TaxTMI 
TaxTMI 
2026 (5) TMI 577
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....4 passed by the Commissioner that imposes a penalty upon him under rule 26 of the Central Excise Rules, 2002 [the Central Excise Rules] 3. The appellant claims that it was at the material time engaged in the manufacture of "Gutka" and Natwar Lal Sharda was a partner in the appellant. 4. In February 2000, the office of Directorate General of Central Excise Intelligence [DGECI] initiated investigations into alleged clandestine manufacture and removal of Scented Tobacco by one Suresh Enterprises operating at Wgholi, Pune. The search of premises of Suresh Enterprises on 18/19-2-2000 did not result in recovery of documents such as delivery challans, Invoices, purchase orders or Lorry Receipts. However, a Pocket diary was recovered from an employee of Suresh Enterprises by the name Ramesh Pardesi. It is the case of DGCEI that such pocket diary revealed transportation of Scented Tobacco to Indore by the following three transporters: a) Sarita Roadways, Wagholi, Pune, b) Vijayant Travels, Pune, c) Hari Roadways Corporation, Pune. 5. The case of DGCIE is that Lorry Receipts resumed from Sarita Roadways showed that Scented Tobacco was transported from Sure....
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....ainst the said Order dated 26-2-2024 before this Tribunal and by order dated 6-3-2012, the appeal was disposed of by the Tribunal with a direction to the adjudicating authority to re-check the documents and identify the Lorry Receipts of Sarita Raodways which are not accounted for and determine the question of clandestine removal only with reference to Lorry Receipts of Sarita Roadways. The relevant observations of the Tribunal are as follows: a) The number of machines installed by the appellant though good piece of evidence was not good enough in deciding quantum of clearance; b) Reliance placed by the department on the Pocket diary recovered from Ramesh Pardeshi, supervisor working with Suresh Enterprises, had fatal flaws and there was no material to support the case of the department from this diary; c) Lorry Receipts recovered from Sarita Roadways was evidence of reliable quality whereas evidence collected from other transporters namely Vijayant Travels and Hari Roadways Corporation was not good enough to prove delivery of unaccounted Scented Tobacco to the appellant; d) Evidence recovered from Laminar Industries was good enough to show that ....
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.... Excise Act with interest under section 11AA and penalty equal to the said duty under section 11AC. The Commissioner also imposed penalty of Rs.11.42,105/- on Natwar Lal Sharda. The said duty demand of Rs. 1,14,21,053/- was worked out by applying mathematical formula/ ratio that for manufacturing 100 kgs of Gutka, 5.7 kgs of Scented Tobacco is consumed. The said formula has been applied to the total quantity of Scented Tobacco appearing in the photocopies of Lorry Receipts of Sarita Roadways in name of the appellant. The relevant portions of the order passed by the Commissioner are reproduced below: "13. xxx Subsequently, the quantification of the 6 LRs pertaining to M/s R.S. Company as mentioned by the Hon'ble CESTAT was sought for from the Directorate General of Central Excise Intelligence (DGGI) vide letters dated 30.04.2024 and subsequent reminders dated 13.06.2024 and 27.06.2024. Finally, DGGI vide letter dated 25.07.2024 submitted the re-quantification of the Central Excise duty demand on the basis of Lorry Receipts in the name of M/s R.S. Company only. xxx xxx xxx 18. The Noticee has demanded for inspection of the 6 LRs (in original) in question fo....
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....f the Act, which is equivalent to the duty so re-quantified and determined/to be confirmed. 23. In the matter of imposition of penalty on the co-noticees under rule 26 of CER, 2002 in the instant case, the Hon'ble CESTAT in earlier round of litigation, vide order dated 06.03.2012 has already viewed that it will be adequate if a penalty of 10% of duty evaded is imposed on Shri Natwar Lal Sharda." 17. Shri J.C. Patel, learned counsel appearing for the appellant assisted by Shri Ankur Upadhyay, learned counsel made the following submissions: (i) Demand of central excise duty confirmed on the basis of photo copies of Lorry Receipts of Sarita Roadways without giving inspection of originals and without accounting for non-production of the originals is untenable in law; (ii) Verification has not been carried out by the adjudicating authority in accordance with the directions of the Tribunal; (iii) There cannot be quantification of clandestine manufacture of Gutka merely on the quantify of Scented Tobacco alleged to have been received; and (iv) Quantification of duty demand on alleged clandestine removal of Gutkha, based on theoretical/hy....
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.... the appellants. The rest receipts cannot be added in the hands of the appellants. 11. During the course of arguments, learned AR submits that only 6LRs are in the name of M/s. R S Company. Hence, we direct the adjudicating authority to verify all the Lorry Receipts and raise the duty demand pertaining to the Lorry Receipts in the name of M/s. R S Company only. No other Lorry Receipt can be added in the name of Appellants. Penalty will have to be decided accordingly." (emphasis supplied) 21. A perusal of the aforesaid order clearly shows that a finding was recorded that the Lorry Receipts which are in the name of the appellant only will have to be adjudicated for the purpose of making the duty demand from the appellant. The order further shows that during the course of the argument, the learned authorized representative pointed out that only six Lorry Receipts were in the name of the appellant. The Tribunal, therefore, directed the adjudicating authority to verify all the Lorry Receipts and raise the duty demand pertaining to the Lorry Receipts in the name of the appellant only. 22. It is, therefore, clear that the adjudicating authority on remand had to adjudicat....
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....evidence of receipts of the required quantities of other raw materials namely lime, katha, menthol, supari and packing material, it was necessary for the adjudicating authority to have examined this issue but it did not. 26. In Commissioner of Central Excise vs. Brims Products [2011 (271) E.L.T. 184 (Pat.)] the Patna High Court observed that receipt of one raw material only does not conclusively prove clandestine manufacture and surreptitious removal of finished product. The relevant portion of the judgment is as follows: "9. In our opinion, since the charge was for clandestine manufacture and surreptitious removal of finished final product, the same is required to be proved beyond doubt by the Revenue. One has to keep in mind that, though being the main ingredient, betel-nut is not the only raw material which is used in manufacture of Pan Masala. That apart, since the investigation has been carried only at the transporters end, no presumption could be drawn with regard to manufacture and removal of the final product. Presumptions and assumptions cannot take place of positive legal evidence, which are required for proving the charge. Even if, it is assumed that some raw....