authorised officers, ....
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....tude of evasion committed by the appellant manufactures was well planned and equally well executed. Such meticulous planning would not have been possible by the responsible person of the three manufacturers/appellants, without the active connivance of the key persons including Mr. Sri Prakash Agarwal. 42.7 The Counsel for the Appellant manufactures submits that the learned Commissioner have taken the correct view and rightly dropped the demand which is wholly presumptive. He further urges that there is no merit in the appeal of Revenue contesting the dropping of the demand. Admittedly, Revenue had proposed the demand on the basis of one element of production - alleged receipt of unaccounted laminates, without corroboration as regards the several other items/ inputs required for production. Learned Counsel also relies on the following Rulings in the case of - i) Flavel International Vs. CCE 2016 (332) ELT 416 (Delhi-HC) ii) Arya Fibres (P) Ltd. Vs. CCE 2014 (311) ELT 529 (Tri.-Ahd.) iii) Continental Cement Co. Vs. UO.I. 2014 (309) ELT 411 (All.-HC) 43. Regarding, imposition of penalty on the three manufacturing concerned as well as the other appellan....
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.... 43.3 Further, there is no co-relation established as to installed capacity to manufacture the alleged excess quantity, presumed to have been clandestinely removed. 43.4 The allegation of clandestine removal cannot be upheld merely on the basis of third party or transporters document. The Revenue has not brought on record conclusive evidence as to proof of production, alongwith evidence of availability of matching raw materials, power and labour, etc. There is no evidence that the alleged quantity was actually manufactured and/or could have been manufactured by the appellant manufacturers. Reliance is placed on the ruling of the Hon‟ble Patna High Court in CCE vs. Brims Products 2011 (271) ELT 184 and also on the ruling of M.P. High Court in Union of India vs. M.S.S. Food Products Pvt. Ltd., 2011 (264) ELT 165. He further stated that the charge of clandestine removal must be corroborated by independent and unimpeachable evidence such as purchase or source of excess raw material, excess consumption of electricity/power, transport or delivery of goods to consignees/ purchasers as mentioned in the invoice, flow back of funds etc. The burden to prove the charge of clande....
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....Neither the appellant have claimed such goods or taken any provisional release. It is not the appellant - manufacturer‟s, look out, as to how the buyer of the goods has arranged for transportation. In case of goods seized outside the factory premises, the presumption is that such goods are duty paid. It is the buyer of the goods, who is required to lead evidence in case such goods are found in his premises or he claims ownership of the goods lying with the transporter. The appellant manufacturer is only responsible in case, they are the consignor or the consignee of such goods. Revenue has not brought any evidence on record that such goods were actually dispatched by the appellant - manufacturers, save and except the statements, all of which have been retracted or did not stand the test of veracity in cross-examination. 45.2. Shri R.P. Singh, Manager of Transport Company-BCC has nowhere in his statement implicated the appellant - Seema Enterprises or that he had reason to believe that the goods received for transportation have been clandestinely removed and were liable to confiscation. There is no allegation in the show cause notice that the appellant - Seema Enterprises s....
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....nufacturer, as the appellant manufacturer makes all their sales at the factory gate at ex factory price under proper invoices. 48. Ld. Counsel further states that no physical stock taking report was prepared by the officers at the time of search, and thus, the whole demand is on the basis of estimation and presumption. The show cause notice and panchnama are silent as to how the finished goods, collectively weighing 6106.48 kgs. (as alleged) were weighed. Whether weighment was actually done or was ascertained on estimate basis. Further, the Panchnama is silent as to the nature of packing, in which the finished goods in question were found to be packed. 49. Ld. Counsel further urges that there is no provision under the scheme of the Central Excise Act and the Rules thereunder, empowering any Central Excise officer to seize any finished goods or raw materials lying in the factory premises. Rule 24 of the CER, 2002 empowers the Central Excise Officer to detain or seize only such finished excisable goods, as are found to have already been removed outside the factory with intent to evade duty. Thus, the seizure of 314.65 kgs of laminates and packing materials lying inside the fact....
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....cise duty of Rs.21,60,745/- [Rs.2,32,645/-, Rs.12,64,632/-, Rs.1,07,419 + Rs.5,56,049/-] as quantified in the show cause notice is demandable and recoverable from M/s. Shanker, under Section 11 A (1) of the Central Excise Act, 1944. 50.3 Further, the excess found 406.24 kgs of packaging materials in the factory of M/s. Seema valued Rs.55,655/- is held liable for confiscation under the provisions of Rule 25 of the Central Excise Rules, 2002 and the Central Excise duty of Rs.3,40,019/- as quantified (on the basis of presumed manufacture of finished goods) in the show cause notice, is demandable and recoverable from M/s. Seema under Section 11 A(1) of the Central Excise Act, 1944. 51. Regarding penalties, the Adjudicating Authority has imposed equal penalties of the confirmed amount under Section 11 AC of the Central Excise Act, 1944 read with Rule 25 of the Central Excise Rules, 2002. Regarding personal penalties, the Adjudicating Authority have imposed personal penalties on all co-noticees under Rule 26/27 of the Central Excise Rules, 2002, except on Smt. Seema Agarwal and Shri Uma Shankar Yadav, as both are proprietors of the units, M/s.Shanker and M/s. Seema, therefore, the ....
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....not be treated as involuntarily or unlawfully obtained. The mere retraction of the statements without any evidence of duress or coercion, do not reflect upon the evidentiary value of the statements. He further observed that when a confession or incriminatory statement is retracted, the burden is on the accused to prove that such confession was made under threat or inducement or coercion. The ld. Commissioner further observed that Section 9 D of the Act is testimonial too, available with the Adjudicating Authority to assess as to whether the earlier statement can be taken as reliable or not, in view of the emerging facts and circumstances during exercising of prescribed procedure under Section 9 D. Moreover, when the statements of the co-accused supports the version of each other, such statement(s) do have evidentiary value. 52.4 We find that such stand of the ld. Commissioner is bad and without authority of law, in view of the scope of inquiry or adjudication, particularly with respect to the reliability of the statements recorded during investigation, as clarified by the Hon‟ble Punjab & Haryana High Court in the case of Jindal Drugs (supra) and also by the Hon‟ble ....
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....or in the RRs, by way of consignor or consignee. Further, in none of the RR‟s, the goods manufactured by the appellants i.e. Pan Masala or Gutka are mentioned. Further, we find the letters exchanged by Revenue with the Railway Authority have not been relied upon (not made RUD) in the show cause notice. 52.7 Shri Binda Tiwari alias Radhe Radhe is a Principal Railway Booking Agent, who had engaged under him the other persons and he was the person, who was under contract with Alok Krishan Gupta for dispatch through Railways. He himself did not prepare any forwarding notes. In his cross examination held on 4.1.2017, he has retracted his earlier statement and stated that his earlier statement was involuntary and recorded under duress. He has emphatically denied the possibility of identifying the brand of Zarda/ Gutka/Pan Masala merely by looking at Railways bilty/forwarding note, as it refers to weight and destination recorded in the RRs, or the corresponding chart (prepared by Revenue) shown to him at the time of recording of his statement during investigation. On being asked by the Adjudicating Authority, has he filed retraction/letter/affidavit, in view of his assertions and....
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....d by Railways, a big part have been discarded (1566 RRs) by the Adjudicating Authority as not reliable. Thus, the demand with respect to the alleged transport through Railways has been confirmed on the basis of the retracted statements, or the statements which have not stood the test in cross examination. Such statements are at best hearsay evidence. Further, admittedly, no money was paid by the appellant manufacturers to the said booking agents. Further, no reference was made by Revenue to the "Handwriting Expert" or the "Govt. Examiner of Questioned Documents" In the facts and circumstances, we find that the demand is wholly based on the assumption(s) and presumption(s). The charge of clandestine removal is a serious charge and altering the civil liability of the person, and as such, the duty liability and penalty cannot be fastened on the basis of the hearsay evidence, and assumptions and presumptions based on the same. The Xerox copy of the RRs supplied by the Railways are not reliable as per the provisions of Section 36 A of the Central Excise Act, as no presumption against the appellant manufacturer is available to the Revenue. We further observe that 3rd party evidence at be....
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....he goods are not available or in existence. Accordingly, we set aside the demand of duty and penalty as well as fine. 52.15 Shri Alok Krishan Gupta, Director of Bee Gee Projects, Kanpur in his cross examination on 24.01.2017 has, inter alia, stated that for the last few years, he has been purchasing Sir Brand Gutka/Pan Masala from the factory premises of the appellant -manufacturers on principal to principal basis. After purchase, he used to dispatch it to various places, to his buyers and used to meet the transportation cost for the same. He had no concern as regards sales made by the manufacturers of Sir Brand Gutka/Pan Masala to other parties, directly ex factory. Therefore, he or his companies are not responsible or concerned in making the arrangements for transportation by rail or truck in respect of the direct sales made by the manufacturing firms to other parties. He further stated that as regards the alleged clandestine removal by the manufacturer of Sir Brand Gutka/Pan Masala, he clarifies that he is an independent trader having his own business and he has never attended to any work of making arrangements of any kind or managing cash for or on behalf of the manufactures....
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.... gate, including M/s B. G. Projects. It was always the responsibility of the buyer to arrange for the transportation. As regards the clause "read and agreed‟ appearing in his subsequent written statement during investigation, he explained that he never had the opportunity to read his earlier statement, whenever his subsequent statement was recorded. He explained the condition under which the statement was recorded, as he was surrounded by the Officers in DGCEI office, Delhi in the late hours of night, and then the statement was recorded as dictated by the officers. 52.18 As regards the demand proposed vide show cause notice dated 07.11.2008 for duty, fine and penalty, in view of our discussion & findings hereinabove, we set aside the demand of Rs.46,29,130/- (for excess finished goods, in the factory) on M/s. Shanker, along with fine and penalty on account of excess finished goods found inside the factory. We also hold that such goods are not liable for confiscation. Similarly, the demand for unaccounted raw materials and packing materials found inside the factory premises is also set aside. 52.19 Mr. Anil Kumar Singhal (trader of pan masala/ gutka), Prop. of M/s Singha....
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....2017 stated - retracting his earlier statement that he does not know either Mr. Jayan Kumar or Mr. Surya Kumar, employees of the appellant - manufacturer. He also categorically stated that he does not know any of the employees of the appellant manufacturers. He also stated that his earlier statement was involuntary or was obtained under duress. 54.24 Shri Rajesh Tiwari, Tempo Driver, in his cross-examination has categorically stated that he does not know any employee/ Manager of the manufacturers of "Sir brand‟ gutka/ pan masala. 54.25 Shri Uma Shankar Awasthi, Manager of M/s Bihar Carrying Co., Kanpur in his cross examination conducted on 5.1.2017 has retracted from his earlier statement, stating that the same was recorded under undue influence and coercion and the same are involuntary and hence, not reliable. On being questioned, in his earlier statement dated 10.05.2008, he had given numbers and names of Vikram Tempo Drivers, who had brought Sir Brand Gutka/Pan Masala to his transport company. In reply, he stated that these nos. and names were dictated to him by the investigating officers. He also categorically stated that on a given day, several tempos/vehicles etc.....