Custom, Excise & Service Tax Tribunal
Mr.Paramjit Singh Kakar vs Cce, Delhi-I on 21 October, 2013
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI Date of hearing: 18 - 19.07.2013 Date of decision: 21.10.2013 Excise Appeal Nos. 3018 to 3029 of 2005 (Arising out of order in appeal No. 141/2005 dated 09.06.2005 passed by the Commissioner of Central Excise, Delhi-I, New Delhi) M/s Santosh Tobacco M/s G.G. Carriers M/s Delhi Indore Transport Co. M/s Singhal Transport Co. M/s Gopi Road Lines M/s Vishnu & Co. Pvt. Ltd. M/s Harsh Transport Pvt. Ltd. M/s Vishnu & Co. Pvt. Ltd. M/s Pragati International M/s Mohammed Kayum Khan M/s Laxmi Prakash Gupta Mr.Paramjit Singh Kakar Appellants Vs. CCE, Delhi-I Respondent
AND Excise Appeal Nos. 589 to 595 of 2006 (Arising out of order in appeal No.152/2005 dated 22.11.2005 passed by the Commissioner of Central Excise, Delhi-I, New Delhi).
M/s Laxmi Freight Carriers (P) Ltd.
Shri Gopal Krishan Parashar M/s Gopi Road Lines M/s Vishnu & Co. Pvt. Ltd.
Shri Paramjeet Singh Kakkar
Shri H. Sunder
Shri R.K. Tripathi Appellants
Vs.
CCE, Delhi-I Respondent
AND
Excise Appeal No. 2700 of 2006
(Arising out of order in-original No. 141/2005 dated 9.6.2005 passed by the Commissioner of Central Excise, Delhi-I, New Delhi) CCE, Delhi-I Appellant Vs M/s Vishnu & Co. Pvt. Ltd. Respondent Appearance: Shri Asshraf Hiddayatulla, Sr. Advocate , Ms. Seema Jain & Ms. T. Mishra, Advocates for the parties.
Sh. Sanjay Jain & Sh. R.K. Verma, DRs for the Department.
CORAM: Honble Smt. Archana Wadhwa, Member (Judicial) Honble Shri Rakesh Kumar, Member (Technical) Final Orders Nos 58037-58056/ 2013 Dated: 21/ 10/ 2013 Per Rakesh Kumar:
Two sets of appeals from Sr. Nos. 1 to 12 and Sr. Nos.13 to 19 filed by the appellants and one filed by the Revenue are being disposed of by a common order as they arise out of same sets of facts and circumstances and the investigation made by the Revenue, though there are two different impugned orders passed by the Commissioner. Both the sides were heard at length on various dates duly represented by Shri Ashraf Hiddayatulla and Ms. Seema Jain, ld. Advocates and Shri R.K. Verma & Shri Sanjay Jain, DR represented the department.
2. As per facts on record, M/s. Vishnu & Company Pvt. Ltd. (hereinafter referred to as VCPL) are engaged in the manufacture of Vimal brand gutka and zarda. The said final products manufactured by them were being cleared and transported through various transporters, i.e. M/s. GG Carriers; Delhi Indore Transport Company; M/s. Gopi Road Lines; M/s. Harsh Transport and M/s. Singhal Transport Co. Ltd. Based upon certain information, the revenue officers visited the premises of the said transporters on 5.7.2003 and conducted various checks and verifications. Certain consignments of Vimal brand gutka were recovered from the premises of the said transporters, leading the officers to entertain a belief that the said goods were manufactured by Vishnu & Company and had been cleared by them without payment of duty. Accordingly, statements of various authorized representatives of the transporters were recorded. Inasmuch as the Revenues case is mainly based upon the evidences collected at the transporters end, we deem it fit to deal with such evidences recovered from each and every transporter, separately.
3. GG Carriers 3.1 It is seen that there was no seizure of any goods from the premises of the said transporter. However, the officers recovered one book which contained summary of transportation of the goods reflected therein. The said book had the caption from PB list of the GRK Pan Masala. GRK was interpreted by the Revenue as Gobind Ram, Kota, who was one of the buyers of the goods from M/s.Vishnu & Company. The other pages of the said book had the caption list of Pan Masala Kaku. There were other pages in the said book, which had certain entries reflecting various numbers. Apart from the above book, the Revenue also recovered some of the loading challans indicating abbreviation GRK, UMS and Kaku, etc. which were also found entered in the book seized from the said premises. Apart from the said items, one loose sheet (carbon copy), one record relating to freight charges received for transport of pan masala, one loading register showing challan numbers, private markings, some telephone numbers, etc. were also recovered and seized.
3.2 As the officers entertained a view that the entries made in the said seized documents relate to the transportation of the products of M/s. Vishnu & Company booked by them, they made further investigations and recorded the statements of various persons. Shri Harjinder Singh, employee of the said transport company in his statement recorded on 10.11.2003 deposed that Shri Naresh Kumar was the booking clerk of the transport company upto 1.7.2003, who left the job and thereafter one, Shri Vishnu started looking after the job of booking clerk of transport company. He further explained that City brand gutka and Vimal brand gutka manufacturers were their customers and whatever is mentioned on the bills, same is reflected on the GRs issued by the transporter and 013, UMS, GRK, etc. could be the private markings of the parties. He further clarified that the goods are received by them with plain paper slips having details like private markings, number of bags and word sweet supari. One person of the factory i.e. Vishnu & Company used to accompany the goods but he does not remember the name of the said person. However, he further deposed that the entire goods come from the same factory as is evident from the packing materials, which used to be the same. He also clarified that they never received sweet supari, pan masala, or zarda from any other company. Shri Harjinder Singh also clarified that he does not know how to read and write in English as his job was to look after the maintenance of the trucks. It is seen that though Shri Harjinder Singh in his statement described himself to be Marketing Executive of the transporter, in subsequent paragraph he clarified that his job was to maintain the trucks. When he was shown the relevant pages of the vehicles movement note book and specific question was put to him, he clarified that though the goods transported were pan masala and zarda, they were wrongly mentioning the same as sweet supari and khand.
3.3 Based upon the information retrieved from the seized documents from the premises of GG Carriers, the Revenue officers decoded some of the abbreviations mentioned in the seized records and carried out further investigations. The GRK mentioned in the seized book showing summary of the transportation of the goods was decoded by the officers as Gobind Ram, Kota. As Gobind Ram was one of the admitted buyers of the gutka from M/s.Vishnu & Company, the investigations were conducted at his end and the statement of Shri Leela Ram Makhija, Proprietor of Gobind Ram, Kota was recorded on 16.07.2003. In his statement, Shri Leela Ram Makhija deposed that the abbreviation GRK does not belong to him. He further deposed that the goods purchased from M/s. Vishnu & Company always came through M/s. Jaipur Golden Transport. As M/s. Leela Ram Gobind Ram, Kota did not own up the abbreviation GRK, the officers visited another premises of one M/s.Gobind Store, Jaipur to find out the secret of abbreviation of GOB. Statement of Proprietor of Gobind Store, Jaipur was recorded on 18.07.2003. The said deponent accepted that he was dealing in Vimal gutka in Jaipur but as no question as regards the abbreviation GOB was put to him, he did not clarify on the same.
3.4 Further investigations were carried out and the records seized from the GG Carriers were scrutinized. It was seen that some of the pages recovered from the office of GG Carriers contained the name and telephone numbers of the parties booking the goods. The same revealed that the telephone numbers appearing in the said seized documents were of the factory of M/s. Vishnu & Company as also three supervisors working in the factory of M/s. Vishnu & Company. One of the telephone numbers appearing in the said books was of one Tulsi, who was the nephew of Leela Ram Makhija of M/s. Leel Ram Gobind Ram, Kota. Shri Leela Ram Makhija, however, expressed his ignorance as to how the name and mobile number of his nephew appeared against the GRK in the books of the transporter.
3.5 During the course of further investigation, statement of one Shri Duli Chand Makhija, Manager of Gobind Store, Jaipur was also recorded on 6.7.2003 wherein he deposed that he was looking after two shops viz. M/s. Gobind Store, Japur, owned by his nephew Nasal Lal and M/s. Kamal Store, owned by his son, Kamal M. He clarified that Gobind Store and Kamal Gateway Store, are the only dealers of Vimal gutka. He could not produce any invoice showing receipt of vimal gutka after the invoice dated 27.06.2003. He, however, denied to have received any consignment of VIMAL gutka from VCPL through M/s.GG Carriers. However, the goods seized from the premises of Gobind Store 950 Vimal gutka pouches were reflecting the manufacturing date as July, 2003.
3.6 From all the above evidences so collected by the Revenue a view was entertained that the entries made in the records of GG Carriers, showing transportation of sweet supari were actually of transportation of clandestine clearance of pan masala or gutka by M/s. Vishnu & Company and the abbreviation GRK and GOB, mentioned against such transportation related to M/s. Gobind Ram, Kota and Gobind Store, Jaipur respectively. Accordingly, the records of Vishnu & Company were also scrutinized and it was found that there are no corresponding entries of clearance of pan masala or gutka in the statutory records of Vishnu & Company. Based upon the same, the demand of central excise duty of Rs.6,72,30,900/- on 20373 bags was believed to have been evaded by the said manufacturer.
4. M/s.Gopi Road Lines 4.1 Premises of the said transport company was put to search on 5.7.2003. There was no seizure of the goods lying at their premises. However, various documents including challan books were recovered. Statement of one Shri Sushil Kumar, Commission Agent, was recorded wherein he deposed that he books for several transport companies including Gopi Road Lines for the transportation of Vimal brand gutka for the area of Jalgaon. He further clarified that no employee of M/s. Vishnu & Company comes to the transport office and the goods usually come in rickshaw accompanied with bills of different companies but they know it is only Vimal brand gutka and no GRs are prepared in the name of Vishnu & Company or in the name of Vimal brand. Subsequently, statement of Shri M.R. Sehgal, Manager of the said Gopi Road Lines was recorded on 5.7.2003 wherein he submitted that they have four offices and 10 commission agenets in Delhi and one of the Commission Agents is Shri Sushil Kumar. He however, pleaded his ignorance about the brand of the gutka being booked by Shri Sushil Kumar. He also produced 12 files containing loading challans showing transportation of 5971 kgs. of gutka.
4.2 When the entries made in the records of M/s.Gopi Road Lines were compared with the copies of the sales ledger of Vishnu & Company, it was found that no invoices were issued showing transportation of the goods through M/s. Gopi Road Lines. As such, Revenue entertained a view that the entries found in the records of M/s. Gopi Road Lines related to clandestine transportation of the gutka manufactured by Vishnu & Company evading duty of Rs.1,96,04,300/-.
5. M/s. Singhal Transport Company 5.1 The searches were also conducted at the premises of the said transporter on 5.7.2003. At that time, a truck No.HR 380 4117 loaded with 40 bags of gutka was found parked at the godown and 170 bags of vimal gutka were lying in the godown and another truck DL 1LA6232 was also parked outside the godown. As there were no duty paying documents in respect of the said goods, the same were seized by the officers. Searches were conducted in Delhi Head Office of the transporter resulting in seizure of 2 GR books and 17 nos. of truck guidance notes. The scrutiny of the said document revealed that the consignments were booked under the name of M/s. Gupta Chemical Works for Hubly and the consignee was shown as self.
5.2 Statement of Shri Paramjeet Singh, Proprietor of Singhal Transport Company was recorded wherein he deposed that he was transporting the goods of Vishnu & Company in bags, which were delivered to them in their own trucks. He however, submitted that he has been transporting Vimal brand gutka for the last 2 months only and during this period, he had never transported gutka of any other brand. He was shown one GR showing transportation of 60 bags of gutka from Delhi to Hubly and he stated that the said bags were of Vimal brand only and the description /name of the consignor as shown in the GR was different on the advice of the party.
5.3 The said statement of Shri Paramjeet Singh was shown to Shri H. Sunder, Director of Vishnu & Company and he agreed with the same.
5.4 As a result of the above investigation, the premises of M/s.Gupta Chemicals Works, who was shown as the consignor of the goods in the GRs recovered from the premises of the said transporter were also visited by the officers and put to search. He was found to be dealing in various tobacco products. However, no seizure of any goods was made from his premises and no statement of the proprietor of Gupta Chemicals was recorded. He was also not questioned about the said GRs wherein he was shown as the consignor.
5.5 Statement of driver of the truck HR 38 D-4117 was also recorded, wherein he admitted having loaded 40 bags of Vimal brand gutka in the truck, which were seized by the officers. Statement of Mohd. Ilias, Driver of the Tata 407 Truck no.DL1L/A6232 was recorded wherein he stated that everyday he made 2 to 3 trucks with 40 bags from the factory of VCPL to the Transport Company. Shri Yogesh Sharma, godown In charge of M/s. Singhal Transport in his statement stated that he mainly receives Vimal gutka for transportation through trucks DL 1L/A6232; DL 12/E 0591, 9891 & 3707.
5.6 Based upon the above evidences collected from the premises of M/s. Singhal Transport Company, it was alleged that 1940 bags involving duty of Rs.64,02,000/- were transported through the said transport company and inasmuch as there were no corresponding records maintained at the premises of Vishnu & Company, Revenue entertained a view that such clearances and transportation was clandestine.
6. Harsh Express Services 6.1 This is another transporter whose premises were put to search on 5.7.2003 and various documents as mentioned in the panchnama were resumed. The same are in the nature of 21 GRs, 5 blank bill books of various companies/firms (partially used) and challan books issued by the said transporter. It is also seen that Shri Ravi Bhandari, Managing Director of the said transporter company also submitted 90 GR books and 30 challan books on 7.7.2003 during recording of his statement. Scrutiny of the said documents revealed that during the period from 10.10.2002 to 5.7.2003 the transport company booked and transported 93 consignments of gutka covering 1828 bags. The same were booked from Delhi, unloaded at Bhopal and was further transshipped to Chindwara under new challans but carrying the same GRs. Shri Ravi Bhandari in his first statement recorded on 5.7.2003 revealed that the gutka transported by their company was of vimal brand and Mr. Dubey of Vishnu & Company used to book the said consignments and also sometimes accompanied the goods upto their transport companys office and made payment for the same. The said consignment were covered under the invoices issued in the names of some trading firms and they never verified the veracity of the consignee or consignor. The said consignments were delivered to M/s. Santosh Tobacco, Chindwara, whose telephone number he disclosed. He also deposed that all the consignments were booked and transported by them under the cover of proper GRs and challans. As regards the bill book of certain traders, he clarified that the same could have been left behind at their premises by mistake, by some of their customers. His further statement was recorded on 7.7.2003 wherein he clarified that wherever the word gutka was mentioned, either in the challans or in the GRs, the same pertained to the Vimal brand.
6.2 During course of further investigations, statement of Shri Santosh Kumar Mishra, booking clerk was recorded, wherein he revealed that they had been booking vimal brand gutka brought to their transport company by one Mr. Dubey, who used to bring sale bills in the name of different companies. He also, in his subsequent statement recorded on 26.08.2003, clarified that they started booking vimal brand gutka from April, 2002 onwards.
6.3 Further statement of Shri Kamal Panjwani, partner of transport company was recorded on 7.7.2003, wherein he deposed that 9 bags of vimal brand gutka seized from Bhopal office on 7.7.2003 were covered under the invoice of M/s. Sudha Sales Agency and the GRs issued by their Delhi office in the said name only. He also submitted that though these bags were booked for delivery at Amravati, the same were actually to be delivered at Chindwara through their delivery agent M/s. Indian Goods Transport Company.
6.4 Statement of Shri Lokesh Jain, Proprietor of M/s. Indian Transport, Chindwara was recorded on 17.11.2003 wherein he stated that all the Vimal Brand Gutka received from Harsh Transport and booked under various names was actually delivered to M/s.Santosh Tobacco. The investigations could not be conducted at the end of M/s.Santosh Tobacco as he failed to cause appearance in spite of the two summons issued to him. The officers also tried to find out the whereabouts of Santosh Sales Agency, Delhi i.e. the person, who was shown to be the consignor of the gutka, but as there was no telephone number or address given at the said bill, his whereabouts could not be found.
6.5 From the above evidences, Revenue entertained a view that various consignments booked by M/s.Harsh Transporter under the fictitious trading firms names were actually belonging to Vishnu & Company. As the said consignments covered 2267 bags, it was alleged that duty of Rs.74,81,100/- were evaded by Vishnu & Company.
7. Delhi/Indore Transport Company 7.1 Their premises were also put to search on 5.7.2003 and various documents maintained by them were recovered. Statement of Shri Vijay Singh, Booking Clerk was recorded, wherein he deposed that the names of Vimal/Gopal, Rajesh, Dubey, etc., with their telephone number and addresses pertained to the persons working in the factory of Vishnu & Company and their transport company was engaged only in transportation of Vimal brand gutka. He also, in an answer to a query clarified that entries like V/40K pertained to booking of Vimal brand gutka whereas V represents Vimal brand, 40 represents 40 bags, 1200 represents total weight of these 40 bags. Further, statement of Shri Vijay Singh was recorded on 18.09.2003 wherein he reiterated his statement made earlier and he further clarified that he inter-acts with the officers of Vishnu & Company as regards the booking of the goods in the night.
7.2 Further statement of Shri Ravinder Saxena, Booking Clerk of Delhi/Indore Transport Company was recorded on 1.10.2003, wherein he also stated that most of the entries in the records maintained by them pertained to the transportation of the Vimal brand gutka. He also deposed that most of the time tempo driver comes to their premises for booking of the goods and provides sale bills for the same and GRs are accordingly prepared and that one Mr. Dubey of the Factory also accompanies the goods. He further clarified that though there were no markings on those bags, but he recognizes the goods being brought in for the purpose of transporting to be of Vimal brand gutka. The said statement of Shri Ravinder Saxena was also agreed upon by Shir Vijay Singh vide his statement dated 18.09.2003.
7.3 Based upon the above evidences, allegation of clearance of 8406 bags involving duty of Rs.2,77,39,800/- was made against the manufacturing company.
8. Based upon the above investigation at the end of the transporters, Revenue further conducted investigations at various ends including the manufacturing unit premises, raw material suppliers premises, packing material suppliers premises. Visit of the officers in the premises of M/s.Vishnu & Company revealed that they were not maintaining any records in respect of all the raw materials. However, the records in respect of the main inputs i.e. supari and raw tobacco were being maintained by them as also in respect of the final products so manufactured. The verification of the same revealed that there was excess of supari in as much as quantum recorded in the statutory records was less. The same were put under seizure along with the seizure of other raw materials found in the factory as no records were being maintained by the said assessee. The statements of Shri H. Sunder, Director of the manufacturing unit were recorded on six different dates. It seems that all the six statements are exculpatory except the first statement where he agreed with the statement of Shri Paramjeet Kakkar, Proprietor of Single Transporter. However, in the sixth statement, he deposed that there might be certain removals without accountal.
8.2 As the name of Shri Dubey, Supervisor of Vishnu & Company appeared in the various statements of the employees of the transporters, he was also interrogated by the officers, wherein he disclosed his phone number and further deposed that the goods are booked through various transporters, and the GRs for the goods booked in the transport company are brought back by the tempo driver. However, if the driver does not bring back the GRs, he goes to the transport company and collects the GRs and makes cash payments.
8.3 Statement of Shir R.K. Tripathi, employee of Vishnu & Company was also recorded wherein he clarified that transportations are always arranged either by him or by Shri Prakashji, Shri Dubey or Shri Dinesh Khilnani, Supervisor and the goods are transported through mini trucks usually called as tempos, which are supplied by Shir Kayum Khan, who owns 4 vehicles of Tata 407 Make. He further deposed that in addition to railways, the goods are booked through Jaipur Gold transport, Prakash Road Lines, Gopi Road Lines, Bajaj Golden, Harsh Transporters, Delhi/Indore Transporters, etc and the goods booked through Harsh Transporters, Delhi/Indore Transporter or Gopi Transporters are generally those which are sold against cash payments by the companies.
8.4 Statement of another supervisor of M/s. Vishnu & Company i.e. Shri Dinesh Khilnani was also recorded wherein he deposed that he receives invoices for dispatch of gutka on plain paper slips, which are called factory gate pass from the other supervisors. He stated that the said slips do not carry any brand name of the goods and it is only the other details,like the date, name of the transporter company and number of gutka bags, are mentioned in the said slips. He also submitted that on some occasions, when much more product is available in stock, the word sada is mentioned on the slip for pan masala in order to distinguish the same from gutka. However, he submitted that he is not aware of the total number of cash sales made by him or the bills, invoices, etc. raised by the company.
8.5 As a part of further investigations, statement of Shir Kayum Khan, owner of Tata-407 truck was recorded wherein he accepted that he owns 4 Tata trucks which are used for transporting Vishnu brand gutka from the factory at Rama Road to various transport companies and railways stations. The said transportations of the gutka is made as per instructions received from the supervisor of the company on phone. He further submitted that the bills are given by the company only when the goods are to be transported through Jaipur Golden Transport or Prakash Road Lines and wherever the goods are to be transported without the cover of bills, it is always the other transport companies and the goods are usually lifted from the factory between 6 p.m. and 7 a.m.
9. Revenue also conducted investigation at the end of the packing material suppliers. It is seen that during the period 1.4.2003 to 5.7.2003, M/s. Vishnu & Company purchased 11,500 jute bags from M/s. Shyam Jute Industries as per information available from the files maintained by them. However, the manufacturing unit has shown the production of 5087 bags of production of final product during the relevant period. The Revenue entertained a view that as there was no accountal of 6143 bags, the same must have been consumed for packing and clearance of gutka cleared clandestinely.
10. It was further seen that the said appellant was purchasing canvas bags from one Ram Lal Ram Chandra (I) Ltd.(M/s. RLRC). The said canvas bags were printed with the logo and brand name of Vishnu & Company and the records seized from the premises of M/s. Ram Lal Ram Chandra revealed that as per the dispatch register maintained by the said manufacturer, there were much more clearances than what has been shown to have been received by M/s. Vishnu & Company. Shri Rajiv Gupta, Managing Director of the said manufacturing unit explained that wherever Vimal brand bags have been shown to have been cleared, the same pertains to the supply of canvas bags to M/s.Vishnu & Company. To the similar effect was the statement of Shri Ram Yatan, Security Guard. The Revenue made calculations in respect of the canvas bags cleared from M/s.Ram Lal Ram Chandra and the canvas bags shown to have been received by Vishnu & Company as reflected in their records and found that there was a huge difference of the canvas bags supplied to VCPL as per the records of M/s.RLRC were much more than the canvas bags whose consumption was shown by VCPL in their factory during the same period.
11. The officers also found that there was excess numbers of pouch sealing machines available in the factory of Vishnu & Company than the numbers which were declared in the declarations made by the said company. The excess number of pouch packing machines were to the tune of 55. The inquiries conducted from another Gutka manufacturer, M/s.Shyam Traders, Lucknow as regards the per machine production revealed that the appellant was capable of manufacturing much more gutka pouches than what was reflected in their records.
11.1 There is also dispute about the use of quantum of menthol in the manufacture of the appellants final product. As per the Revenue, on the date of visit of the officers, no menthol was found in the factory premises whereas as per accounts maintained by them, there was purchase of menthol to the extent of 1000 kgs. Inasmcuh as the appellant have not reflected the corresponding manufacturing of gutka/pan masala, Revenue was of the view that same stands used in the clandestine manufacture and removal.
12. The sample drawn from the goods available at M/s. Singla Transport Company was sent to Shriram Institute for Central Research, Delhi for analysis of the same. The report of the said Institute indicated some percentage use of various raw materials required for manufacture of gutka/pan masala. On comparison of the same with the VCPLs declaration regarding percentage of various raw materials like supari, tobacco, katha, menthol in the VIMAL brand gutka, it was alleged that the appellant over-stated the consumption of certain goods like supari, tobacco and menthol and such differential excess use, as reflected in the records, was for the purpose of manufacture of excess final product, which was ultimately cleared by them without payment of duty.
12.1 Apart from the above, Revenue also conducted the searches at various dealers premises and seized the goods of Vimal brand gutka on the belief that the same were cleared by manufacturers clandestinely.
13. On the above basis, proceedings were initiated against the appellant by way of issuance of show cause notice dated 24.12.2003 proposing confirmation of demand of duty of Rs.12,85,58,100/- alongwith interest under Section 11 AB against M/s. Vishnu & Company along with imposition of penalty on VCPL and other noticees. The said show cause notice resulted in passing of the impugned order-in-original no.141/2005 dated 9.6.2005, by which, the adjudicating Commissioner confirmed the proposed demand against M/s. Vishnu & Company along with confirmation of interest and imposition of penalty of identical amount. In addition, penalties of varying amounts were imposed upon the other appellants, who are traders dealing in the products of VCPL and are alleged to have received gutka cleared by VCPL clandestinely, trasnporters and Mohd. Kayyum Khan, who was the owner of the mini trucks. However, he dropped the proceedings proposing confiscation of the seized raw materials, with which the Revenue is aggrieved with and has challenged the same.
14. The second set of appeals emerges out of another order-in-original no.152/2005 dated 21.11.2005 which confirms proposals in the show cause notice dated 1.3.2004. The said order confirms the duty demand of duty of Rs.2,75,15,400/- along with interest and imposition of penalties of the identical amounts against VCPL. In addition, penalties stand imposed on the other appellants M/s. Laxmi Freight Carriers, Gopal Krishan Prashar, M/s.Gopi Road Lines, Shri Paramjeet Singh Kakkar, Shri H. Sunder and Shri R.K. Ripathi. who are Executive Director and Supervisor and transporter, etc.
15. We have heard both the sides duly represented by Shri Ashraf Hiddayatulla and Ms. Seema Jain, Advocates and Shri R.K. Verma and Shri Sanjay Jain, Departmental Representatives. As both the sets of appeals arise from different orders-in-original, we proposed to deal with the said two sets of appeals separately.
16. Order-in-Original No.141/05 dated 9.6.2005
16. In terms of the said order-in-original, duty demand of Rs.12,85,58,100/- stands confirmed against M/s.Vishnu & Company. Ld. Sr. Advocate, Shri Arshad Hidaytullah appearing for M/s. Vishnu & Company along with Ms. Seema Jain, ld. Advocate, submitted that the entire case of the Revenue is based upon the documents recovered from the premises of various transporters and the statements of employees of the transporters. The contention of the ld. Sr. Advocate is that the said documents are third partys documents and reliance on the same for confirmation of huge demand of duty is neither justified nor warranted. Dealing with the evidences of each and every transporter, it is pleaded that the said documents and the statements recorded cannot be held to be valid evidences against assessee without there being any independent evidence. Referring to the documents recovered from the GG Carrier Transporters, ld. Advocate draws our attention to annexure D-17 of the show cause notice. Scrutiny of the same reveals that there is some numbers e.g. 18605 shown in the said register along with another no.40 and some code i.e. GRK. According to the Revenue, 18605 refers to the GRs nos. and 40 refers to the no. of jute bags whereas GRK is the code of their buyer which according to the Revenue is M/s. Gobind Ram, Kota. She submits that investigations were conducted at the level of Gobind Ram, Kota wherein the proprietor of the said dealer denied GRK being their code and very clearly stated that the said code - GRK does not belong to him. As such, it is the submission of the ld. Advocate that the entire case of the Revenue falls on this ground itself.
17. As regards the statement of Shri Harjinder Singh, employee of GG Carriers strongly relied upon by the Revenue, she submits that though the initial portion of the said statement refers Shri Harjinder Singh as the Marketing Executive of the transporter company but on being asked, he has clearly deposed that he was engaged in the maintenance of the trucks. As such, the statement of Shri Harjinder Singh, who has got nothing to do with the booking of the goods, cannot be held to be a valid piece of evidence. In any case, she submits that during the course of examination, the said Harjinder Singh clarified that he had never made any documents for the transportation of the goods and he denied having transported gutka of VIMAL brand. He also clarified that the markings 013, GRK, UMS and GMS, etc. are parties in Rajasthan, who booked the goods and not VCPL. He further deposed during cross-examination that he does not know any worker or employee of the Vishnu & Company and as he was engaged in the repair and maintenance of the vehicles, he was not available and present during the booking of any consignments.
18. Ld. Advocate also draws our attention to the fact that the said Harjinder Singh was re-examined by the adjudicating officer, after completion of cross-examination and a specific question was put to him that when in his statement, he has referred to the consignments booked by the transport company as part of Vimal brand gutka, how he is now denying the fact of knowledge, he replied that he did not have any knowledge of Vimal brand gutka and he is repeatedly being asked questions, which he is not aware of.
19. As such, submits the ld. Advocate that the fact that Shri Harjinder Singh was not authorized person of GG Carriers concerned with the booking of the consignments read with the outcome of his cross examination, reveals that his evidence is not worth-relying. She also submits that Shri Harjinder Singh in his statement has disclosed the names of booking clerk of the said transport company as Shri Naresh upto 1.7.2003 and thereafter Shri Vishnu but the Revenue did not deem it fit to question the said booking clerks, who were actually the responsible persons for booking the consignments. She has also referred to the statements of the dealers at Kota as also at Jaipur and submits that inasmuch as the said statements are exculpatory statements, the confirmation of demand of duty based upon the so called evidence collected from GG Carriers Transport, cannot be upheld.
20. She also draws our attention to the fact that the records seized from GG Carriers, in any case, indicated clearance of transportation of pan masala whereas Revenue has raised the demand by treating the same as gutka. She clarified that during the relevant period, M/s.VCPL was not engaged in the manufacture of pan masala. This fact by itself leads to the inevitable conclusion that no clearance was ever effected by the manufacturing unit without payment of duty.
21. As regards the documents seized from the premises of M/s. Singhal Transport Company, she submits that the Revenue has relied upon the statements of Shri Yogesh Sharma, the truck driver, Shri Sita Ram, as also Mohd. Ilyas, Kayum Khan, Paramjit Singh Kakkar owner of the transport company. She submits that whereas the deponents of statements of i.e. Shri Yogesh Sharma, Mohd. Ilyas, Shri Kayum Khan and Shri Sita Ram were not offered for cross examination so as to test the veracity of their statements, Shri Paramjit Singh Kakkar was produced for cross-examination. During cross examination, he revealed that the goods are always received in plain gunny bags without any markings and that they never opened the bags. He also disclosed that the payments for the transportation were never made by VCPL, who did not book the gutka consignments. It is always the person, who used to accompany the goods, who would make cash payment for transportation of the goods. As such, she submits that as regards the seized goods Shri Kakkar explained that the consignment was booked by Shri Shamsher Singh, who disappeared after the seizure of the same.
22. Based upon the above, the contention of the ld. Advocate is that when as per statement of Shri Paramjit Singh Kakkar, the bags booked with the transporter were not having any outside markings and when the same were not opened by the transporter, it is not possible for any of the employees of the transport company to find out the exact contents of the bags and that too, with brand name. As such, this fact itself reveals that the statements made by the employees were recorded by the officers under duress. The correctness of the said statements could not be verified on account of non-tendering of the said deponents for cross examination.
23. She also submits that the truck notes as also the GR issued by the transporter clearly mentioned the name of the consignor as Gupta Chemical Works. The Revenue has been able to find out the said M/s.Gupta Chemical Works and as also raided their premises. In spite of that no statement of the representative of M/s. Gupta Chemical Works was recorded by the officers and he was never questioned about the booking of the said consignments by him. It is their contention that such non-action on the part of the Revenue was intentional with a view to make out a case against M/s.Vishnu & Company. In such a scenario, Revenues stand that the goods booked under the name Gupta Chemical Works were in fact booked by M/s.Vishnu & Company cannot be appreciated.
24. As regards the documents recovered from the premises of Harsh Transporter and the statement of Shri Ravi Bhandari, Managing Director, ld. Advocate submits that Revenues reliance on the 5 blank bill books of other companies like Vikas Plastic, M/s. Prakash Sales Store, M/s. National Trading, M/s. Himanshu Auto, etc., she submits that as is clear from the copies of the said bill books produced on record, the same belonged to the trading units, which were doing trading in products other than gutka. Further, the loading challans also revealed that the same were in respect of the goods, which were other than gutka. The Revenues allegation that the said bill books were being used by VCPL for transportation of gutka is based on the assumptions and presumptions and cannot be appreciated. She also draws our attention to the result of cross-examination of Shri Ravi Bhandari, wherein he deposed that their transport company goes by the name of the consignor and not by the brand name and inasmuch as the invoices issued by them did not mention VIMAL brand, it cannot be said that same were in respect of the gutka manufactured by M/s.Vishnu & Company. Shri Ravi Bhandari also clarified that he has seen Shri Dubey, who used to bring the goods to his transport office only once and most of the time, he used to talk to him on phone. Further, our attention stands drawn to the cross examination of Kamal Panjwani, Partner of M/s.Harsh Transport Services, wherein he deposed that he never opened the bags and does not know whether the same contained the brand name of VIMAL. On examination by the Department, he submitted that his statement was written by Departmental Officers and only the last paragraph was written by him in English. Similarly, our attention stands drawn to the affidavit of Shri L. Jain, Proprietor of Indian Goods Transport, wherein he swore that he has no knowledge of the brand name of gutka inasmuch as the brand names were never written on the gunny bags and he was forced to write in his statement that gunny bags transported by him was of VIMAL brand name. By referring to the statement of Santosh Kumar Mishra, booking clerk of the said transport, she submits that he was not made available for cross examination and an affidavit was produced by him, wherein he clarified that booking was always done by parties, who raised their bills and not by Shri Dubey.
25. In view of the above, she submits that the entire evidence relied upon by the Department is some records maintained by the transport company, which do not carry either the Appellants (VCPLs) name as the consignor. It is only based upon surmises and conjectures that Revenue is interpreting the said documents as if the same were for transportation of VIMAL brand gutka, whereas the names of the trading firms clearly revealed that the said trading units were trading in goods other than gutka. She further submits that though the address of the said trading firms are mentioned on the bill books but Revenue never made any efforts to conduct any investigations from them. Had it been done, the entire facts would have been made clear. This fact according to the ld. Advocate causes prejudice to the Revenues stand and in the absence of such investigations, Revenues endevour to relate the transportation under the cover of the said bills to the appellant, cannot be appreciated. She also submits that the invoices of Sudha Sales Agency showing transportation of 9 bags, which were recovered and seized by the Department at Bhopal, is also alleged to have been issued by them without making any investigation at the end of Sudha Sales Agency. As such, the Revenues stand that whatever goods were transported through the said transporter relates to the clandestine clearance to M/s. Vishnu & Company is without any valid and legal evidence.
26. Similarly, in respect of Gopi Road Links, she submits that the demand is based upon the loading challans recovered from the said transporters, wherein the names of the consignor as also the consignee are different trading firms or commission agent and the Revenue has not bothered to do any verification from the said trading firm or commission agent. Revenues reliance on the statement of Shri Sushil Kumar, Commission Agent, is not appreciated inasmuch as he was never offered for cross examination and the correctness of the said statement could not be tested. However, he tendered an affidavit to the effect that he never knew the brand name of gutka as there was no method of knowing the same when the goods are received duly packed in gunny bags, which were not carrying any markings.
27. As regards the documents recovered from Delhi Indore Transport Company, she submits that loading register relied upon by the Revenue does not even mention the goods by name, and the Revenue has wrongly presumed that all such loading of the goods was in respect of the gutka. She submits that the Revenues contention that V/40/1200 refers to Vimal brand goods in 40 bags and 1200 is the total weight of the consignment as 1 bag consists of 300 bags is believed itself from the same page where the weight of the goods is written as 2300 kgs. As such, the same arguments in respect of the other transport units, stands reiterated.
28. In view of the foregoing, she submits that inasmuch as the entire case of the Revenue is based on the recovery of the documents from the transporters premises, which documents are not even clear, either in respect of the goods loaded in the transporters truck or in respect of the brand name or in respect of the manufacturer, reliance on the same is against the settled principles of law that clandestine removals cannot be upheld based upon such recovery of the documents from the premises of the third parties. It is the contention of the ld. Advocate that there are so many other units, located in the same area, which are engaged in the manufacture of gutka/pan masala, etc. The brand names of such manufacturer also start from V i.e. Virat, Vishal, etc. The other manufacturer in that area, are under the name of M/s. Prem Vijay Chemicals, M/s. Kuber Tobacco, Ashish & Co., Vishal & Company, etc , who also uses the services of the said transporters or might have used the services of the said transporters for the transportation of the goods. In view of the fact that the various persons/employees of the said transporters have agreed that the goods were being handed over to them in gunny bags, which were not having any markings and in the absence of any authorization to open the said gunny bags, it was not possible for the transporter to find out the exact brand name of gutka. Revenues action and proposal to link all such transportation to the appellant (VCPL) is neither in accordance with the settled principles of law nor just and fair. As regards the statement of some of the employees showing that Shri Dubey used to accompany the consignments, she clarifies that Vishnu & Company are also selling the goods against cash at their factory gate. Shri Dubey was only helping those buyers in getting their consignments booked through these transporters in his personal capacity. She submits that they have sales at the factory gate against cash, to the tune of around Rs.9.12 crores, on which the appropriate duty stands discharged by them. Such cash sales at the factory gate might have been booked by the transporters either from the buyers, who purchased the same or through various trading firms or may be through Shri Dubey, who might be acting in personal capacity so as to earn some commission from the transport companies. She clarifies that Shri Dubey, at the time of recording of his statement was never confronted with any question relating to clandestine manufacture and clearance of the goods or getting the consignments booked from the transporters. According to the ld. Advocate, such deliberate non-questioning of Shri Dubey, was with an intention to make a case against VCPL, otherwise the facts would have been clarified by Shri Dubey. In any case, she submits that Shri Dubey had subsequently filed an affidavit showing that he was getting some of the consignments booked from the transporters, at the request of the buyers of gutka at factory gate and this was done by him in his personal capacity. In any case, she submits that though the Commissioner has given a finding that all the transporters have taken his name but the facts remain that it is only two transporters i.e. Delhi/Indore Transport Company and Harsh Transport Company, which have named Shri Dubey as the person, who used to come with the consignments. She further submits that if according to the Revenue, Shri Dubey was involved with the illegal clearance, booking of the consignments and transportation of the same, he should have been issued a show cause notice for aiding and abetting M/s. Vishnu & Company. However, show cause notice never proposed any action against Shri Dubey for the reasons best known to the Revenue.
29. Ld. Advocate, Ms. Seema Jain, further by referring to the various statements of Managing Director or of the employees of Vishnu & Company submits that all the said statements are exculpatory except one statement of Shri Sunder, Managing Director, wherein he agreed with the statement of Paramjit Kakkar, partner of M/s.Singhal Transport Company. However, in his 6th statement, there is some reference to some clandestine removals, which might have done by M/s. Vishnu & Company but there is no evidence of the same in his 5th statement wherein Shri Sunder in clear terms, denied having indulged into clandestine activities. It is only when he is being called repeatedly for recording of the statement, he agreed that there might have been some clandestine removals.
30. Next referring to the statement of Shri Mohd. Kayum Khan, owner of the mini trucks relied upon by Revenue, she submits that as per the said statement, he used to transport the goods at night without the cover of any bills. She submits that the said statement is, on the face of it, contrary to the statement of all the transporters, wherein they have deposed that the goods always come to them under the cover of invoices wherein the name and address of trading firms, etc. is written. His further statement that all the mini trucks were parked in the compound of the factory of VCPL is contrary to the statement of the driver, wherein he has clearly deposed that the mini trucks, after being used, were parked at Motinagar stand. The said statement of Shri Kayum Khan stands admittedly written by Shri Riyaz Khan without giving any reasons as to why the same could not be written by Shri Mohd. Kayum Khan. She submits that such statements are not worthy of reliance. Neither Shri Kayum Khan nor Shri Riyaz Khan nor the driver of the said mini truck were tendered for cross-examination in spite of a request made to that effect. However, they submitted an affidavit clarifying the entire state of affairs.
30.1 As regards, the evidence of suppliers of raw materials /packing materials, etc. she submits that Revenue relies on the gate register of M/s. Ram Lal Ram Chandra, who was manufacturing canvas bags for the appellant, but the same cannot be relied upon being a third partys documents. In any case, she submits that gatekeeper of M/s.Ram Lal in his statement had clearly deposed that the said register was being maintained by earlier person, who has left the job. In spite of gate register having not being maintained by him, he explained the same as if the same related to the canvass bags cleared by the said manufacturer to Vishnu & Company. She submits that in the said gate register, the truck nos. are also mentioned and as such, it was possible for the Revenue to conduct investigations at the end of the truck owners/drivers so as to find out as to whether the said canvass bags were delivered to the appellants factory or not. No such investigation was conducted and as such, no reliance can be placed on the same. In any case, she submits that there were many spurious manufacturer, who were also engaged in manufacturing of Vimal brand gutka and were clearing using the brandname VIMAL. She draws our attention to a FIR dated 17.06.2002 lodged with the Police at Gwalior complaining about some other small manufacturers, manufacturing goods under their brand name and as a result of FIR lodged by VCPL, 480 bags of spurious VIMAL brand gutka manufactured by such spurious small manufacturers were also recovered from such manufacturers. She strongly contends that the said FIR was admittedly filed before the search of the transporters units and before the start of the investigations against the appellant. As such, they cannot be accused of creating a false defence.
31. By strongly relying upon the said FIR, she submits that it is not only the lodging of FIR but the same has also been proved to be a correct complaint with the recovery and seizure of 480 bags of gutka manufactured by these spurious manufacturers. In absence of any evidence to establish that such canvas bags were actually delivered at the appellants factory, the reliance upon the said 3rd partys document is not appropriate when it is established fact that others were also illegally using their brand name and were brining the goods to the market packed in identical packings. As regards the accusation of the department that they purchased 11500 jute bags during the relevant period but have shown production of much less than number of final product and there being no stock of jute bags in their factory at the time of visit of the officers, she submits that their factory consists of 3 floors and the Revenue has not made any efforts to find out the correct position of balance of such jute bags which might be lying scattered in their factory. Similar is the position in respect of menthol. She submits that if the said vital raw materials as also the packaging materials were to be nil in the appellants factory, which were actually lying at the time of visit of the officers, it was not possible for them to function without the same. This fact itself reveals that the stock taking was not conducted by the department properly and reflects upon wrong facts and factual position.
32. As regards the Revenues allegation that though the appellant had declared only 65 packing machines whereas 120 such machines were found to be installed in their premises, she submits that all these machines were old machines and though they were found to be 120 in number, all of them were not in working condition. Admittedly, the visiting officers found only 65 packing machines working at the time of their visit, she clarifies that the excess machines are kept in the factory so as not to hamper the continuous production in case of any of the machines becoming non-functional. She further submits that during the relevant period, the duty on gutka/pan masala was not based upon the number of packing machines installed in the factory and as such, the excess number of packing machines will not have any effect on the allegation of clandestine removal. She also submits that calculation made by the Revenue as regards the production, based upon the said packing machines is only hypothetical and theoretical and is not based upon the actual working of installed machines. The same is based upon the statement of other manufacturer, who might be dealing with different kind of machines or with different models. She clarifies that the production per machine is dependent upon a number of factors. On being questioned, she clarifies that the declaration about the number of installed machines was being made by the appellant in terms of some circulars issued by the jurisdictional Commissionerate and there was no requirement to declare such number of machines in terms of any statutory law. She further clarifies that Shri Sunder, Managing Director in his statement had clarified that they were working in one shift, which the Revenue has not controverted. If that be so, the number of packages alleged to have been produced by them were not capable of being produced.
33. As regards the report by Shriram Institute of Industrial Research relied upon by the Revenue, she submits that such report cannot be relied upon inasmuch as gutka is not a homogenous product. The same is mixed in a mixture with hand and then packed in a packing machine. During the said process, the percentage content of various raw materials may vary from pouch to pouch and in some pouch, contents of one constituent may be higher than the contents of the same material in other pouch. Such an exercise done by the Revenue was only a hypothetical exercise and such calculation of higher production on the allegation of suppression of less use of the raw materials cannot be appreciated.
34. Having dealt with the individual evidence produced by the Revenue, ld. Advocate reiterates its stand that the charges of clandestine removal are required to be established by production of positive and sufficient evidences. The entire case of the Revenue is based upon the surmises and junctures and the appellant has been able to effectively rebut all the evidences produced by the Revenue by giving an explanation of every charge. As such, submits the ld. Advocate that third party documents, which do not reveal either the appellants name or brand name read with the retraction of the statement either by way of affidavit or by way of cross examination, read with the fact that there are many units located in the same vicinity, which are manufacturing gutka and read with the fact that some of them are using the brand name starting with the initial V, read with the fact that FIR unauthorises use of their brand name by other smaller manufacturers of gutka was lodged by them well in advance of the start of investigation by the Revenue and the fact that such FIR resulted in seizure of the spuriously manufactured goods thus establishing the existence of other manufacturers using their brand name and lack of proper investigation by Revenue and absence of positive evidence to show clandestine removal by M/s.Vishnu & Co., she submits that allegations and findings of the clandestine removal cannot be upheld against them. She accordingly prayed for setting aside confirmation of demand and imposition of penalties on M/s. Vishnu & Company.
35. On the same ground, she submits that inasmuch as there was no clandestine removal by Vishnu & Company, the question of imposing penalties upon them or on the other appellants, who are either the Managing Director/employees or dealers/buyers, does not arise. She accordingly prays for setting aside the impugned order. As regards transporters, she specifically submits that all the transporters received goods against bills and they are under no legal obligation to check either the contents of the bags received by them for further transportation or to verify the correctness of the bills or to examine the duty paid character of the goods. As such, no contravention of rules can be found in respect of such transporter justifying any penal action against them. Similarly, while challenging the imposition of penalty on dealers/buyers, she submits that there is also no evidence to show that alleged clandestinely removed goods were received by the said dealers/buyers at their premises and except for the oral statement of some persons to show that the goods were being loaded at the premises of Santosh Tobacco, there is no production of any documentary evidence by the Revenue. She further submits that authorized representative of Santosh Tobacco never appeared and there is no such statement by Santosh Tobacco. Thus, to impose huge penalty of Rs.20 crores upon him based upon the statement of a third person, without there being any corroboration, is neither justified nor warranted.
36. In support of above arguments, she referred to the various decisions of the Tribunal as also of the Honble High Court and Honble Supreme Court, with which we shall deal with in subsequent paragraphs at the time of giving our findings.
37. As regards the submissions made by the Revenue, ld. DR refers to the written submissions filed by them after conclusion of the hearings. He very fairly has offered to give soft copies of the said written submissions. We are reproducing the same as such:-
1. Brief summary of the allegations The appellants did not account for their production which was clandestinely removed from their factory by loading into Mini trucks operated by Sh. Mohd Kayyum Khan, a transport contractor exclusively working for them. The contractor used to park his idle trucks in their factory. On most occasions, the Mini trucks moved out of their factory loaded with bags of Vimal Brand Gutkha without any valid documents showing payment of duty These clandestinely removed goods were transported to godowns of several transport companies for transportation to their dealers located in various States/cities of the country. These transporters mis-declared these goods in the transport documents. Transporters were provided trading invoices issued in the name of fictitious trading firms. The names of consignors and consignees declared in these invoices were fictitious to avoid detection and subsequent investigations against them.
The appellant had contended that these are the cash sales at the factory gate on which the excise duty had already been paid.
The Department has put forward a large body of evidences in support of these allegations to rebut their argument.
2. Background 210 bags of their finished product were seized on 5.7.03 by the officers from a transport company. Neither the production of these goods nor the clearance thereof find mention in the stock register. Thereafter searches were conducted at the premises of M/s. VCPL resulted in revelations of many discrepancies with respect to inputs, packing material and finished goods. The details of inputs found excess showing quantity and their value over and above the recorded balance is as below in the table:-
Table: 1 Sr. No. Description of the input Qty found excess Value(Rs.)
1.
Supari 9356 kgs 9,82,380/-
2. Raw tobacco 466 kgs 16,310/-
Total Rs. 9,98,380/-
It was observed that no account was being maintained in the factory in respect of other inputs and the packing material mentioned in the table below. In absence of any records the unaccounted goods were initially detained and were subsequently placed under seizure.
Table: 2 Sr. No. Description Physical Stock Value(Rs.)
1. Printed Pacing laminates 6355 kgs 7,30,825/-
2. Polypacks 4,04,000 Pcs 1,37,360/-
3. Cotton Bags 5450 Pcs 1,36,250/-
4. Catechu 850 kgs 2,55,000/-
5. Gutkha Mix(ready to pack) 1200 kgs.
2,76,000/-
6. Lime 700 kgs 11,550/-
7. Magnesium 3400 kgs 95,200/-
8. Elaichi(cardamom) 6490 kgs 35,25,650/-
9. Elaichi Dana(cardamom seeds) 1750 kgs 9,36,250/-
Total Rs. 61,04,085/-
3. Evidence of use of inputs for production of goods cleared clandestinely .
(a) Packing material not accounted.
(i) Canvass bags used for packing not accounted M/s. VCPL has not maintained any stock account of purchase and consumption of canvass bags procured from M/s. Ram Lal Ram Chandra (India) Ltd.(RLRC).
Records resumed from M/s. RLRC show that the actual number of canvass bags which M/s. VCPL had purchased from them, is several times higher than what has been shown in their books of account showing payments to M/s. RLRC. As per these records, even in a short period of 3 months between 1.4.03 to 4.7.03 they purchased 1,40,488 bags while the account books show payments for only 26,000 bags.
Other records like gate register, delivery challans, statements of gate keepers and the statement of Managing Director of RLRC abundantly proves that the dispatches shown in the records of RLRC to VCPL were in fact delivered to VCPL. In the records resumed by the department from RLRC, name of the notice as well as the brand name Vimal is prominently reflected in the relevant entries corroborated by the categorical statements of Sh Rajiv Gupta and the security guard of RLRC.
The sworn affidavit from Shri Rajiv Gupta which was given after more than one year of recording his statement stating that he was selling bags to unauthorized manufacturers of Vimal Gutkha also, against cash payment is clearly an afterthought. He has neither named nor identified any such manufacturer. The notice are charged with clandestine removal of 27396 bags of Gutkha during the period from 1.4.03 to 5.7.03 which would have required 109584 canvass bags. This compares well with the unaccounted for receipt of 1,14,488 bags during this period from M/s. RLRC.
This leads to irrefutable confirmation of allegation of the department that all these canvass bags printed with the company logo and picture of their product, purchased without maintain an account of their purchase, were consumed in unrecorded production.
(ii) Laminated films used for production of sachets not accounted.
Unaccounted stocks of flexible laminated films bearing Vimal brand were seized from two of the suppliers namely M/s. Pragati International, Najafgarh, Delhi and M/s. Lalwani Convertors, Rama Road Delhi.
The printed film rolls under seizure were not found accounted for in the stock register. No explanation was given for the unaccounted stock.
In case of the former, Sh. Ashok Chadha, the CEO has admitted having supplied unrecorded production to M/s. VCPL in the past.
In view of this, the recovery of unaccounted stocks of laminates produced for M/s. VCPL and admission of Sh Ashok Chadha ( not retracted so far), the allegations of the Deptt. in this regard are duly substantiated by credible evidence.
(iii) Non Accountal of 6413 jute bags.
Purchase account shows payment for 11000 bags for a short period of 3 months while consumption from daily stock account register is only 5087 bags for same period. As per their own calculations given in para 17.3 of their reply, M/s VCPL should have had a stock of 6413 jute bags in the factory on the date of search. However the panchnama shows no stock of jute bags on the date of search.
4. Raw Material Consumption.
(i) Menthol The assessee claims their manufacturing process requires Menthol consumption of 0.45% of the weight of the final product after all ingredients are mixed; while the analysis report says it is present only as 0.013%. It means that for every 450 gms claimed to have been added, only 13 gms are found on analysis. Even if an improbable 90% were to evaporate in such a short period, which is highly unlikely, the Noticee would have added only 130 gms in the mixture and not 450 gms. The rate of evaporation would have to be a whopping 97.2% to explain the gap between 450 gms and 13 gms which is in the realm of impossible.
It is therefore evident that huge quantities of Menthol were consumed in the factory in production of the goods that were not accounted for by falsely showing that the inputs were used in the manufacture of duty paid goods by using a formula that exaggerates the quantity of menthol used in manufacture.
(ii) Supari During the period from 1.04.03 to 4.7.03 consumption of Supari has been shown as 88545 Kg for the production of 5087 bags of various products. However, as per the analysis report, the consumption should have been 67,500 Kgs only. The reason for this difference is that, while the actual consumption is 67% of Supari in the total wt of the product, the book entries are made to show exaggerated consumption of 87-88% of Supari.
There was an excess stock of 9356 Kgs of Supari against the recorded balance. M/s VCPL, in para 4.2 of their reply, have tried to explain this excess by claiming that another consignment of 9600 Kgs purchased under invoice no 18446 dt 25.5.03 was not entered in the stock register. Neither on the day of the search nor for next 18 months did they inform the investigating officers about this invoice, thus denying the investigators an opportunity to conduct appropriate investigations as to the authenticity of this invoice.
5. Production Capacity.
The officers found 120 machines in the factory on the day of the search and the same has been recorded in the panchnama.
The noticee had declared to the jurisdictional Range officer that they are working on 65 machines. The point of dispute is the availability of another 55 machines in the factory.
While it is fairly acceptable that some machines may be kept in a standby mode to meet the exigencies of breakdowns, perhaps 5-7 additional machines could be reasonably kept to meet the act as stand by for 65 machines; it cannot be accepted that 55 machines were being maintained as standby for 65 machines.
Thus the allegation in the SCN in regard to excess, undeclared capacity of production holds good.
6. Documents resumed from Transporters & Statements of their employees indicating that goods transported were gutkha of M/s VCPL.
For the purpose of quantification of duty allegedly recoverable from M/s. VCPL, the investigations have mainly relied upon the records resumed from five transport companies listed below:-
A. M/s. Singhal Transport Co. Sadar Bazar, Delhi.
B. M/s. GG Carriers, Punjabi Bagh, Delhi.
C. M/s. Delhi Indore Transport Company, Tis Hazari Delhi D. M/s. Harsh Transport(P) Ltd., Dayabasti, Delhi E. M/s. Gopi Roadlines, Dayabasti, Delhi.
In the relevant entries of the transporters documents, registers, loose sheets, GRs & delivery challans, the goods have been described as Gutkha in respect of M/s. Singhal Transport Co. Sadar Bazar, Delhi, M/s. Harsh Transport(P) Ltd., Dayabasti, Delhi. and M/s. Gopi Roadlines, Dayabasti, Delhi. In the case of M/s. GG Carriers, Punjabi Bagh, Delhi, there are clear instructions to the booking staff to misdeclare the description of goods in their documents, as evidenced from entry on page 44 of record No. 8 seized from the office of M/s. G.G. Carriers.
(a) M/s. Delhi Indore Transport Company (Annexure A5).
In case of M/s. Delhi Indore Transport Company, the records resumed are the loading registers. However, both the persons namely Mr Vijay Singh and Mr Ravinder Kumar working in the booking office of the transporter have clearly stated in all the statements recorded from them over a period of time that the consignments identifiable by the letter V in the registers pertain to Vimal brand Gutkha. It was further stated that goods from the factory were received for booking almost every night. They do not book any other brand of Gutkha except Vimal brand. They have never even seen any invoice of M/s VCPL.
Regarding consignments listed under Anne. A-5, the SCN states in para-36 During the period between 8.5.03 & 28.6.03, A total of 8406 bags of Gutkha of Vimal brand were loaded in the trucks destined for Indore. Scrutiny of invoice books used by M/s VCPL during the same period shows that only two invoices nos 69 dt.11.5.03 and 121 dt. 4.6.03 were issued in the name of a party located in Indore. Both were dispatched through M/s Jaipur Golden Transport as mentioned on the invoices as well as the copies of GRs submitted by the transport company. Several invoices have been issued showing cash sales, where complete addresses of the buyers are not given. Name of the city against all such buyers has been mentioned as N Delhi. Deliveries against these cash sales have been made directly to the parties, as mentioned at the bottom of each invoice. Evidently, the Mini trucks deployed in the factory have not been used for these deliveries. Booking clerks of the transport company have clearly identified mini trucks of M/s VCPL as the vehicles which brought the goods to their godown from the factory. It is, therefore, clear that all the consignments booked from M/s Delhi Indore Transport Company are different from those sold against cash payment in their invoices. In absence of any invoices in their records, it is apparent that all the consignment booked by M/s VCPL have been cleared without payment of duty.
(b) M/s G.G. Carrier (Annexure A1).
Statement of Sh Harjinder Singh was recorded who explained the resumed records and their entries. The pan masala was being cleared as sweet supari as evident from many records resumed from the transporter duly explained in para 45 of the SCN.
For instance record no 8 seized from the transporter when translated in to English revealed as follows:
The word Jarda or Khand is to be written in place of pan masala.
The goods so transported are not sweet Supari, as declared and are actually Pan masala has been amply brought out from the documentary evidences and statements recorded. In fact the use of the words panmasala and zarda in place of Gutkha is frequently found in the record of transport companies . On the basis of loading registers resumed from M/s. G.G. Carriers it is observed that 20373 bags of Vimal Gutka .were transported by them on behalf of M/s. VCPL involving Central Excise duty of Rs. 6,72,30,900/-
From para 57 of SCN ,it is revealed that consignment shown in the invoice said to be the cash sales are of different from those booked from GG Carrier. No entries from these dispatches have been made in the statutory records of M/s VCPL. The contention of the appellant that all the records mentioned clearance of Pan Masala and not Gutkha has no relevance for the reason that it has been categorically admitted by Shri Harjinder Singh that the impugned goods were received from M/s. VCPL and during that time only gutkha was being cleared. In the records of transporter who may not be knowing the difference between Paan Masala and Gutkha in common parlance might be mentioning Gutkha as Paan Masala.
(c) M/s. Gopi Roadlines (Annexure A2).
All the consignments mentioned in Annexure A-2, prepared on the basis of Challans / other records of M/s. Gopi Roadlines and their Commission Agent Sh Sushil Kumar were of Vimal Gutkha, brought from the factory of the Noticee and the booking for the same was made by Sh S K Dube, an employee of the Noticee. The details of fictitious firms figure as the consignor/consignee in the records. As the noticee have categorically admitted these consignments as having originated from their factory, all the doubts relating to true identity of these goods become irrelevant. Detailed scrutiny of clearances shown in annexure A2 revealed that no corresponding invoices have been issued by the noticee. On comparing the cash sales invoices with transporter records it is observed that in invoice there is no mention of city/destination of the buyer as mentioned in transporter records. In fact the address mentions Delhi as the location of the buyer meaning there by that the said transporter cannot be used for movement of goods shown to be cleared against those cash sales.
(d) Harsh transport (Annexure A4) The noticees have clearly owned up all the consignments mentioned in Annexure A-2 and A-4, at least to the extent that these goods originated from their factory. The Director/ staff of Harsh transport have rightly identified all such consignments as of Vimal Gutkha originating from M/s VCPL. Sh. Ravi Bhandari, MD of M/s Harsh transport, has mentioned Mr Dube, employee of the noticee as the person who used to come to their transport company for booking of Gutkha.
Statement of Sh. Santosh Kumar Mishra, Booking Clerk of the Harsh transport company was recorded on 5.7.03 in which he stated, that all the consignment of Gutkha booked from their company were of Vimal brand Gutka and these consignments were always booked by Sh. Dube.
Statement of Sh. Kamal Panjwani, Partner of M/s Harsh Transport (P) Ltd., Bhopal was recorded on 7.7.03 in which he stated, that in none of the previous consignments of Vimal brand Gutkha received at Bhopal from his Delhi office, any duty paying documents accompanied the consignments.
The recovery of blank bill books from the premises of M/s. Harsh Transport Delhi, corroborates the statement of Sh. Ravi Bhandari, MD M/s. Harsh Transport the M/s. VCPL were booking their consignments in the name of fictitious firms Statement of Sh. Lokesh Jain was recorded on 17.11.03 in which he stated, that all the consignments of Vimal Brand Gutkha received by him from M/s Harsh Transport (P) Ltd. covered under GRs showing destinations as Akola or Amaravati and booked under various names as consignors & consignees, were always delivered to M/s Santosh Tobacco, Chindwara.
Scrutiny of invoice books of M/s VCPL Delhi revealed that no invoice was issued by them on 3.7.03. Last invoice (no 164) was issued on 1.7.03 in favour of Sh. Raj Kumar of Delhi. No invoice was issued in favour of M/s Sadhna Sales agency since 24.6.03 the date from which the invoice book begins. On the contrary one invoice no 411 dt. 3.7.03 issued by M/s Sadhna Sales Agencies, Tilak Bazar, KhariBaoli, Delhi-110006 was found attached with G.R.No. 225622 dt. 3.7.03. On investigation no such firm or company was found to exist in the area. In his statement recorded under section 14 of C.Ex. Act Sh. Ravi Bhandari, Managing Director, M/s Harsh Transport(P) Ltd, stated inter alia, that all the consignments of Vimal brand Gutkha were booked for dispatch by VCPL, Delhi, that he does not book Gutkha consignments for any other company.
Regarding Annexure A-4 in respect of M/s Harsh Transport the findings given in para-71 of SCN reveals that no invoices have been issued by VCPL to M/s Santosh Tobacco, Gandhi Ganj, Chindwara, as evident from the invoice books. None of these consignments figure in the records of M/s VCPL. Thus it leads to only conclusion that M/s VCPL has removed all the consignments clandestinely without payment of duty
(e) M/s Singhal Transport(Annexure A3).
The details of none of the bags transported by M/s Singhal Transport, appear in the invoices issued by M/s VCPL and thus the allegation of clearance without payment of duty is established. Statement of Sh Paramjit Singh of Singhal Transport was recorded who stated that the Vimal gutkha was transported by company own mini trucks to the place of the transporter. The description in the GR is shown different as per advice of M/s VCPL and they never received any invoice of M/s VCPL. Goods were dispatched from Singhal Transport on 3.7.03 and 4.7.03 while there are no invoices for anyone from the invoice book after 1.7.03.
7. Evidence of employees & contractor of M/s VCPL given in statements-
(a) Sh S K Dubey, an employee of the noticee is the common link between all the 5 transport companies and the operations in the factory of the Noticee. Booking clerks on all the 5 transport companies have mentioned Sh Dubey as the person who used to interact with them regarding consignments identified by them from their records as Vimal Gutkha. Either the name of Sh Dubey, or his mobile phone number, admittedly provided by the factory or his name along with telephone nos of the factory, have been noticed in the telephone diaries resumed from these transport companies. Sh. Dubey, in his statement has also admitted that he used to visit these five transport companies in connection with the booking of Vimal Gutkha from these transporters. Even the noticee themselves do not dispute the fact that Sh Dubey used to go to these transporters for booking Vimal brand Gutkha.
(b) In his statement Sh Kayum Khan, an independent transporter used by the Noticee for transporting their goods from the factory to transport companies, had stated that he used to transport their goods to seven transport companies. Five of these have already been mentioned above and remaining two are Jaipur Golden and Prakash Road lines. In his statement, he had explained that the consignments going to five transporters mentioned above used to be without bills/ invoices and those going to Jaipur Golden and Prakash Road lines were covered by valid invoices. His statement gets corroboration from the fact that one of the TATA-407 tempos, seized on 5.7.03 for having transported goods without valid documents, also belonged to him. It was further revealed by him that all such transport used to be in late night.
(c) Statement of Sh. Dinesh Khilnani, Supervisor M/s. VCPL(Noticee) was recorded. On a query he stated that he receives instructions for dispatch of Gutkha on plain paper slips which are called factory gate pass, that the said instructions on plain paper chits are given to him either by Sh. Prakash Ji of their company or Sh. Rama Kant Tripathi, that the names of the factory is neither printed on these paper slips not stamped, that even the brand name of the products is not mentioned on these chits. That the paper slip is either signed by Sh. PrakashJi or Sh. Tripathi, that the security guard identifies the signatures of both of them and allows exit of the truck after tallying the details on the slip.
That whenever and wherever the bill is issued for a particular consignment, it is issued by Prakash Ji, that he is not aware as to how many consignments have been covered under the proper bill/Invoices that he is not aware of the ratio between consignments covered under bills or cleared without bills.
(d) Statement of Sh. Rama Kant Tripathi, Supervisor of M/s VCPL was recorded in which he stated that vehicles for dispatch are either arranged by him or by Sh. Prakash Ji, that the dispatches are always made through mini trucks also called tempos supplied by Sh. Kayyum who owns 4 vehicles of TATA 407 make, that Sh. Kayyum is paid for the trips made by his vehicles on monthly basis.
Through various statements of persons connected with these transporters, the telephone nos of Sh Dube and/or of the factory of the Noticee, GR nos, Challan nos, loading registers, day books, blank bill books of factitious firms it is proved that the goods listed in the annexure A-I to A-5 of the SCN were of Vimal brand Gutkha and had originated from the factory of the Noticee.
8. Admission of the fact of clandestine clearances by notice.
210 bags of their finished product were seized on 5.7.03 by the officers from a transport company. Neither the production of these goods nor the clearance thereof find mention in the stock register. Consumption of nearly 1.35 lakh canvass bags certifies production of over 33000 bags between the period from 1.4.03 to 4.7.03. The account shows production of only 5087 bags. Sh H Sunder, Director M/s. VCPL has on more than one occasion admitted that finished goods were being removed from the factory without payment of duty. While in his letter offering Rs two crore as voluntary deposit, and as pointed out by the notice in their written reply, he mentioned that the deposit was toward demands which are anticipated, in the PLA, while debiting Rs 66 lakhs on 5.7.03 it was categorically mentioned as Voluntary payment of C. Ex. Duty towards clandestine removal of Vimal brand Gutkha manufactured in our factory as detected by the officers of DGCEI on 5.7.03. In his statements dt. 5.7.03 and 17.12.03, he has admitted that on occasions they had removed goods without payment of duty. In para 41.3 of their written reply, the notice has unambiguously admitted the duty liability on these 210 bags which were removed without issuing proper invoice.
Sh Harsinghani Sunder, Director of M/s VCPL, the noticee, has clearly admitted in his statement dt. 5.7.03 the clandestine removal of their goods without payment of duty while endorsing the statement of Sh Paramjit Kakar. He made a mention to the similar effect in the PLA. He did not retract his statement, till the filing of the reply to SCN, either through direct communication or in the any of his five subsequent statements.
It may be seen from aforementioned evidences that it is established against the appellants that all the consignments mentioned in the Annexures A-1 to A-5 pertain to transportation of Vimal Brand Gutkha, orders for which were placed on M/s VCPL by their outstation dealers, these originated from the factory of the Noticees M/s VCPL, were transported in the tempos of ShKayam Khan and booked at the transport on payment of freight by ShS.K.Dubey, an employee of M/s VCPL. These are different from the goods sold to local buyers of Delhi against the invoices listed by the noticees in the Annexure to their reply which were delivered at the factory gate to these buyers and were cleared without payment of duty.
9. Pleas raised by Appellant.
1) Disputed ground of law: Adjudication vitiated due to denial of right to Cross-examine witness A disputed ground for seeking order to allow the appeal is that cross examination of several people sought by the appellants was denied by the adjudicator.
This ground is not admissible as the noticee had submitted a list of 20 such witnesses sought to be cross examined. All the witnesses were allowed and all of them were given two opportunities each. Only 6 of them appeared. Of those who did not appear, two are their own employees namely Sh S.K.Dubey and Sh Dinesh Khilnani. The fact that their own employees did not appear is evidence that the appellants were neither serious in their request for cross examination nor were confident of facing questioning about the genuineness of their allegations. Since ample opportunities had been granted to persons to come for cross examination, no plea of failure to observe principles of natural justice can be raised at appellate stage.
2) Disputed ground that statements given by persons to officers is false and that the evidence of that is in sworn affidavits.
Instead of appearing for cross examination several persons chose to provide sworn affidavits to the noticee alleging high handed methods of the investigating officers. One of the Witnesses Sh M.R.Sehgal of M/s Gopi Roadlines appeared on second opportunity, but his cross examination was declined by the Ld. Advocate of the appellants. Almost all those who did not attend, provided affidavits.
The investigations were completed in December, 2003 and their statements had been recorded much earlier; most of these being in July, 2003. Yet, the affidavits were given only in December, 2004 and January 2005 and even afterwards. The time lapse in filing the affidavit is sufficient evidence to show that these affidavits are just after thoughts.
A close scrutiny of the affidavits show that at least five of these, namely those of Mohdliyas, Vijai Singh, S.K.Dubey, Ravinder Kumar and Sushil Kumar were given before the same Notary Public, namely Sh Surendra Kumar. All these were drafted by the same person namely ShD. D. Harsinghani, whose identity and relationship with all these witnesses has not been disclosed. The residential address of Sh Harsinghani has been shown as 8/134, Ramesh Nagar Delhi. Both the name and the residential address of Sh D.D. Harsinghani have an uncanny resemblance with Sh Suder Harsinghani, the Director of M/s VCPL and residing at 8/133, Ramesh Nagar, Delhi.
In view of the circumstances explained above the aforesaid affidavits have no evidentiary value and are liable to be rejected as afterthought on part of the appellants.
3) Disputed Ground of law: Please that goods may have been cleared on cash sale basis.
The appellants main ground for disputing the charge of clandestine removal is that all the goods alleged to have been transported through the above listed 5 transporters in the SCN (Annexures A-1 to A-5, comprising 38957 bags of Vimal brand Gutkha), were those booked by their customers, who had purchased these goods from the noticee on payment of duty and were delivered by the noticee at his factory gate.
The Commissioner while dealing with this issue has recorded reasons for not accepting these pleas (paras 70 to 75 of the OIO). The Commissioner has scrutinized the list of such cash sales pleaded by the notice along with annexures A1 to A5 and records that neither the dates nor the quantities of goods tally. In particular para 75 clearly brings out the quantity shown as the cash sales vis-`-vis quantity cleared by Annexure A-I to A-V . It clearly brings out that during the period of cash sales neither the dates tally nor the quantities.
This ground appears to have been taken to put a red herring on way to proper evaluation of the evidence of clandestine removal. The appellants do not claim to know the names of people who could have possibly taken possession of these goods that have been mentioned in the records of their transporters. They are not in a position to corroborate the removals in question with record of cash sales in their books of account.
In this relation it is essential to recapitulate the evidences that go to indicate the nature of removal of the goods from the factory premises. They can be summed up from the O-in-O in the following manner:-
1) 210 bags of their finished product were apprehended on 5.7.03 by the officers from a transport company which were immediately transported to the factory of M/s VCPL. Neither the production of these goods nor the clearance thereof finds mention in the stock register.
2) As per these records, even in a short period of 3 months between 1.4.03 to 4.7.03 they purchased 1,40,488 bags while the account books show payments for only 26,000 bags. The notice are charged with clandestine removal of 27396 bags of Gutkha during the period from 1.4.03 to 5.7.03 which would have required 109584 canvass bags. This compares well with the unaccounted receipt of 1,14,488 bags during this period from M/s. RLRC.
3) Unaccounted stocks of flexible laminated films bearing Vimal brand were seized from two of the suppliers namely M/s. Pragati International, Najafgarh, Delhi and M/s. Lalwani Convertors, Rama Road Delhi.
4) As per their own calculations given in para 17.3 of their reply, M/s VCPL should have had a stock of 6413 jute bags in the factory on the date of search. However the panchnama shows no stock of jute bags on the date of search.
5) Huge quantities of Menthol were consumed in the factory in production of the goods that were not accounted for by falsely showing that the inputs were used in the manufacture of duty paid goods by using a formula that exaggerates the quantity of menthol used in manufacture. During last 3 years of search more than 1000 kgs/year has been purchased by notice as proved by purchase bills even though the quantity consumed as per accounted production was only about 60 kgs only.
6) There was an excess stock of 9356 Kgs of Supari against the recorded balance on the date of search.
7) The officers found 120 machines in the factory on the day of the search and the same has been recorded in the panchnama. The noticee had declared to the jurisdictional Range officer that they are working on 65 machines. The point of dispute is the availability of another 55 machines in the factory. While it is fairly acceptable that some machines may be kept in a standby mode to meet the exigencies of breakdowns, perhaps 5-7 additional machines could be reasonably kept to meet the act as stand by for 65 machines; it cannot be accepted that 55 machines were being maintained as standby for 65 machines.
8) In the relevant entries of the transporters documents, registers, loose sheets, GRs & delivery challans, the goods have been described as Gutkha in respect of M/s. Singhal Transport Co. Sadar Bazar, Delhi, M/s. Harsh Transport(P) Ltd., Dayabasti, Delhi. and M/s. Gopi Roadlines, Dayabasti, Delhi. In the case of M/s. GG Carriers, Punjabi Bagh, Delhi, there are clear instructions to the booking staff to misdeclare the description of goods in their documents, as evidenced from entry on page 44 of record No. 8 seized from the office of M/s. G.G. Carriers.
9) the consignments identifiable by the letter V in the registers pertain to Vimal brand Gutkha in view of the instructions given by VCPL (?).
10) The pan masala was being cleared as sweet supari as evident from many records resumed from the transporter duly explained in para 45 of the SCN. For instance record no 8 seized from the transporter when translated in to English revealed as follows. The word Jarda or Khand is to be written in place of pan masala. In fact the use of the words panmasala and zarda in place of Gutkha is frequently found in the record of transport companies . On the basis of loading registers resumed from M/s. G.G. Carriers it is observed that 20373 bags of Vimal Gutka .were transported by them on behalf of M/s. VCPL involving Central Excise duty of Rs. 6,72,30,900/-.
11) Sh. Kayyum who owns 4 vehicles of TATA 407 make, that Sh. Kayyum is paid for the trips made by his vehicles on monthly basis. one of the TATA-407 tempos, seized on 5.7.03 for having transported goods without valid documents, also belonged to him.
All aforementioned documentary evidences have been corroborated by statements of around 20 persons comprising of noticee himself, noticees employees, transporters & its employees, raw material suppliers, packing material suppliers and local TATA 407 vehicles contractor. None of these statements were ever retracted. A 18 months delayed futile attempt to obtain sworn affidavits from few instead of cross-examining them has been explained above.
The lack of transparency in conduct of business operations of the appellants, which facilitates clandestine removal of goods produced by them, is in piece with the past record of the appellants wherein they have faced 9 investigations within a span of 2 years from the C.Ex. Deptt. alone out of which, by their own admission 5 were not appealed against and for one they were turned back by the Settlement Commission. All these 6 cases pertained to the charge of clandestine removal.
The ground taken by them that the goods removed may have been removed by some unnamed persons who purchased on cash basis is merely a conjecture which gets defeated by the host of evidence listed above that clearly point to clandestine removal of goods.
38. Appeals arising out of order-in-original No. 152/2005 dated 21.11.05.
Vide the said impugned order demand of Rs.2,75,15,400 stand confirmed against M/s. Vishnu & Co. along with imposition of penalty of equal amount. In addition, penalty also stands imposed on various other appellants who are either transporter companies or the Managing Director/employees.
38.1 As per facts on record, the Revenue searched the business premises of one transport company M/s. Laxmi freight Carriers Pvt. Ltd. on 3.9.03. 140 bags of gutka of vimal brand was found lying in the said premises. On demand, the sale bills of M/s. Vikram Sales Agency were produced and the consignment was found to be booked in their name. Revenue officers entertained a view that the said consignment of Vimal brand gutka was actually booked by Vishnu & Co. in the fictitious name of Vikram Sale Agency. Accordingly, they conducted further search of the said transporter company and resumed various documents like GRs . Scrutiny of said GRs revealed that various consignments of Gutka were booked in the names of various traders like AM Agency, M/s. Dinesh Ganesh Trader, M/s. National Trading Company and M/s. Goyal Trading Company. Statements of Shrishri Kant, the person looking after work of Laxmi Freight Carriers were recorded wherein he stated that they were transporting the consignments of VIMAL brand gutka only, which were coming to their premises through the tempo along with the bills of various trading firms on which full address is not written. Inasmuch as the goods always used to come through same tempos, he was aware that same were of Vimal Brand. Though he does not know the name of the labourer who used to accompany the consignment but he recognizes him. He also deposed that one copy of the GR was always given to the labourer accompanying the goods and the freight for consignment was paid at Surat and Shri Gopal Prasad, Director of M/s. Laxmi Freight Carrier can explain about the same.
38.2 His second statement was recorded on 16.9.03 wherein Shrishri Kant stated that he did not know any official of M/s.VCPL. He was also shown the statement of Shri H. Sunder dated 5.9.03 wherein he stated that they never transported goods through M/s. Laxmi Freight carriers. He stated that Shri Sunder was wrong.
38.3 Further statement was recorded on 8.10.03 wherein he again reiterated that the freight for transportation of gutka was always fixed by Shri Gopal Parashar, Director. He further clarified that Shri R K Tripathi of Vishnu and Company sometimes spoke to him for availability of the space. He clarified that Vimal brand gutka was not written on the GRs on the instruction of VCPL. He also gave the telephone number of VCPL on which he used to talk. His statement was recorded on 16.4.04 wherein he stated that 30 bags were received by them on 2.9.03 at 8.00 PM on the bill of Vikram Sales Agency and 10 bags were received in the import on 3.9.03 on the bill of Vikram Sales Agency. Said 140 bags were seized by the officers on 3.9.03.
38.4 During further investigation statement of one Shri M L Sharma loading incharge of M/s. Laxmi Freight Carrier were recorded on 22.9.03 and 8.10.03. He also deposed that they used to receive Vimal Brand gutka in the tempos and that they have never transported gutka of any other brand except of Vimal brand. Shri R K Tripathi of M/s. Vishnu used to speak to him. Statement of Shri Gopal K Parashar, Director of Laxmi Freight Carrier was also recorded on 6.11.03 wherein he submitted that though they were transporting gutka but he was not aware of the brand of the same inasmuch they have never opened the bags. However, when the statement of Shri Srikant was shown to him, he agreed with the same.
38.5 During the course of further investigation, statement of Shri R K. Tripathi Managing Vishnu and Co. was recorded on 2.12.03 and 16.2.04. In the said statement, he denied having booked the gutka for transport through M/s. Laxmi Freight Carrier. He also denied having talked to any of their employees. Further statement of Shri R.K. Tripathi, Excise Incharge of M/s.VCPL were recorded. Said statements are not incriminating inasmuch as no question as regards transportation of Vimal Brand Gutka through Laxmi Freight carrier was put to him.
38.6 In his statement recorded on various dates, Shri H. Sunder Director of Vishnu and Company deposed that they are selling their branded gutka in the state of Gujarat, Madhya Pradesh and Rajasthan and receiving payments in cheques. They are also making cash sales at the factory gate when the buyer book their own vehicles. He clarified that they had made cash sales on 3.9.03 and the buyers might have booked the goods. He denied having sent the gutka to the said transport company. On being asked as to why full address of the buyers who purchased the gutka in cash at the factory gate was not being given in the sale memo, he stated that according to his knowledge and information there was no requirement.
38.7 Revenue also recorded statement of Shri Abdul Kayum Khan, owner of tempo and Shri Miraz Khan, driver of the tempos who according to the statement of Shri Srikant were bringing the Gutka to his factory, wherein they denied having ever transported the Vimal brand gutka from the factory of M/s. VCPL to M/s. Laxmi Freight carriers. On being asked whether they know the booking clerk of Laxmi Freight carriers, they denied the same.
38.8 As a further investigation, the details of call records of mobile phone of Shri R.K. Tripathi was also obtained and it was found that calls made between Shri R K Tripathi and M/s. Laxmi Freight Carriers during the period 1.7.03 to 3.9.03 were six and that between 4.9.03 to 10.10.03 was six and after the date of search there were 8 calls. Similarly the calls between Shri R K Tripathi and Gopal Parahsar, Director of Laxmi Freight Carrier were found to be zero prior to the date of search and 3 after the date of search.
38.9 The searches conducted in the factory premises of VCPL on 03.09.03 resulted in alleged excess stock of supari and tobacco. Similarly it was found that though there was lamination stock available in the factory, no records were being maintained by them.
38.10 In addition to the seizure made at the premises of Laxmi Freight carriers, there was also seizure of 160 bags of Vimal Brand Gutka found at the godown of M/s. Singhal Transport. On the above basis, revenue entertained a view that the GRs issued by M/s. Laxmi Freight Carriers showing transport of gutka in the names of various trading units, was actually clandestine clearance of gutka by M/s. Vishnu and Co. and as such, based upon the same demand was raised against the appellant. In addition to 160 bags found at M/s. Singhal Transport and 140 bags found at the premises of Laxmi Freight Carrier, 25 boxes of sweet supari were seized from M/s. Gopi Road Lines were also proposed to be confiscated. The said show cause notice stand adjudicated by the Commissioner confirming demand and imposing penalties as mentioned in para 14 above.
39. Arguing for the appellant, learned counsel Ms. Seema Jain submits that Revenues case is based upon the statements of Shri Shrikant and of Shri M.L. Sharma of M/s. Laxmi Freight Carriers. She submits that both the said deponents were tendered for cross examination and during the cross examination they clearly deposed that since the consignment received by them on 2nd and 3rd Septemeber of 2003 was opened by the officers at the time of visit on 03.09.03 and was found to be containing Vimal Brand Gutka, he just presumed that all the previous consignments were also of Vimal brand gutka and that is why he made a statement that all the previous consignments were of Vimal brand gutka. She submits that otherwise also the statement of Shri Shrikant is not reliable statement on the face of it inasmuch as he has disclosed certain tempo numbers which was allegedly used for transporting the gutka from the factory to their premises but when the owner of the said tempo was questioned by the Revenue, he in his statement very clearly denied having used tempos for transportation of Gutka from the factory of M/s. VCPL to the premises of transporters M/s. Laxmi Freight Carriers. She also submits that said statement of Shrishri Kant is again proved to be wrong inasmsuch as the said deponent stated that every time the consignment was received by them, they used to talk to R K Tripathi. However, the call records of R K Tripathi very clearly reflects upon the fact that there was only 6 calls prior to 3.9.03 out of which three were incoming and three outgoing. Similarly, these call records reflect that there was virtually no telephonic conversation between R K Tripathi and Shri Gopal Prashar. This fact is contrary to the details given by Shri shri Kant wherein he apart from the accepting that there was regular telephone conversation between him and Shri Tripathi, also stated that Tripathi was fixing the freight with the Director on telephone. She submits that this documentary evidence are contradictory to the oral disclosure made by the employees of Laxmi Trading Company which in any case are contrary to the details found by the Revenue itself.
39.1 Learned counsel also submits that Director of Laxmi Freight in his initial statements have denied that the consignment received by him were of Vimal brand gutka as same were never opened. He in cross examination also clarified that he was recording the correct factual position when he was taken to a next room and was shown the statement of his employees and was pressurized to accept the same.
39.2 Similarly by referring to the statements of R K Tripathi, she submits that said statements are exculpatory as he, in his statements has clarified that they also sell the goods in cash and the consignment booked at Laxmi Freight Carrier might have been by the buyers who purchased the goods against cash at the factory gate. As regards the excess found raw materials, she submits that there are marginal difference in the quantum of material which may vary from the entries made in the form IV register on the date of visit of the officers. The said raw materials had not been utilized by the time of visit of the officers and as such were lying on the factory floor. The same were taken into consideration while arriving at the excess of the same.
39.3 In view of the above, learned advocate submits that there is virtually no evidence of illegal purchase of any of the raw material and payments made for the same to the supplier. There is no identification of any supplier of the raw materials neither is there any identification of the buyers of the final product. The Revenues entire case is based upon the third party documents recovered from the premises of transporter which, in any case, do not bear any reference either to the manufacturing unit or to the brand name. and statements of the employees have also been demonstrated to be contrary to the documentary evidence produced by the appellants. She submits that charges of clandestine removal are serious charges and are required to be confirmed by production of cogent and positive evidence. There is not even an iota of evidence to prove the allegation of clandestine manufacture of huge quantum of gutka and clearance of same without payment of duty. As such, she prays for setting aside the confirmation of demand of duty and imposition of penalty against M/s. Vishnu and Co. As a consequence, she submits that penalty imposed upon the employees and transporter would also get set aside.
40. Countering the argument of Ms. Jain, Advocate, learned Departmental Representative, Shri R K Verma draws our attention to the statement of Shri Srikant of Laxmi Freight Carrier wherein he in very clear terms stated that they are transporting gutka of only one brand name and the same is VIMAL brand. This fact according to the learned DR reflects upon the bonafides of said deponents inasmuch as he not knowing the name of the manufacturer has not stated the name of the manufacturer but has disclosed the brand name. Further the fact that Vimal brand gutka was found at the premises of transporter under the cover of bill raised in the name of Vikram Sales Agency corroborates the Revenues understanding that Vikram brand Gutka was being transported by M/s. Vishnu and Company under the name of fictitious bills. He also submits that since no detail of address of the said trading firm is available, no further investigation could be carried out at their end. He also submits that said bills raised by them in the name of trading unit was consigned to self and as such, the entire exercise was being done in a secrecy.
40.1 He also submits that statement of Shri Srikant was duly corroborated by the statement of Shri M.L. Sharma wherein he also disclosed the brand name of the goods as VIMAL brand gutka.
40.2 Learned DR submits that statement of these two employees of Laxmi Freight carriers was also recorded on various dates after the seizure and during the course of further investigation and all the statement so recorded by the Revenue are pointing only towards one fact that gutka booked through them was the product of VCPL. These statements were never retracted earlier and it is only during the course of cross examination that the said two deponents clarified that they never opened the boras as they were not authorised to open the same and it was only when the present consignment was found to be of Vimal brand gutka they assumed the earlier consignment to be of Vimal brand gutka. The contention of the learned DR is that such disclosure for the first time by the said deponents during the course of cross examination cannot be held to be correct reflection of the truth and the due importance should be given to the first statements recorded by the Revenue. As regards the contradictions pointed out by learned counsel for the appellant in the statement of said two deponents, learned DR submits that Shrishri kant and Shri Sharma have disclosed even the number of tempos which were used to bring the goods to their premises. The fact that the owner of the said tempos has denied having brought the goods to Laxmi Freight Carrier cannot be pressed into service inasmuch as even the Director of the Company, Shri Sunder has admitted the use of the same very tempos for transportation of the goods to other transporters premises. Similarly as regards the call records, learned DR submits that the same clearly indicate that Shri R.K. Tripathi was in telephonic contact with Shri Parashar of M/s. Laxmi Freight Carriers and these calls were obviously for booking of the consignments of gutka by VCPL through M/s. Laxmi Freight Carriers. Learned DR further submits that there was discrepancy in the stock of the raw material found on the date of visit of the officers which is indicative of the fact that said manufacturing unit was indulging in clandestine activities.
40.3 As regards the appellants statement that said consignment might have been booked by a third buyer who purchased the goods at factory gate against cash bill, on the date of seizure from the transporter company or earlier same is nothing but an afterthought. By referring to the stock of goods entered in RG I register and the quantum of goods which could have been manufactured on the date of visit of the officer, learned DR submits that they have intentionally issued cash bills on the date of visit so as to cover up the discrepancy of stocks. He referred to para 39.3 and 40.2 of the impugned order in original. Thus the appellants plea that after buying the goods at the factory gate they were being booked by their buyers cannot be appreciated. He further submits that even the names of the buyers shown in the invoice issued for cash sales do not relate to the names of the persons who get the consignment booked at the transporters end. If, it is the customer who booked the goods after buying the gutka at the factory gate against cash as, contended by learned advocate, in that case the name of the buyers and the name of the consigner should match along with other relevant details which in fact are not matching. As such, it is clear that the consignment of gutka booked at Laxmi Freight Carrier was other than the cash sales made by the appellant and was out of stock of the clandestinely manufactured and cleared gutka. In view of the above, he submits that the goods seized at the premises of Laxmi Freight and also at M/s. Singhal Transport and M/s. Gopi Roadlines are liable to confiscation inasmuch as those transport companies has also deposed that the goods were received by them from M/s. Vishnu and Company.
41. In her rejoinder learned Seema Jain, submits that result of cross examination requires to be accepted otherwise the same would loose its purpose. As the said deponent clearly stated that consignment were never opened by them, the said statements have to be accepted. She also reiterated her defence submissions made in the first case. As regards the use of vehicles, she clarified that admittedly the vehicle numbers disclosed by Shri Khan were being used by VCPL, but the question is whether the same are used for Laxmi Freight Carrier. Shri Sunder has denied the said fact.
42. Learned DR also stated that initial statement given by the transporter and their employees have to be accepted as the correct reflection of the factual position and as such admissible as evidence in support of allegation of duty evasion against VCPL. Further elaborating his arguments, he submits that there was no immediate retraction to the said statements and the denial at the time of cross examination which was done almost after two years is, on the face of it at the behest of the manufacturer, as the transporter have to get their business from the manufacturer. He further submits that by tendering incriminating statement, the said deponent also invited penal action against them. As such no reasonable person would tender the statement merely to damage the manufacturer wherein he also involves himself in the process and invite the penal action. By keeping in view the above facts, the reliance on the statement of the employees of the transporter is appropriate and proper.
43. Revenue in Appeal No. E/2700/2006 43.1 The said appeals stand filed by the Revenue against that part of the impugned order in original No. 141/2005 dated 19.6.2005 with which we have dealt in the first part of the impugned order. Vide the said order, Commissioner has dropped the confiscation of excess found raw materials. Revenue is in appeal against that part of the impugned order of the Commissioner vide which he has also dropped the proposal to confiscate the goods found at the premises of M/s. Lalwani Convertors and M/s. Ashok Tobacco and the alleged unaccounted raw materials seized from the premises of VCPL.
43.2 Learned advocate appearing for the manufacturing unit submits that thought the Revenue has shown three respondents in the same appeal, but only one appeal number is given by the registry and there is no notice served to M/s. Lalwani Convertors and M/s. Ashok Tobacco. Though we find that the Revenue was required to file three separate appeals, but keeping in view that all three respondents stand shown in the same appeal and it is only a technical lapse, we treat the said appeal as having been filed against three respondents.
43.3 Learned DR submits that admittedly M/s. VCPL had not maintained any records as regards receiving and consuming of all inputs, though the records were being maintained in respect of two main raw materials i.e. tobacco and supari. However, inasmuch as there are number of other raw materials used by the said assessee, they were under legal obligation to maintain the records. The non-maintenance of the records would result in confiscation of the inputs and the Commissioner has erred in dropping the same. In any case, he submits that as the non-maintenance of records would invite penal action against the assessee in terms of provisions of Rule 25 of Central Excise Rules, 2002.
43.4 As regards the dropping of proposed confiscation of the flexible laminates seized from the premises of manufacturer of the same - M/s.Lalwani Convertors and kimam and raw tobacco seized from the premises of M/s.Ashok Tobacco, he submits that the said goods were meant for onward transportation to M/s. Vishnu and Co. who would have used the same for clandestine use and manufacture of final products. He submits that two said units have not maintaining any records of the goods manufactured by them and that they were working in small scale exemption. He submits that there is no exemption from the maintenance of records and it is absolutely necessary to maintain such records so as to find out as to at which date and point of time they crossed the SSI limit. As such, he prays that the impugned part of the order passed by Commissioner be set aside and Revenues appeal be allowed.
43.5 Learned advocate Ms. Seema Jain reiterates the finding of the Commissioner and submits that the Commissioner has rightly concluded that there is no provision of law providing seizure or confiscation of the raw and the exempted units M/s.Lalwani Convertors and M/s. Ashok Tobacco were not required to maintain records in respect of goods manufactured or produced by them as they were availing full duty exemption under SSI exemption notification and were also exempt from registration under Central Excise Rules. As such, she prays that the Revenues appeals be rejected.
43.6 Both sides in the course of their arguments referred to and relied upon various precedent decisions which we shall be referring to at the time of conclusion of the matter.
44. We have considered the submissions from both the sides and perused the records.
45. The main Appellant VCPL manufacture VIMAL brand gutka in pouches of MRP of rupee one. Fifty gutka pouches are packed in a bigger plastic packet and fifty five such packets are packed in one canvas bag. Four such canvas bags are packed in one gunny bag. Each gunny bag thus contains 11000 retail gutka pouches. The printed plastic laminated rolls for packing of gutka into retail pouches and packing of retail pouches into bigger plastic packets, canvas bags for packing of bigger plastic packets of gutka and gunny bags in which four canvas bags are packed are procured from different sources. There is no dispute that clearances to dealers were in gunny bags. While the gunny bags are unmarked, the retail plastic pouches, bigger plastic packets in which fifty retail pouches are packed and canvas bags in which 55 bigger plastic packets are packed have the manufactures name, brand name, logo details of the gutka packed, etc. printed on them.
45.1 The duty demand of Rs. 12,85,58,100/- against the main Appellant VCPL on 38957 bags of VIMAL gutka alleged to have cleared by them without payment of duty during the period from 01.04.2002 to 05.07.2003 is based on the records loading register & challans of five transport companies M/s GG Carriers, M/s Singhal Transport Co., M/s Harsh Transport Ltd., M/s Gopi Roadlines and M/s Delhi Indore Transport Co.
45.2 The duty demand of Rs. 2,75,15,400/- against VCPL on alleged clandestine clearances of 8338 bags of VIMAL gutka during the period from 14.07.2003 to 02.07.2003 is based on the GRs recovered from the premises of M/s Laxmi Freight Carriers Pvt. Ltd.
45.3 Sofar as the allegation of duty evasion of Rs.12,85,58,100/- is concerned besides the transporters records which consist of GRs or entries in the loading registers maintained by them (none of which mention VCPL as the consignor), the other evidence relied upon by the Department in support of allegation of duty evasion against VCPL is
(a) statements of employees/ Directors of the Transport companies implicating VCPL;
(b) statement of Sh. H. Sunder, Director, VCPL, Sh. Dinesh Khilnani, & Sh. Ramakant Tripathi, Supervisors, VCPL and Sh. Shiv Kumar Dubey, Supervisor, VCPL;
(c) Statements of Shri Kayum Khan, owner of four Tata 407 vehicles; Shri Sita Ram, Driver of Truck No.HR-38D/4117 of M/s. Singhal Transport Company from which 40 bags of VIMAL gutka were seized on 5.7.2003 when it was parked just outside the premises of Singhal Transport Company and of Shri Mohhmed Illias, Driver of the truck no.DL-1L A6232 of Shri Mohd. Kayum Khan which were found parked outside the premises of M/s.Singhal Transport Company on 5.7.2003.
(d) Test report dated 28.08.2003 of Shriram Institute for Industrial Research in respect of a sample of VIMAL brand gutka seized from the premises of M/s. Singhal Transport according to which the percentage of Supari, Lime, tobacco, katha and Menthol in the sample of vimal gutka is 68%, 2.2%, 5%, 15.5% and 0.013% respectively as against VCPLs claim of percentage of supari, tobacco, katha and menthol as 86%, 6%, 5% and 0.47% respectively.
(e)(i) Gate register maintained at the factory gate of the factory of M/s Ram Lal Ramchander (I) Ltd. (RLRC), the supplier of canvas bags with VCPLs name, brand name & logo printed on them, according to which, the number of canvas bags supplied to VCPL during 1.4.2002 to 4.7.2003 was several times more than the number of bags shown to have been used by VCPL during the same period. (Four canvas bags containing 2750 pouches each are packed in on gunny bag).
(ii) Statement of Shri Rajiv Gupta, Managing Director, RLRC.
(f)Alleged failure of VCPL for account for 6413 jute bags during period from 01.04.2003 to 05.07.2003 inasmuch as during this period, VCPL purchased 11500 jute bags from M/s Shyam Jute Industry and on 05.07.2003 at the time of officers visit to the factory, there was no stock of jute bags while in the RG-1 register for this period, production of only 5087 bags of gutka had been shown which indicated that the missing jute bags had been used for packing of gutka pouches cleared clandestinely without payment of duty. Similarly there is alleged failure on the part of VCPL to account for a huge quantity of menthol inasmuch as while on search of the factory, an invoice showing purchase of 1000 kgs. Of menthol from M/s. MKS Aromatics, Delhi was found whereas at the time of search of the factory on 05.07.2003, there was no stock of menthol.
(g) At the time of search of the factory of VCPL on 05.07.2003, 120 pouch sealing machines were found installed as against the declared number of 65 machines.
45.4 As regards the duty demand of Rs.2,75,15,400/- against VCPL which is the subject matter of second set of appeal, the same, in addition to the GRs recovered from the premises of M/s. Laxmi Freight Carriers is based on the following evidences-
(1) Seizure of 140 bags of vimal gutka from the premises of M/s.Laxmi Freight Carriers booked in the name of M/s. Vikram Sales Agency which was found to be untraceable.
(2) Statements of Shri Shrikant, booking clerk and Shri M.L. Sharma, Loading in charge of M/s. Laxmi Freight Carriers implicating VCPL and its employee, Shri R.K. Tripathi.
(3) Statement of Shri Gopal Parashar, Director of M/s.Laxmi Freight.
(4) Telephone call details of Shri R.K. Tripathi of VCPL during period from 1.7.2003 to 10.10.2003.
(5) Seizure around the same time of 160 bags of VIMAL Gutka from the premises of Singhal Transport without any invoice and 25 boxes of sweet supari from the premises of M/s. Gopi Road Lines without any invoice.
46. Ld. Departmental Representative pleads that while the duty demands in both sets of appeals have been calculated on the basis of entries in the registers/challans/GRs recovered from the transporters offices read with the statements of the Directors/employees of the transport companies, the evidences as mentioned in para 45.3(d) to 45.3 (g) above further support the departments allegations, as these evidences clearly indicate that VCPL were grossly under-reporting the manufacture of gutka by adopting various modus operandi i.e showing inflated consumption of supari, tobacco and menthol and under reporting the receipt and consumption of canvas bags and the number of pouch packing machines installed and their failure to account for the consumption of jute bags and menthol,which they had purchased under invoices recovered from their premises also indicates that the missing jute bags and menthol had been used for manufacture and packing of unaccounted gutka. On the other hand, the plea of Ms. Seema Jain, the ld.Counsel for the appellants is that there is no unaccounted consumption of jute bags and menthol,that the departments contentions that at the time of visit to their factory on 5.7.2003,there was no physical balance of menthol or jute bags is incorrect, inasmuch as the stock of jute bags and menthol has been physically checked and even the panchnama is silent on this issue, that as regards allegation of receipt of 615650 canvas bags from M/s. Ram Lal Ram Chandra India Ltd, during period from April, 2002 to 4.7.2003, which would translate into production of about 1,53,912 bags of gutka as against a much lower figure of production of gutka in terms of gunny bags shown during this period, in their records, this allegation is purely based on the entries in the gate registers maintained by the gate officers in the factory of RLRC, that there is no evidence of receipt of this much quantity of canvass bags in the factory of VCPL during April, 2002 to 4.7.2003 period, that the appellant during this period have received only 105000 canvass bags, which is evident from the computer print-outs taken from the suppliers computer, that delivery challans resumed by the officers from the factory of RLRC nowhere indicate that canvas bags mentioned in the gate register as supplied to VCPL have been received by the appellant and in this regard, no inquiry has been made with the drivers or owners of the trucks, whose numbers are mentioned in the delivery challans, that Shri Rajiv Gupta of RLRC was not made available for cross-examination, while in the affidavit filed by him, he has stated that certain quantities of canvass bags bearing Vimal brand name have been sold at the factory gate in cash, that there were other manufacturers of gutka unauthorisedly using the brand name Vimal of VCPL as is clear from the various evidences and it is those manufacturers of duplicate Vimal brand gutka, who must have purchased the canvass bags from RLRC and that, in any case, just on the basis of the third partys records, the allegation of purchase of such a huge quantity of canvass bags and based on that, allegation of duty evasion cannot be made against VCPL, that as regards the test report of samples of Vimal brand gutka by Shri Ram Institute for Industrial Research, this test report gives the percentage of supari, lime, tobacco, katha and menthol and the Vimal brand gutka as 68%, 2.20%, 5%, 15.5% and 0.013% respectively as against the declared content of supari, tobacco, katha and menthol as 86%, 6%, 5% and 0.47% respectively, that while the main ingredients of gutka are supari, lime, tobacco, katha and menthol and other ingredients are negligible, the total percentage of supari, lime, tobacco, katha and menthol in the test report of Shri Ram Institute for Industrial Research adds up to 90% only, that this itself shows that there is something wrong in the test report and same is not reliable, more so, as the percentage of katha reported in the test report is 15.5% as against declared content of 5%, that menthol is a volatile substance and hence, the content of menthol in the samples is not indicative of the actual quantity of menthol used in the manufacture of gutka, that gutka being a heterogeneous mixture mixed manually, test of a small samples of 1.8 gms. cannot determine correct content of its ingredients, that on the basis of test report of SIIR, the Income Tax Authorities had reopened the assessment of VCPL for the assessment year 2001-2002 and had demanded income tax of Rs. 79,40,757/- vide assessment order dated 29.03.2004 passed by ACIT, Central Circle III, but on appeal filed to the CIT (Appeals) against this order, the CIT (Appeals) vide order-in-appeal dated 6.8.2004, after discussing test report of SIIR in detail, held that same is not reliable and allowed the appeal and that in view of this, no credibility can be attached to this test report and no allegation of inflating the consumption of supari, tobacco and menthol can be made against the appellant. It was also pleaded by Ms. Seema Jain, ld. Counsel for the Appellants that though at the time of officers visit to the factory, a total of 120 pouches sealing machines had been found as against the declared number of machines of 65, there is no dispute that at that time only 65 machines were functioning, that during that period, the assessment of duty was not on the basis of the number of machines installed, that when at the time of officers visit to the factory, only 65 machines were functioning, as against the declared machines of 65 and there is no evidence that at any point of time, the larger number of machines were being operated, the allegation of excess unaccounted production based on just larger number of machines being installed in the factory, cannot be made.
46.1 We have carefully considered the rival submissions in respect of the evidences at para 45.3 (d) to 45.3 (g).
46.2 As regards the test report of dated 28.8.2003 of Shri Ram Institute for Industrial Research, which is relied upon by the Department in support of its allegation that VCPL had been showing grossly inflated consumption of supari, tobacco and menthol inasmuch as while the content of supari, tobacco and menthol declared by them is 86% , 6% and 0.47% respectively, on test of a sample of Vimal brand gutka by SIIR, the percentage content of these ingredients was found to be 68%, 5% & 0.013% respectively, it is seen that the percentage of supari, lime, tobacco, katha and menthol as declared by VCPL is 86%, 2.2%, 6%, 5% and 0.47% respectively, which totals up to 99.67%. The other ingredients are perfumes and other substance which are in very small quantity. As against this, as per the report of SIIR, the content of supari, lime, tobacco, katha and menthol in the Vimal brand gutka is 68%, 2.2 %, 5%, 15.5% and 0.013% respectively which totals about upto 90%. This itself creates doubt about the correctness of this report as these five ingredients are the main ingredients and the percentage of other ingredients is very negligible, less than 1% and the total of the percentage of these five ingredients instead of being more than 99%, is only about 90%. Moreover, we also find merit in the appellants contention that gutka is a heterogeneous mixture mixed manually and not a homogenous mixture and, therefore, testing of a small quantity of gutka 1.8 gms in this case, can not give correct results, more so, in case of a volatile substance like menthol, which evaporates over a period of time. For these reasons only, the Commissioner of Income Tax (Appeals) in his order-in-appeal dated 6.8.2004 has not relied upon this report and has set aside the assessment order of the ACIT. In view of this, there is no justification for relying upon this report for the purposes of these proceedings.
46.3 As regards excess consumption of unaccounted receipt of canvas bags to the tune of 510650 during the period from April, 2002 to 4.7.2003 from RLRC, we find that according to the appellant during this period, they had received only 105000 canvass bags and the allegation of excess receipt to the tune of about 510650 canvass bags is based on the entries in the gate register maintained by gate officers at the factory of RLRC. Though the gate entries are backed by delivery challans, those delivery challans nowhere indicate that canvas bags covered under those challans had been delivered to VCPL. The delivery challans mention the registration numbers of the trucks in which the goods had been supplied, but no inquiry had been made with the drivers or owners of those trucks. We really fail to understand that when truck numbers were available in the delivery challans why Revenue did not make inquiries and conducting investigations at their end so as to further their case. Failure on their part to do so has resulted in negating their case. Moreover, the cross examination of Shri Rajiv Gupta, Managing Director of RLRC has also not been allowed while he has given an affidavit that certain quantities of canvas bags bearing vimal brand have been sold at factory gate also in cash. In view of this, just on the basis of the entries in the gate registers and challans, not corroborated by any other evidence, it cannot be said that the canvas bags covered under those challans have been received by VCPL and used for packing of gutka, especially when there is evidence record that unscrupulous manufacturers were using VCPLs brand name and as such were in need of laminated pouches printed with their brand name.
46.4 It has been alleged that as per the records recovered from the premises of VCPL, during period from 1.4.2003 to 5.7.2003, they had purchased 11,500 jute bags from M/s. Shyam Jute Industries and as on 5.7.2003, there was no stock of jute bags, while the RG-I Register for this period showed the production of only 5087 bags of gutka and on this basis, it has been alleged that consumption of 6413 jute bags has not been accounted for and these bags must have been used for packing of gutka cleared clandestinely. Similarly, during this period, while 1000 kgs. of menthol had been purchased by VCPL from M/s. MKS Aromatics, Delhi, it is alleged that at the time of officers visit to the factory, there was no stock and hence, on this basis, it is alleged that bulk of this quantity has been used in the manufacture of unaccounted gutka which has been cleared clandestinely. The basis for non-accountal of 1000 kgs. of menthol and 6413 jute bags admittedly received by VCPL is that at the time of the officers visit to the factory on 5.7.2003, there was no stock of these items. However, the appellant deny this allegation and plead that it is not correct that stock of these items had been checked and found to be nil. Their plea is that these items were available in the factory and that even the panchnama of search of the factory is silent on this issue. We find merit in this contention of the appellant, as the panchnama does not record any unexplained shortage of jute bags and menthol. Therefore, it cannot be alleged that there was unexplained shortage of jute bags and menthol indicating use of these items in unaccounted manufacture of gutka cleared clandestinely.
46.4 While at the time of the officers visit to the factory, there were 120 machines installed as against the declared number of 65 machines, it is not the allegation that more than 65 machines were being operated. The number of machines being operated at that time was only 65. Therefore, the excess number of machines by itself cannot be treated as evidence of unaccounted manufacture and clearance of gutka by the appellant. The presence of 120 machines against the declared number of 65 machines can be the supporting evidence if there is other cogent evidence of unaccounted manufacture and clearance of gutka by VCPL. It may not be out of place to mention here that the period involved in the present appeals is prior to compounded levy based on the number of machines installed and as such, the number of machines installed in the factory is not a relevant factor.
47. This leaves the evidence in form of records of the transporters, the statement of their Directors and employees and the statements of Shri H. Sunder and other employees of VCPL and the statement of Shri Mohd. Kayum Khan, owner of Tata 407 vehicles. On the basis of the records recovered from GG Carriers, Delhi-Indore Transport Company, Gopi Road Lines, Harsh Transport, Singhal Transport Company, the duty demand confirmed against VCPL are Rs.6,72,33,900/-, Rs.2,77,39,800/- , Rs.1,97,04,300/-, Rs.74,81,100/- , Rs.62,02,000/- respectively. Similarly, the duty demand of Rs.2,75,15,400/- for the period 14.07.2003 to 2.9.2003 has been confirmed against VCPL on the basis of the records recovered from Laxmi Freight Carriers Ltd. Our findings in respect of the demands confirmed against the VCPL on the basis of the records recovered from different transport companies are as under:-
48. Duty demand based on the records recovered from the premises of GG Carriers and the statements of various persons recorded in course of inquiries on the basis of those records.
48.1 Duty demand of Rs.6,72,30,009/- has been confirmed against VCPL on the basis of alleged removal of 20,373 bags of vimal brand gutka each carrying 11,000 pouches. The basis of this allegation is that certain records found from the premises of GG Carriers and the inquiries made with their employees. From the premises of GG Carriers several loading registers as well as GRs were recovered. The loading registers mentioned booking of bags of pan masala in the name of GRK, GOB, Kaku, UMS, KK, 013, 017, etc. for transportation of the goods to Kota, Jaipur, Ajmer and Dausa. Shri Harjinder Singh an employee of GG Carriers, who as per his statement was the Marketing Executive, stated that GRK, GOB, UMS, Kaku, KK, 013,017, etc. are the consignees of the consignments of gutka booked by manufacturer of vimal brand gutka by declaring the same as sweet supari. There was also a remark in one of the registers that pan masala is to be mentioned as zarda or khand. On this basis, the number of bags mentioned against GRK, GOB, Kaku, KK, UMS, 013, 017, etc. have been treated by the department as the consignments of vimal brand gutka booked on various different dates by VCPL and since in respect of those consignments, there were no corresponding invoices on the record of VCPL, these consignments have been treated as clandestine clearances without payment of duty by VCPL. In this regard, on inquiry it was found that VCPL did have dealings with M/s. Leela Ram Gobind Ram, Kota, whose proprietor is Shri Leela Ram Makhija and according to the department, the abbreviation GRK means M/s. Leela Ram Gobind Ram Makhija. However, Shri Leela Ram Makhija in his statement dated 16.07.2003 while admitting that he was dealing in Gutka, pan masala and zarda for the last 22 to 25 years and that he was dealing in vimal brand gutka which they purchased directly from VCPL, stated that all the consignments of vimal brand gutka were received from VCPL only through Jaipur Golden Transport Company and they have never received any consignment of vimal brand gutka through GG Carriers. In the records of GG Carriers, at one page GRK Mr. Tulsi 9829035060 was mentioned which indicated that there is one Mr. Tulsi connected with GRK and 9829035060 appeared to be the mobile number of Mr. Tulsi. When Shri Leela Ram Makhija was questioned about Mr. Tulsi he stated that he is his nephew working in his shop and his mobile number is 9829035060 and when asked as to how the name and mobile number of Mr. Tulsi was found written in the records of GG Carriers, he could not give any explanation. In course of inquiry, it was also found that the brother of Shri Gobind Ram also deals in gutka from a separate shop name Prem supari Bhandar, Kota. Inquiry was also made with Shri Narayan Lal S/o Shri Leela Ram Makhija but he also did not accept receiving any consignment of vimal brand gutka through GG Carriers. It was also found that VCPL were having dealings with Gobind Store, Jaipur, whose Manager is Shri Duli Chand Makhija and investigating officers were of the view that the abbreviation GOB means Gobind Store, Jaipur. However, on inquiry with Shri Dauli Chand Makhija, Manager of Gobind Store, he in his statement dated 16.07.2003 while accepting that he deals in vimal brand gutka and has dealings with VCPL, denied to have received any consignment of vimal brand gutka from VCPL through GG Carriers.
48.2 Ms. Seema Jain, ld. Counsel for the appellants, however, has pleaded that no consignments of gutka booked by VCPL has been transported through GG Carriers, that the only evidence relied upon by the department, the support of the allegation that the abbreviations GRK, GOB, Kaka, KK, UMS, 013, 017, etc. are the customers of VCPL at various outstation locations buying vimal brand gutka from VCPL, is the statement of Shri Harjinder, that Shri Harjinder Singh was looking after maintenance of the trucks and he had no concern with the booking of the consignments, that this fact has been accepted by Shri Harjinder Singh in course of his cross examination during adjudication proceedings, that during period till 1.7.2003, booking of the consignments was being handled by the booking clerk, Shri Naresh and thereafter another booking clerk, Shri Vishnu was looking after this job as Shri Naresh had left the job, that no inquiry has been made by the department with Shri Naresh and Shri Vishnu and instead inquiry has been made and the statement had been recorded of Shri Harjinder Singh, who has no concern with the booking of the consignments, that proprietors of Shri Leela Ram Gobind Ram, Kota and Gobind Store, Jaipur have denied having received any consignment of vimal brand gutka through GG Carriers, that no inquiry has been made with the proprietor of GG Carriers, that other than the statement of Shri Harjinder Singh which is of no evidentiary value, there is absolutely no evidence that the consignment mentioned as booked in the names - GRK, GOB, Kaku, UMS, 013, 017, etc. are the consignment of vimal brand gutka booked by VCPL to their various outstation customers.
48.3 Ld. Departmental Representative, on the other hand, reiterating the findings of the adjudicating authority in the impugned order has emphasized that Shri Harjinder Singhs statement is correct, that the retraction of his statement in course of his cross-examination has no meaning and that from the statement of Shri Harjinder Singh, it is clear that the consignments booked in the name of GRK, GOB, UMS, Kaku, etc. were the consignments booked by VCPL to their outstation customers. He also points out to the words, GRK, Mr. Tulsi 9829035060 written in a paper recovered from the premises of GG Carriers and also the telephone numbers of the factory premises of VCPL and of the VCPLs employees, Shri Tripathi, Shri Dinesh of VCPL found written in a diary recovered from the premises of GG Carriers.
48.4 We have considered the submissions from both the sides. The main evidence which links VCPL with various entries with the marks GRK, GOB, Kaku, UMS, 013, 017, etc. is the statement of Shri Harjinder Singh. However, it is not denied that the booking clerks during that period were Shri Naresh Kumar upto 1.7.2003 and Shri Vishnu after 1.7.2003 and it is these persons who can be expected to have knowledge as to who had booked the consignments against which the codes, GRK, GOB, UMS, Kaku, KK, 013, 017, etc mentioned. But no inquiry had been made with them. Inquiry had been made only with Shri Harjinder Singh, who in course of his cross examination, has stated that he was not dealing with the booking of cargo and he was looking after only the maintenance of the trucks. Though the department alleges that the abbreviations GRK means Leela Ram Gobind Ram, Kota and the abbreviation GOB, Gobind Store, Jaipur, the proprietor of these stores while admitting that they have dealings with VCPL have denied having received any consignments of vimal brand gutka through GG Carriers. According to them all the consignments of gutka from VCPL were being received by them through M/s. Jaipur Golden Transport Company. Though mobile number, telephone number of Tulsi along with abbreviation GRK was found written on a paper recovered from the premises of GG Carriers along with telephone number of VCPL and their employees and while Shri Leela Ram Makhija of M/s.Leela Ram Gobind Ram, Kota has stated that Mr. Tulsi is his nephew, just because the name and mobile number of Mr. Tulsi along with abbreviation GRK was found mentioned in a paper recovered from the premises of GG Carriers, it cannot be concluded that all the consignments marked GRK in the loading register had been booked by VCPL for transportation to M/s. Leela Ram Gobind Ram, Kota when no inquiry on this point has been made with Shri Tulsi and Shri Leela Ram Makhija of M/s. Leela Ram Gobind Ram, Kota has denied having received any consignment of vimal brand gutka through GG Carriers and instead has insisted that all the consignments of vimal brand gutka were received from VCPL through Jaipur Golden Transport Company and no document showing the receipt of any consignment of vimal brand gutka through GG Carriers have been recovered from the premises. As regards Gobind Stores, Jaipur, its Manager, Shri Dulichand Makhija though accepting that they are sole distributor of VIMAL brand gutka, denied having received any consignment of VIMAL gutka through GG Carriers. No document in support of this allegation has been recovered from their premises. Though from the premises of M/s. Gobind Stores, 19 packets of VIMAL gutka containing 950 retail pouches of batch no.VG 07 packed on 07/2003 were recovered while last invoice issued by VCPL to M/s. Gobind Stores, Jaipur was No.161 dated 27.6.2003, which could not cover the 19 packets of VIMAL gutka packed in July, 2003, on this basis, it cannot be concluded that M/s. Gobind Stores, Jaipur were receiving clandestinely cleared consignments of gutka from VCPL through GG Carriers, as even as per the Department, no consignment of Vimal gutka has been booked through GG Carriers during 1st July, 2003 to 5th July, 2003 period and, therefore, these 950 retail pouches can not be linked to GG Carriers.
48.5 Similarly, no documents have been recovered from the premises of VCPL indicating that they had booked any consignment of VIMAL brand gutka through M/s. GG Carriers to Rajasthan. Though a number of entries in the loading register with code names like GRK, GOB, Kaku, etc. have truck no. also, we do not find any inquiry having been done with the drivers of these trucks to ascertain as to where the goods had been delivered. In view of this, we hold that the duty demand of Rs.6,72,30,900/- based on the entries in the loading register of this transport company with code names like GRK, GoB, Kaku, KK, UMS, 017, 013, etc. coupled with the statement of Shri Harjinder Singh, is not sustainable.
49. Duty demand of Rs.62,02,000/- on alleged clandestine removal of 1940 bags of vimal brand gutka based on the records of M/s. SinghalTransport Company.
49.1 From the office of Singhal Transport Company, two GR books and 17 truck guidance notes had been recovered. The scrutiny of the GRs revealed that a number of consignments declared to be of gutka had been booked by M/s.Gupta Chemical Works to self. At the time of search of the premises of the Transport Company, 170 gunny bags containing vimal brand gutka were found. Besides this, there was a truck no.HR38B4117 parked just outside the Transport company in which 40 such bags were loaded. This truck was of Singhal Transport Company. Since there were no duty paying documents in respect of 40 bags of vimal brand gutka loaded in the truck and 170 bags of Vimal Gutka, lying in the godown, the same along with truck were placed under seizure. Besides the truck no.HR38D4117,another Tata 407 Truck no.DL1L A6232 was also parked and it appeared that a part of the consignment of gutka had been brought in that truck. Therefore, that truck was also placed under seizure. Statement of driver of the truck no.HR38D4117, Shri Sita Ram was recorded, wherein he admitted having loaded 40 bags of vimal brand gutka. Statement was also recorded of Mohd. Ilias, Driver of the truck no.DL1L A6232 wherein he stated that this truck is of Shri Moh. Kayum Khan, that he brings consignments of gutka from the factory of VCPL to the premises of Singhal Transport Company and that every day, he makes 2 to 3 trips with 40 bags of gutka. Shri Yogesh Sharma, Godown Incharge also stated that the consignment of gutka from the factory of VCPL were being received through the mini trucks DLIL A6232. Statement of Shri Paramjit Singh, proprietor of Singhal Transport Company was recorded on 5.7.2003, wherein he stated that he admitted for transportation of vimal brand gutka manufactured by VCPL, that those goods were always transported in bags and delivered by them to the transport companys godown by Tata 407 trucks, that he had been transporting vimal brand gutka for the last two months, that all the GRs issued by him in respect of gutka pertain to vimal brand gutka only and that the description of the goods and name of the consignor in the GRs had been shown different as per the advice of the VCPL. This statement of Shri Paramjit Singh was shown to Shri H. Sunder, Director of VCPL who in his statement dated 5.7.2003 stated that the same is correct. Accordingly, all the GRs with M/s. Gupta Chemical Works as the consignor have been treated as the GRs in respect of the consignments of vimal brand gutka cleared clandestinely by VCPL without payment of duty. In all, there are four such GRs showing M/s. Gupta Chemical Works as consignor and covered a total of 230 bags, which according to the statement of Shri Paramjit Kakkar and confirmed by the statement of Shri S.Sunder were the consignment of vimal brand gutka. Besides this, there were 17 truck guidance notes issued during the period from 19.05.2003 to 3.7.2003, which are in respect of 1710 bags of gutka. These truck guidance notes are for transportation of Gutka consignments but the same do not mention the name of the consignor or the name of the consignee. According to the department, all these truck guidance notes were also in respect of transportation of vimal brand gutka and these consignments had been booked by VCPL and have been cleared clandestinely without payment of duty. It is on this basis that the duty of Rs.62,02,000/- has been demanded on alleged clandestine removal of 1940 bags of vimal brand gutka.
49.2 Though the ld. Departmental Representative supports the Commissioners order confirming this duty demand on the basis of the records of the Singhal Transport Company read with statements of Shri Paramjit Singh, Shri H. Sunder and other persons, Ms. Seema Jain, ld. Counsel for the appellant, pleads that the statement of Shri Paramjit Singh cannot be relied upon, as in his cross examination, Shri Paramjit Singh has stated that bags brought to the transport company for booking were plain gunny bags without any marks, that they have never opened the bags and hence, they could not have known the contents, that these consignments were not booked by M/s. VCPL and name of the consignor used to be given by the person, who came to book the same, that statement of Shri Yogesh Sharma stating that the consignments of gutka were being received in the transport company in four Tata 407 mini trucks from the factory of VCPL cannot be relied upon as Shri Yogesh Sharma was not made available for cross examination, that for the same reason, the statement of Mohd. Ilias, driver of the truck DL 1LA6232 cannot be relied upon, that the statement of Shri H.Sunder had been recorded under duress and has been dictated by the investigating officers and hence, the same cannot be relied upon, that Shri H. Sunder never admitted to have booked the consignments cleared by their company through Singhal Transport Company, that he was forced to deposit an amount of Rs.66,00,000/- through PLA, although the documents recovered from Singhal Transport Company pertain only to 210 bags of gutka, that 4 GRs covering transport of 230 bags are in the name of M/s. Gupta Chemical Works, Hubly, that in these GRs no brand name is mentioned, that though M/s. Gupta Chemical Works was visited on 8.7.2003 and they do deal in Tobacco, Pan Masala and gutka , no statement of proprietor of Gupta Chemical Works has been recorded, that in view of this, the duty demand on 230 bags covered under 4 GRs with gutka at the consignor is not sustainable, that the duty demand on the remaining bags is based on 17 truck guidance notes showing transportation of gutka to Gujarat, that neither any brand name of gutka is mentioned in these truck guidance notes nor there is any name of the consignor, that these truck guidance notes cannot be linked to VCPL and no duty can be demanded from VCPL on the goods covered under these truck guidance notes and, therefore, the duty demand based on these truck guidance notes is also without any basis. She however accepted the duty demand of about Rs.6.93 lakhs in respect of 210 bags seized from the transport godown which had been found to be containing vimal brand gutka.
49.3 As regards the duty demand of Rs.6,93,000/- on 210 bags which were found to be containing vimal brand gutka the same is not contested and as such, it is accepted that these bags containing vimal brand gutka had come from the factory premises of VCPL without payment of duty.
49.3.1 The confiscation of these 210 bags of gutka and imposition of redemption fine in lieu of confiscation is also upheld. As regards the confiscation of M/s. Singhal Transport Companys truck no.HR 38D-41/7 from which 40 bags had been seized and Tata 407 Truck No.DL 1L A6232 of Shri Mohd.Kayum Khan in which 210 bags seized were brought to the Transport Company, since the plea of the VCPL is that invoice for 210 bags was going to be issued and as such there is no evidence to prove that M/s. Singhal Transport Company and Shri Mohd. Kayum Khan had knowledge about the goods being liable for confiscation, the same is not sustainable and has to be set aside. For the same reason, no penalty is imposable on Shri Mohd. Kayum Khan or M/s.Singhal Transport Company under Rule 26 of Central Excise Rules. As regards the duty demand in respect of 230 bags covered under 4 GRs issued by this transport company with the consignors name as M/s.Gupta Chemical Works, Hubly, Shri Paramjit Singh, Proprietor of the Transport Company in his statement dated 5.7.2003 has stated that GR No.195483 dated 4.7.2003 as well as GR No.195540 dated 5.7.2003 were in respect of vimal brand gutka and that, though the consignor is mentioned as Gupta Chemical Works with self as the consignee, the consignments have been booked by M/s. VCPL. It is seen that the Revenue is treating the said GRs, which has been issued by showing M/s. Gupta Chemical Works as the consignor, as for the goods belonging to M/s.VCPL on the basis of the statement of Shir Paramjeet Singh which was agreed to by Shri H. Sunder. But the Revenue has been able to locate M/s.Gupta Chemical Works, who was admittedly dealing in gutka and pan masala, etc. However, for the reasons best known to the officers, no statement of the representative of M/s. Gupta Chemical Works was recorded by the officers. When GRs showing M/s. Gupta Chemical Works as the consignor have been recovered by the officers during the course of search of the transport offices and the officers have also been able to locate M/s.Gupta Chemical Works, the first reaction of any reasonable and prudent person would be to question M/s.Gupta Chemical Works about the such GRs. Surprisingly no question were ever put to M/s.Gupta Chemical Works and no explanation was ever sought to be elicited from the representative of M/s.Gupta Chemical Works. Therefore, treating the said GRs admittedly issued by showing Gupta Chemical Works as the consignor of the goods as the GRs in respect of consignments of VIMAL brand gutka booked by VCPL is not correct. This only reflects upon the ambiguity of the Revenue to treat each and every transportation of gutka being that of vimal brand. The duty liability, therefore, cannot be fixed upon VCPL on the basis of GRs issued in the name of M/s. Gupta Chemical Works without putting the admitted consignors to any investigation. Therefore, the confirmation of the demand of duty in respect of the said four GRs relating to 230 bags issued in the name of M/s.Gupta Chemical Works, is not sustainable.
49.4 As regards the duty demand in respect of the remaining bags covered under 17 truck guidance notes, on going through these truck guidance notes, we find that while these truck guidance notes are in respect of transportation of the consignments of gutka to Gujarat, there is nothing in these truck guidance notes, from which it can be ascertained as to who were the consignors and who were the consignees and as to whether the consignees were the persons having dealings with VCPL. In view of this, we hold that the duty demand based on 17 truck guidance notes is not sustainable.
49.5 Thus the duty demand of Rs.6,93,000/- on 210 bags of VIMAL brand gutka seized from the godown of M/s. Singhal Transport and Truck No.HR-38 D4117 is upheld, the duty demand based on the documents recovered from the transporters premises has to be set aside.
49.5.1 As discussed above, while the confiscation of 210 bags of gutka seized from the godown and imposition of redemption fine is upheld, confiscation of Truck No.HR-38 D-4117 of M/s. Singhal Transport from which 40 bags of gutka had been seized and of the Truck No.DL-1L/A-6232 of Shri Mohd. Kayum Khan in whose truck 210 bags of gutka had been brought from VCPLs factory to M/s. Singhal Transport, is set aside and penalty on Shri Mohammad Kayum Khan, owner of the truck DL-1L/A-6232 is also set aside.
50. Duty demand of Rs.2,77,39,800/- in respect of 8406 bags of vimal brand gutka alleged to have been cleared by VCPL confirmed on the basis of the records of M/s. Delhi Indore Transport Company.
50.1 In course of search of office of this Transport Company, one day book registers/loading registers were recovered which had entries regarding the consignments booked for transport. Among these entries, there were entries like V-40/OK, V/40, etc. These registers were being maintained by booking clerk, Shri Uday Singh, who in his statement stated that the entries like V-40 represents 40 bags of Vimal brand gutka, that the number written in front of entries like V-40 represents the weight of the consignment, that the entry V-40/OK means 40 bags of Vimal brand gutka with total weight of 1200 kgs. i.e. 30 kgs. per bag, that similarly, the entries like V/10, V/5 represent 10 bags and 5 bags of Vimal brand gutka respectively and that the consignments of gutka used to be brought by one Shri Dubey. Statement of Shri Ravinder Kumar, another booking clerk of the transport company was recorded wherein he also confirmed that terms like V/40, V/10, V/5, etc. represent consignment of Vimal brand gutka, that the numbers mentioned in these entries represent number of bags, that these consignments used to be brought by one Shri Dubey of VCPL, that the GR number is not mentioned against these entries as the goods used to be brought during night and directly loaded in the trucks. On the basis of the entries like V/40, V/10, V/5, etc. in the loading register recovered from this Transport Company read with the statement of booking clerks, the department has alleged that 8406 bags of Vimal brand gutka clandestinely cleared by VCPL without payment of duty had been despatched to their customers through this transport company and accordingly, duty of Rs.2,77,39,800/- has been demanded on this basis.
50.2 While the ld. Departmental Representative defends the impugned order confirming this duty demand based on the records of the Delhi Indore Transport Company, Ms. Seema Jain, ld. Counsel for the appellants, pleads that absolutely no documents were recovered showing that VCPL had booked any consignments of Vimal brand gutka through Delhi Indore Transport, that the only basis of the departments allegation of booking of the clandestinely cleared consignments of gutka by VCPL through this transport company is the entries like V/40, V/10, V/5, etc. in the loading register/day register of the transport company, which according to the statements of the booking clerks, represent the consignments of Vimal brand gutka, that no credibility can be attached to the statements of Shri Vijay Singh and Shri Ravinder Singh, as they have not been made available for cross examination and have tendered affidavits stating that entries like V/40, V/10, V/5 etc. in the register do not represent the consignment of Vimal brand gutka, that the loading register does not even mention the description of the goods and that just on the basis of such cryptic entries in the registers like V/40, V/10, etc., it cannot be presumed that these consignments were of the Vimal brand gutka booked by VCPL especially when there were so many other gutka manufacturers located in that area, manufacturing gutka with the brand name starting with V.
50.3 After carefully considering the submissions of the ld. Departmental Representative and of the ld. Counsel for the appellant, we find that the only basis for this duty demand is the entries like V/40, V/10, V/5 in the registers loading register, booking registers of the transport companies read with the statements of the booking clerks. But both the booking clerks have retracted their statements. These entries do not even mention the description of the goods and the names of the consignors or consignee and hence, there was no question of any inquiry being made with them.
50.4 In view of the above, we hold that the evidence on record is not at all sufficient to substantiate the allegation of clandestine removal of 8406 bags of vimal brand gutka without payment of duty and their transport to the customers through Delhi Indore Transport Company. Therefore, this demand is also not sustainable.
51. Duty demand of Rs.1,97,04,300/- on 5971 bags of Vimal brand gutka alleged to have been cleared clandestinely by VCPL is based on the records of the Gopi Road Links.
51.1 In the office of M/s. Gopi Road Lines, the investigating officers resumed fifty challan books nos. 4401 to 4450 and also 12 files containing loading challans. The challan books had entries regarding booking of the consignments of gutka along with the number of bags and weight and also mentioning the consignors name. The name of VCPL does not figure in any entry as consignor. On inquiry being made with M.R. Sehgal, Manager of Gopal Road Lines, he stated that he has four offices and ten commission agents in Delhi, that one of the commission agents is Shri Sushil Kumar and that he is not aware of the brand of gutka whose consignments were booked by Shri Shushil Kumar. Earlier, inquiry had been made with Shri Sushil Kumar, a commission agent wherein he had stated that consignments of gutka booked through M.R. Sehgal were of Vimal brand gutka, that the goods used to come in rickshaw under the bills of various parties and he knew that it is vimal brand gutka, that no GR was ever prepared in the name of VCPL, that the brand name vimal brand was not mentioned on any GR and instead, the description of the goods was simply mentioned as gutka and that Vimal brand gutka was being booked for transport to the Jalgaon. A total of 5971 bags were found to have been booked under various challans and where the description of the goods was mentioned as gutka and in respect of which Shri Sushil Kumar had stated that the same is vimal brand gutka and all these consignments had been booked for transportation to Jalgaon. The department being of the view that these consignments have been clandestinely cleared by VCPL without payment of duty inasmuch as on the dates of bookings, no invoices covering these goods had been issued, has demanded duty of Rs.1,97,04,300/-.
51.2 While ld. DR defended the impugned order confirming this demand on the basis of the evidence as discussed above and also pointed out that a diary was found in which telephone numbers of employees of VCPL had been written, Ms. Seema Jain, ld. Counsel for the appellant pleaded that the statement of Shri Sushil Kumar is not reliable as he subsequently filed an affidavit that he never checked the brand name of gutka and no brand name was mentioned on the gunny bag, that his statement was recorded under coercion and duress and that he was not made available for cross examination. She also pleaded that the loading challans were in the name of various firms and none of them were in the name of VCPL, that the loading challans were in respect of bookings by ten commission agents in Delhi and all the consignment of gutka booked by 10 commission agent cannot be attributed to VCPL. She also pleaded that no personal number of Dubey was found in any diary of M/s.Gopi Road Lines. She, therefore, pleaded that the duty demand of Rs.1,97,04,300/- based on the records of the transport company and the statement of its employees and agents is not sustainable.
51.3 We have considered the submissions from both the sides and perused the records. The entries in the booking register and the loading challans simply mention the description of the goods as gutka, number of bags and consignors name. The name of VCPL does not figure anywhere as the consignor. While M/s. Gopi road Lines had ten commission agents in Delhi, out of them inquiry was made only with Shri Sushil Kumar and no inquiry was made with others. Therefore, in any case, in respect of the consignments of gutka booked by other agent, it cannot be presumed that the same were of vimal gutka.
51.4 With regard to the consignments of gutka booked by Shri Sushil Kumar, the only evidence to link those consignments with VCPL is the statement of Shri Sushil Kumar stating that those consignments were of vimal brand gutka brought to the transport company in tempo rickshaws. However, this statement has subsequently been retracted by Shri Sushil Kumar and his cross examination was also not allowed. Other than the statement of Shri Sushil Kumar, there is no evidence to link the challan with VCPL. We, therefore, hold that sofar as the duty demand of Rs.1,97,04,300/- based on the records of the Gopi Road Links is concerned, the evidence on record is not sufficient to uphold the same and as such, the same is not sustainable.
52. The duty demand of Rs.74,81,100/- confirmed against VCPL in respect of alleged clandestine removal without payment of duty of 2267 bags of vimal brand gutka on the basis of the records of Harsh Transport Co. Pvt. Ltd.
52.1 Ravi Bhandari is the Managing Director of M/s. Harsh Transport Co. Pvt. Ltd. They have offices at Delhi as well as at Bhopal. From the premises of M/s. Harsh Transport Co. Pvt. Ltd., Delhi while there was no seizure of any consignment of gutka, 90 GR books and 30 challan books were submitted by Shri Ravi Bhandari, Managing Director and the same were resumed by the investigation officers. Besides this, there were five blank bill books of Vikas Plastics, Himanshu Auto, Prakash Sales Store and National Trading, etc. Challans showed despatch of a number of consignments of gutka a total of 2267 bags to various locations with the different parties as consignors. Shri Ravi Bhandari, Managing Director of the Transport Company in his statement stated that these consignments were of vimal brand gutka, which had been transported to Chindwara, even though the GRs mentioned destinations other than Chindwara, that these consignments had been transported to Bhopal from where the same had been delivered to M/s. Santosh Tobacco, Chindwara through M/s. Indian Goods Transport, that wherever the term gutka is mentioned in the challans or GRs, it pertains to vimal brand gutka, as they have not transported any other brand of gutka, that though the consignments of Vimal brand gutka were meant for transportation to Chindwara, the GRs were made for Akola or Amravati to avoid any problems, that all the consignments were under the invoices issued by trading firms, that as transporters they do not verify the veracity of the consignor or consignee, that the consignments of vimal brand gutka were never covered by the invoices issued by VCPL, that the blank bill books recovered from their office might have been left by mistake by some of their customers and that the vimal brand gutka used to be brought to the godown by Shri Dubey of VCPL. Shri Santosh Kumar Mishra, Booking Clerk of Harsh Transport also stated that they have been booking vimal brand gutka being brought to their company by one Shri Dubey whose mobile number is 9810555593, that he used to bring the consignments of gutka in the name of the different companies, that on 3.7.2003, Shri Dubey had brought 9 bags of vimal brand gutka which was booked under GR 225622 dated 3.7.2003 and that the goods were actually to be delivered to one M/s. Santosh Tobaco at Chindwara although the name of the consignor or consignee are different. At Bhopal office of Harsh Transport, 9 bags of the consignment of gutka covered under GR No.225622 dated 3.7.2003 with M/s. Sadhana Sales Agency as consignor was found. Even though this consignment was booked for transport to Amravati, on examination, the bags were found to be containing vimal brand gutka, Inquiry was made with Shri Kamal Panjwani, Partner of Harsh Transport Company and he in his statement dated 7.7.2003 stated that the goods covered under this GR mentioning M/s. Sadhana Sales Agency as the consignee and whose destination was Amravati were to be delivered to M/s. Santosh Tobacco at Chindwara and that the goods were to be transported to Chindwara through M/s. Indian Goods Transport Company. In this regard, the statement of Shir Lokesh Jain, Proprietor of Indian Goods Transport was recorded on 7.7.2003 wherein he stated that the consignments of vimal brand gutka covered under GRs showing destination as Amrawati were being delivered to M/s. Santosh Tobacco, Chindwara. Accordingly, the consignment of 9 bags were placed under seizure. The investigating officer compiled the list of the consignments where the description of the goods were mentioned as gutka and accordingly, in respect of these consignment, which covered the total of 2267 bags, the duty of Rs.7,04,100/- has been demanded.
52.1 Ld. DR supports the impugned order confirming this duty demand emphasizing on the evidence on record as mentioned above and pleaded that in all the consignments booked by this transport company where the description of the goods was mentioned as gutka, the consignors were found to be fictitious and all these consignments were of VIMAL brand gutka which were delivered to Santosh Tobaco, Chindwara and same had been cleared clandestinely without payment of duty.
52.2 Ms. Seema Jain, ld. Counsel for the appellant pleaded that five blank bill books of Vikas Plastics, Himanshu Auto, Prakash Sales Store and National Trading were not of the VCPL and no bill books of the said companies had been resumed from the premises of VCPL, that the documents on the basis of which the demand has been raised have not been supplied despite request, that cross examination of Shir Ravi Bhandari had been allowed, that in course of his cross examination, he stated that the invoices accompanying the goods did not mention the brand of the goods as Vimal brand gutka, that Shri Kamal Panjwani in course of his cross examination has denied having knowledge of the brand name of the gutka, that the consignment of 9 bags under the cover of GR in the name of Sadhana Sales Agency was not of the VCPL, that Shri Santosh Kumar Mishra was not made available for cross examination and he in his affidavit, has stated that he was not aware that the consignments of gutka were of vimal brand, that he had been forced to write that the gutka transported was of vimal brand gutka and it is incorrect to say that for booking, Shri Dubey of VCPL used to come. She, therefore, pleaded that the duty demand of Rs.74,81,100/- based on the records of M/s. Harsh Transport Pvt. Ltd. and the statement of its Managing Director, employees and another persons is not sustainable.
52.3 We have considered the submissions from both the sides. The duty demand is based on the basis of various GRs issued by Harsh Transport Pvt. Ltd. showing the names of various companies including Sadhana Sales Agency as consignor and in which the description of the goods mentioned is gutka. These GRs are sought to be linked to VCPL on the basis of the statements of Shri Ravi Bhandari, Managing Director of Harsh Transport Co. Pvt. Ltd. and also the statement of Santosh Kumar Mishra, booking clerk of the transport company at Delhi, wherein they have stated that they were booking only the consignment of vimal brand gutka and that all the GRs where the description of the goods is gutka are of Vimal brand gutka booked by Shri Dubey of VCPL. One such consignments of 9 bags had been booked on 3.7.2003 under GR No.2256 dated 3.7.2003 for transportation to Amravati, wherein Sadhana Sales Agency was mentioned as the consignor. This consignment was sent to Bhopal and on opening the same, 9 bags were found to be containing vimal brand gutka. Shri Kamal Panjwani, Partner of M/s.Harsh Transport Co. Ltd. in his statement dated 7.7.2003 has stated that though this consignment is booked for Amravati the same was to be delivered at Chindwara and at Chindwara, M/s. Santosh Tobacco was a dealer dealing in vimal brand gutka. Even if the Vimal brand gutka found in 9 bags is accepted to be that manufactured by VCPL, for demanding duty on this consignment booked by M/s. Sadhana Sales Agency and on earlier consignments of gutka with M/s.Sadhana Sales Agency as consignor, it has to be proved that all these consignments had actually been booked by VCPL. But in this regard, other than the statements of Shri Ravi Bhandari and Shri Santosh Kumar Mishra, there is no other evidence to link these GRs with VCPL. Shri Ravi Bhandari in course of his cross examination has stated that he was not aware of the brand name of gutka booked under the GRs in question. Shri Santosh Kdumar Mishra has retracted his statement implicating Shri Dubey of VCPL by filing an affidavit, but still his cross-examination, even though requested, was not allowed. Though there is a letter dated 18.11.2003 of Shri Panjwani of M/s. Harsh Transport to 510, DGCEI mentioning delivery of consignments of VIMAL gutka booked by VCPL to M/s.Santosh Tobacco, Chindwara, neither any inquiry has been conducted with M/s. Santosh Tobacco to confirm the averment of Shri Panjwani nor it is known as to whether the premises of M/s.Santosh Tobacco at Chindewara were searched and if so what was the result. In view of this, neither the duty demand based on the basis of the GRs issued with M/s. Sadhana Sales Agency as consignor including the duty demand on 9 bags under seizure is sustainable nor the 9 bags seized are liable for confiscation nor penalty under Rule 26 of Central Excise Rules, 2002 is imposable on M/s.Santosh Tobacco.
52.4 As regards the GRs with persons other than M/s. Sadhana Sales Agency as the consignors, as discussed above, other than the retracted statements of Shri Ravi Bhandari and Shri Santosh Kumar Mishra, there is no other evidence to link the same with VCPL and, therefore, it cannot be presumed that the goods covered under those GRs were VIMAL brand gutka booked by VCPL. Therefore, the duty demand based on those GRs is also not sustainable.
53. Duty demand of Rs.235/- on 950 VIMAL gutka pouches seized from M/s. Gobind Stores, Jaipur and duty demand of Rs.9,156/- on 30518 VIMAL gutka pouches seized from the premises of M/s. Laxmi Prakash Gupta, Seoni.
53.1 As mentioned in para 48.4 above on 16.07.2003 from the premises of M/s. Gobind Stores, Jaipur, 19 plastic packets of VIMAL gutka containing 950 pouches involving duty of Rs.285/- were recovered. Similarly on 12.07.2003, 30518 pouches of VIMAL gutka were seized from Shri Lakshmi Prakash Gupta, Seoni on which duty involved is Rs.9,156/-. According to Department, the gutka pouches seized from M/s. Gobind Stores, Jaipur and Shri Lakshmi Prakash Gupta, Seoni are non-duty paid. While M/s. Gobind Stores, Jaipur pleaded that 950 pouches, though as per markings on these packets are packed in July, 2003, are covered by VCPLs invoice No.161 dated 27.6.2003, the plea of Shri Lakshmi Prakash Gupta is that 30518 VIMAL gutka pouches seized from his premises are a part of a consignment of 10 bags sold by VCPL to him under invoice no.58 dated 2.5.2003.
53.2 As regards 30518 VIMAL brand gutka pouches seized from Shri Lakshmi Prasad Gupta of Seoni, in our view, the explanation of Shri Lakshmi Prasad Gupta that the goods are part of a consignment of 10 bags purchased from VCPL under invoice dated 2.5.2003, is plausible and it is for the department to prove that this is not correct by producing evidence like batch number and date of packing. Since no such evidence has been produced, neither any duty can be demanded from VCPL in respect of 30518 pouches nor the same are liable for confiscation, nor any penalty can be imposed under Rule 209 A of Central Excise Rules, 1964/Rule 26 of Central Excise Rules, 2001/2002 on Shri Lakshmi Prakash Gupta on this count. Therefore, the duty demand of Rs.9,156/- on these goods from VCPL and penalty on them under Section 11 AC on this count, confiscation of these goods and imposition of penalty on Shri Lakshmi Prakash Gupta has to be set aside.
53.3 As regards duty on 950 gutka pouches recovered from M/s. Gobind Stores, since as per the batch number printed on them, the same were packed in July, 2003, the claim of VCPL that the same were part of the goods sold to M/s.Gobind Stores under the invoice no.161 dated 27.06.2003 is not acceptable and these goods have to be treated as cleared by VCPL without payment of duty. Therefore, duty demand of Rs.285/- from VCPL on these pouches along with interest under Section 11AB, penalty on VCPL under Section 11 AC and their confiscatioin has to be upheld.
54. Confiscation of 941.8 kgs. of printed plastic laminates for packing of VIMAL brand gutka and 26.95 kgs. of printed plastic laminates for packing of Keemti brand gutka, seized from the factory premises of M/s. Pragati International, Delhi and imposition of penalty on him.
54.1 The above stock of printed plastic laminates had been seized from the factory premises of M/s. Pragati International, Delhi, which had central excise registration. Since the above stock of printed plastic laminates was not accounted for in RG-1 register, the same has been correctly confiscated under Rule 25 (1) of Central Excise Rules, 2001/2002/Rules 173 Q(1) of Central Excise Rules, 1944 and penalty on M/s. Pragati International on this count has been correctly imposed under the above Rule. The impugned order with regard to confiscation of goods seized from the factory premises of M/s. Pragati International, Delhi and imposition of penalty on him has to be upheld.
55. Thus, so far as the order-in-original no.141/2005 dated 9.6.2005 is concerned, out of the total duty demand of Rs.12,85,58,100/-, only the duty demand of Rs.6,93,285/- (Rs.6,93,000 + Rs.285/-) with interest under Section 11 AB and penalty of equal amount on VCPL under Section 11 AC to be upheld. The duty demand against VCPL of the remaining amount, interest thereon and the remaining amount of penalty under Section 11 AC on VCPL is not sustainable.
55.1 As regards the penalty on the transporters, sofar as M/s. GG Carriers, M/s. Delhi Indore Transport, M/s. Gopi Road Lines and M/s. Harsh Transport are concerned, since as discussed above, there is no evidence on record that they had dealt with any excisable goods which they knew or had reason to believe are liable to confiscation, penalty on them under Rule 26 is not sustainable.
55.2 As regards M/s. Singhal Transport Company, though at the time of officers visit to the transport company, 210 bags of vimal brand gutka had been seized, which were not covered by any central excise invoice, since according to the Appellants the invoice was to be received, it cannot be said that M/s. Singhal Transport Company had knowledge about the goods being liable for confiscation and, therefore, penalty on the transporter under Rule 26 of the Central Excise Rules would not be attracted. For the same reason, no penalty would be imposable on Shri Paramjit Singh, Proprietor, M/s.Singhal Transport Company.
55.3 Since the duty demand of only Rs.6,31,285/- has been confirmed against VCPL, penalty of Rs.2 Crores imposed on Shri H. Sunder, Director of Vishnu & Company under Rule 26 is also on much higher side and has to be reduced.
55.4 As regards penalty under Rule 26 of Central Excise Rules 2001/2002 on M/s. Santosh Tobacco since allegation against them of receiving clandestinely cleared consignments of VIMAL gutka is not proved, the same is not sustainable.
55.5 While confiscation of
(a) 210 bags of VIMAL gutka seized from the premises of M/s. Singhal Transport Company, which had been cleared by VCPL without payment of duty and without issue of invoice,
(b) 950 VIMAL gutka pouches seized from M/s. Gobind Stores, Jaipur; and
(c) confiscation of printed plastic laminates seized from the premises of M/s. Pragati International, Delhi;
and imposition of redemption fine and penalty on this count on VCPL/M/s. Pragati International is to be upheld, confiscation of 9 bags of VIMAL gutka seized from Bhopal office of M/s. Harsh Transport Company and confiscation of 30518 VIMAL gutka pouches from Shri Lakshmi Prakash Gupta, Seoni and penalty is not sustainable.
55.6 Duty demand from VCPL on 9 bags of VIMAL gutka seized from Bhopal office of M/s. Harsh Transport Co. and on 30518 VIMAL gutka pouches seized from Shri Lakshmi Prakash Gupta of Seoni is not sustainable. However, duty demand of Rs.285/- from VCPL on 950 VIMAL gutka pouches seized from M/s.Gobind Stores, Jaipur is sustainable.
55.7 Neither the Truck No.HR-38 D-4117 of M/s. Singhal Transport Co. nor the Tata 407 tempo no.DL-1L A6232 of Shri Mohd. Kayum Khan is laible for confiscation nor any penalty is imposable on Shri Mohd. Kayum Khan under Rule 26 of the Central Excise Rules, 2001/2002, Rule 209 A of the Central Excise Rules, 1944.
56. Coming to the second set of appeals, the same are against order-in-original no.152/05 dated 21.11.2005 by which the duty demand of Rs.2,75,15,400/- has been confirmed against VCPL and besides imposition of penalty of equal amount on them under Section 11 AC, penalty of Rs.1 Crore has been imposed on Shri H. Sunder, Director of Vishnu & Company, penalty of Rs.5,00,000/- has been imposed on Shri R.K. Tripathi, employee of Vishnu & Company and penalty of Rs.15 lakh, Rs.1 Lakh, Rs.5 Lakh and Rs.10 lakh has been imposed on M/s. Laxmi Freight Carriers, Gopal Krishna Parashar, Director of Laxmi Freight, M/s.Gopi Road Lines and Paramjit Kakkar, Proprietor, M/s. Singhal Transport respectively. The duty demand against VCPL is on 8388 bags of gutka alleged to have been cleared clandestinely by them without payment of duty and the same is based on the records of M/s. Laxmi Freight Carriers for the period from 14.07.2003 to 2.9.2003. The jurisdictional central excise officers visited the premises of M/s. Laxmi Freight Carriers on 3.9.2003 and found a consignment of 140 bags of vimal brand gutka booked under an invoice of Vikram Sales Agency. The goods in the bags were found to be vimal brand gutka and the consignor, M/s. Vikram Sales Agency was found to be non-traceable entity. Scrutiny of the GRs of Laxmi Freight Carriers revealed that various consignments of gutka had been booked in the name of various traders like M/s. Anurag Sales Agency, M/s. Naveen Trading Co., M/s. Ganesh Trading Co., M/s. Goyal Trading Co., M/s. Vikram Sales Agencies, etc. Shri Srikant, booking clerk of the Laxmi Freight Carriers stated that they were booking the consignments of vimal brand gutka which were transported to the transport company through tempo No.DL 1L059; DL-1L A6232, 6020, 3707, etc., under bills of various trading companies on which the full address was not written. However, in his further statement dated 16.09.2007, Shri Srikant stated that he did not know any official of VCPL. When Shri H. Sunder, Director, VCPL was confronted with the statements of Shri Srikant, he stated that his company has never transported its goods through Laxmi Freight Carriers. Further, statement of Shri Srikant was recorded on 8.10.2003, wherein he stated that freight for transportation of the goods was fixed by Gopal Parashar, Director with VCPL, that Shri R.K. Tripathi of VCPL also used to speak to him for availability of space and that brand name of vimal was not written on the GRs on the instructions of VCPL. He also gave the telephone number of VCPL on which he used to talk. Statements of Shri M.L. Sharma, Loading Incharge of Laxmi Freight Carriers were recorded on 22.09.2010 and 8.10.2003, wherein he stated that they used to receive vimal brand gutka in tempos and that Shri R.K. Tripathi of VCPL used to speak to him. But Shri R.K. Tripathi of VCPL and Shri H. Sunder, Director, VCPL in their statements denied having booked any consignment of gutka through Laxmi Freight Carriers. Shri Miraz Khan, driver of the tempo and Shri Moh. Kayum Khan, owner of the tempo also in their statements stated that they have never transported any consignment of gutka from the factory of VCPL to Laxmi Freight Carriers. However, notwithstanding the denial by H. Sunder, Managing Director, VCPL, other employees in VCPL and of Shri Mohd. Kayum Khan, the officers were of the view that all the consignment of gutka booked in the name of Vikram Sales Agency, National Trading Company, etc. are the consignments of Vimal brand gutka booked by VCPL and the same have been cleared clandestinely without payment of duty. Besides this, 160 bags of vimal brand gutka were found in the godown of Singhal Transport Company and 25 boxes of sweet supari were seized from the godown of Gopi Road Lines. The departmental officers also checked call records of the mobile telephone of Shri R.K. Tripathi and it was found that there were telephone contacts between him and M/s. Laxmi Freight Carriers and M/s. Singhal Transport which indicated that these transport agences were being used by VCPL for booking the consignment of gutka, which had been cleared by them clandestinely without payment of duty.
56.1 Ld. Departmental Representative supports the Commissioners order by emphasizing on the evidence on records as mentioned above.
56.2 Ms. Seema Jain, ld. Counsel, however, pleaded that Revenues case is based on the statement of Shri Srikant and Shri M.L. Sharma of Laxmi Freight Carriers, that both the persons were tendered for cross examination and during cross examination they deposed that since the consignments received on 2/3.09.2003 had been opened by the officers at the time of visit on 3.9.2003 and were found to be containing vimal brand gutka, they presumed that all the consignments were of vimal brand gutka and that is why he had made statement that all the previous consignment were of vimal brand gutka, that otherwise also, the statement of Shri Shrikant is not reliable inasmuch as he disclosed certain tempo numbers which were alleged to have been used for transportation of gutka to the transport company from the factory of VCPL, but the owner of the tempos denied the transportation of any gutka to M/s. Laxmi Freight Carriers, that call records of Shri R.K. Tripathi very clearly reflect that there were only six calls prior to 3.9.2003 out of which three were incoming and three were outgoing and these call records reflect that there was virtually no conversation between Shri R.K. Tripathi and Shri Gopal Prashar and this fact is contrary to the statement of Shri Srikant stating that there was regular telephone conversation between him and Shri Tripathi and Shri Tripathi was fixing the freight with the Director, Shri Gopal Prashar, Ms. Seema Jain.
56.2.1. Ld. Counsel also pleaded that VCPL were having large number of sales at the factory gate against cash and the persons, who took delivery of gutka at the factory gate were making their own arrangements for transport and, therefore, any consignment of gutka found to have been booked by some traders cannot be presumed to have been booked by VCPL.
56.3 We have considered the submissions from both the sides. The duty demand is in respect of the consignments booked by Laxmi Freight under the bills of Vikram Sales Agency, A.M. Agency, National Trading Co., Goyal Trading Co., etc. A consignment of 140 bags booked under the bills of M/s Vikram Sales Agency was found to be containing vimal brand gutka. The departments contention is that all these consignments covered under the bills of Vikram Sales Agency, National Trading, Goyal Trading, etc. are of Vimal brand gutka which had been booked by VCPL who had cleared the same clandestinely without payment of duty and in this regard, reliance is placed on the statements of Shri Srikant and M.L. Sharma and also on the record of telephone calls of the phone of Shri R.K. Tripathi of VCPL. Shri H. Sunder, Director, VCPL, Shri R.K. Tripathi and other employees of VCPL have denied having booked any consignment of gutka through Laxmi Freight Carriers. Though according to Shri Srikant, the consignments of gutka were being brought in tempo, on inquiry with Shri Mohd. Kayum Khan, he has stated that no consignment of gutka has ever been transported by him from VCPL to Laxmi Freight Carriers. Just on the basis of a few telephonic calls between Shri Tripathi and Shri Laxmi Freight Carriers, it cannot be presumed that the consignments booked through Laxmi Freight Carriers under the bills of Vikram Sales Agency, National Trading Co., Goyal Trading Company, A.M. Agency, etc. were of vimal brand gutka manufactured and cleared by VCPL and had been booked by VCPL. No documents showing booking of any consignment of gutka through Laxmi Freight Carries were recovered from VCPL. In view of this, we hold that the evidence on record is not sufficient to uphold the departments allegation and as such, the duty demand of Rs.2,75,15,400/- confirmed against VCPL alongwith interest, imposition of penalty of equal amount on them under Section 11 AC and imposition of penalty of Rs.1 Crore on Shri H. Sunder on this ground and penalty of Rs.5,00,000/- on Shri R.K. Tripathi is not sustainable. The same, therefore, has to be set aside. As regards the duty demand on 140 bags of VIMAL Brand gutka seized from the premises of M/s. Laxmi Freight Carriers and which were under an invoice of M/s. Vikram Sales Agency, even if these goods are those manufactured by VCPL, there is no evidence to prove that the same had been cleared by them without payment of duty and there is merit in the Appellants plea that 140 bags of Vimal brand gutka seized from the godown of M/s. Laxmi Freight Carriers may be part of cash sales by VCPL at the factory gate which were on payment of duty. Therefore, neither any duty is demandable on 140 bags of Vimal gutka seized from the premises of Laxmi Freight Carriers nor the same are liable for confiscation and for this reason, no penalty would be imosable on M/s. Laxmi Freight Carriers or its Director, Shri Gopal Parashar.
57. As regards 160 bags of Vimal brand gutka seized from the godown of M/s. Singhal Tranport, without any bills, the Departments allegation that the same had been cleared without any invoice by VCPL and sent to the godown of M/s. Singhal Transport for booking for transport, the same is based on
(a) statement of Shri Puran Singh, godown in charge that Shri R.K. Tripathi of VCPL was sending such consignments without any bills;
(b) statement dated 1.10.2003 of Shri Paramjit Singh, Proprietor of M/s. Singhal Transport, wherein he agreed with the statement of Shri Puran Singh; and
(c) call records of the mobile phone of Shri R.K. Tripathi of VCPL showing telephone contacts between him and Shri Paramjeet Singh during period from 1.7.2003 to 10.10.2003.
57.1 Shri H.Sunder of VCPL has denied having booked any consignment cleared by them through Singhal Transport during the period of dispute. Shri R.K. Tripathi of VCPL has also taken the same stand and stated that sometimes he arranged for transportation of the consignments of gutka for the buyers who had purchased the same at the factory gate in cash.
57.2 In this case, even if the Vimal brand gutka packed in 160 bags seized from the godown of M/s.Singhal Transport is assumed to be that manufactured by VCPL, the same cannot be treated as proved to have been cleared by VCPL without payment of duty, as other than the statements of Shri Puran Singh and Shri Paramjit Singh Kakkar and the telephone calls between Shri R.K. Tripathi of VCPL and Shri Paramjit Singh, there is no other evidence in support of the Departments allegation and this evidence is not sufficient to prove the allegation as --
(i) Shri H. Sunder and Shri R.K. Tripathi of VCPL have denied having booked any consignment cleared by them through Singhal Transport;
(ii) during that period, there were a large number of cash sales on payment of duty at the factory gate of VCPL and the goods seized from the Transport godown of M/s. Singhal Transport may be part of such cash sales booked by some buyer;
(iii) the statement of Shri R.K. Tripathi that sometimes he arranged the transportation for other buyers who had purchased the goods at the factory gate and his calls to Shri Paramjeet Singh of M/s. Singhal Transport were in this connection is a plausible explanation for the telephone contacts between him and Shri Paramjeet Kakkar and just on the basis of these telephone contacts it cannot be presumed that all these telephone contacts were for booking of the clandestinely cleared consignments of gutka; and
(iv) no documents have been recovered from the premises of VCPL indicating booking of consignments by them through M/s. Singhal Transport during 14.07.2003 to 3.9.2003 period.
Therefore, neither 160 bags of gutka seized from the premises of M/s.Singhal Transport are liable for confiscation nor Shri Paramjeet Singh, Proprietor , M/s.Singhal Transport is liable for penalty.
58. As regards penalty of Rs.5,00,000/- M/s. Gopi Road Lines and redemption fine in lieu of confiscation demanded from VCPL in respectof seizure of 25 boras of sweet supari and zarda from the godown of M/s. Gopi Road Lines, the ownership of the goods and their clearance without payment of duty and booking of the goods for transport through M/s. Gopi Road Lines stands admitted by VCPL and in fact, the duty involved on the goods has been paid even before the issue of the show cause notice. The goods had been seized on 3.9.2003 and the explanation of Shri Rajeev Sharma, Supervisor, M/s. Gopi Road Lines is that the goods had been received on 1.9.2003 but were not transported as he was told that the Manager, VCPL would come with the bill. Shri H. Sunder, Director, VCPL has also stated that this consignment was meant for Maharashtra after ban on gutka in Maharashtra, this consignment of sweet supari was being transported for the first time as sample and may have been sent by the staff without payment of duty under impression that no excise duty is payable.
58.1 Since the goods admittedly were cleared by VCPL without payment of duty, the same would be liable for confiscation and VCPL would be liable for penalty on this count under Rule 25 (1) of the Central Excise Rules, 2002 which has to be upheld, even if there was confusion about duty liability as there is no explanation for clearance of the goods without any invoice. Accordingly, the confiscation of the seized sweet supari and imposition of redemption fine on VCPL under Rule 25(1) readwith Section 34 of Central Excise Act, 1944 on this count is upheld.
58.2 As regards imposition of penalty under Rule 26 of the Central Excise Rules, 2002 on M/s. Gopi Road Lines, penalty under this rule is imposable on a transporter only when there is evidence on record indicating that the transporter was involved in transportation of excisable goods with knowledge that the goods are liable for confiscation. In this case from the statement of Shri Rajveer Sharma of M/s. Gopi Road Lines, it is clear that while the goods were received on 1.9.2003, the same were not transported as he was told that the Manager, VCPL would come with the bill and the goods were not transported as he was still waiting for the bill. There is no evidence to disprove this statement of Shri Rajveer Sharma. Therefore, it is not proved that M/s. Gopi Road Lines had knowledge that the goods, in question, was liable for confiscation. Therefore, penalty of Rs.5,00,000/- imposed on M/s. Gopi Road Lines under Rule 26 of the Central Excise Rules is not sustainable and the same is set aside.
59. Revenue Appeal No.E/2700/06 59.1 This appeal by the Revenue is against the part of the Order-in-Original No.141/05 dated 19.06.2005 of the Commissioner by which the commissioner has dropped the proposal for confiscation of flexible laminates and kimam & unprocessed tobacco seized from the premises of M/s.Lalwani Convetor and M/s. Ashok Tobacco respectively and alleged unaccounted raw material seized from the premises of M/s.VCPL.
59.2 As regards the confiscation of alleged unaccounted raw materials seized from the premises of VCPL after considering the submissions from both the sides, we are of the view that there is no provision for confiscation of unaccounted raw material under Rule 25 of the Central Excise Rules, 2002 as neither this is covered by clause (a), (b) and (c ) of Rule 25 (1) nor by clause (d) of this sub-rule, as no rule of Central Excise Rules, 2002 or notification issued under these rules provide for maintenance of raw materials account. Rule 9(5) of Cenvat Credit Rules is not applicable, as this Rule applies for Cenvat Credit availed inputs while in this case, the alleged unaccounted raw materials are not cenvat credit availed raw materials. Therefore, the alleged unaccounted raw materials seized from the premises of VCPL are not liable for confiscation and as such there is no infirmity in the Commissioners order dropping their confiscation.
59.3 As regards the confiscation of plastic laminates, seized from the premises of M/s. Lalwani Convertors, and loose unprocessed tobacco and kimam seized from M/s. Ashok Tobacco Co. , both the them were availing of SSI exemption and according to respondent, they had neither crossed the threshold limit for SSI exemption, nor had crossed the threshold limit for exemption from registration. This fact of the respondent is not disputed by the Department. A manufacturer who is exempted from registration requirement, is not required to maintain the statutory central excise records. In view of this, the alleged unaccounted goods seized from the premises of M/s.Ashok Tobacco and M/s. Lalwani Convertors are not liable for confiscation and as such, there is not infirmity in the impugned order on this point.
60. Though we have dealt with the individual evidence available and relied upon by the Revenue in respect of each transport company but before parting, we would like to deal with the general arguments advanced by the appellant, which are common to all the transport agencies. First of all ld. Advocate has strongly argued that they are not the only one engaged in the manufacture of gutka under the brand name of Vimal which starts with the English letter V. There are other manufacturing units located in the vicinity which are also manufacturing gutka and pan masala under different brand names, which start with the letter V. Ld. Advocate has disclosed that the other gutka manufacturers located in the same area are M/s.Prem Vijay Chemicals, M/s. Kuber Tobacco, M/s. Ashish & Company, M/s. Vishal & Company, etc. , who manufacture gutka under the brand name of Virat, Vishal, etc. The said manufacturers also use the services of the said transporters in question. As such, we note that to confirm the demand against M/s.VCPL on the basis of the records of the transporters, who may also be engaged in transporting the gutka of other manufacturers starting with the same letter V, would be in the arena of assumptions and presumptions. Moreover, we find that some of the employees of the transporters have also disclosed in their statements that there was no markings of the brand name on the outer surface of the gunny bags, which they received for transportation and the transporters are not allowed to open the gunny bags. As such, it is not possible for a transporters employee to find out whether gutka packed in the gunny bag is of the Vimal brand or any other brand. We, therefore, fully agree with the above contention of the ld. Advocate. In the light of the depositions made by certain employees of the transport companies and in view of the admitted position that no markings are put on the outer surface of the gunny bags of the gutka, it is not only improper but almost impossible for any employee to find out the brand name of the gutka contained in those gunny bags.
61. Apart from the above, ld. Advocate appearing for the appellant has strongly contended that they were also selling gutka at their factory gate against cash. During the period, in question, they have reflected a cash sale of almost Rs.9 Crores at their factory gate on which they have paid the duty. Transportation of such bought out goods by the customers is arranged by themselves to the place of destination. She submits that the name of Shri Dubey was taken by the employees of most of the transport companies as a person, who used to bring the goods to the transport office was in connection with these cash sales, inasmuch as their customers used to seek help of Shri Dubey in getting the goods booked through various transport agencies. Shri Dubey has admitted that he was helping the customers to get the booking from the transport company so as to earn some private income by way of commission. The Revenue has not put any question to Shri Dubey as regards the clandestine manufacture and clearance of the goods from the factory of M/s.VCPL. Though we have already discussed that evidence on record is not sufficient to show the role of Shri Dubey in transporting the goods from the factory of VCPL to the transporters office, but even if accepting the Revenues stand that Shri Dubey was the person, who used to accompany the goods, the said fact by itself will not reflect upon the clandestine activities of VCPL as contended before us, as M/s. VCPL was also selling gutka against cash at the factory gate. Such huge cash sales by the customers are admittedly required to be transported to their final destinations for which the said customers need the transport agencies. Shri Dubey may be only helping these customers in getting their goods booked through these transport agencies. In absence of recovery of any GRs issued by the six transport companies involved in this case from the premises of VCPL, the said fact cannot be considered to be a clinching evidence so as to reflect upon the clandestine activities of VCPL.
62. We also take into consideration the submission of the ld. Advocate that as their brand Vimal was a very popular and famous brand name, the other spurious manufacturers were taking the benefit of the same and were engaged in the manufacture of gutka by using their brand name. For the said proposition, they had also lodged a FIR much prior to the date of visit of the officers or initiation of the present proceedings. As regards the FIR, the same has been proved to be correct inasmuch as the Police Authorities recovered 480 bags of gutka manufactured by those spurious manufacturers and unearthed the said activities going on in the hands of the other manufacturers. As such, she submits that when admittedly, the other small manufacturers were engaged in the manufacture of gutka by using their brand name without their consent and knowledge, the evidence as relied upon by the Revenue cannot be held to be sufficient to show that it was the appellant and not the other manufacturers, who were manufacturing and clearing Vimal brand gutka without payment of duty. We note that the fact of filing of an FIR is not contested by the Revenue and the same reflects the factual position. If the other manufacturers were clandestinely using the brand name Vimal and were also procuring the materials including packing materials, etc from the same source and would also be engaged in transportation of the said goods, the evidence collected by Revenue cannot linked with M/s.VCPL, in the absence of there being any other direct and positive evidence.
63. We would like to observe that the charges in the present cases are that of clandestine manufacture and removal by M/s.VCPL. There are plethora of judgements laying down that such charges are required to be proved by production of tangible evidence and sufficient evidences. The same being in the nature of the quasi-criminal cannot be upheld on the basis of assumptions and presumptions or on the basis of doubts. The required evidence, at least, should be able to tilt the weight of the facts in favour of the Revenue so as to act upon the theory preponderance of probabilities while we fully agree with the ld. DR appearing for the Revenue that such charges cannot be proved by mathematical precision but observe that the evidence produced by the Revenue should, at least establish the allegation of clandestine manufacture and removal by preponderance of probability. In the present case, we note that the entire evidence of the Revenue is primarily ambiguous records maintained by transporters and the oral statement of the employees of the transporters. As already scrutinized in the preceding paragraphs, such records maintained by transport companies nowhere clearly reflect upon the fact that the goods being transported under the cover of GRs had been booked by M/s. VCPL and were in respect of the gutka of their brand name Vimal. Most of the deponents of the respondents have retracted from their original stand at the time of cross examination during the course of adjudication. Otherwise also, we have also observed that it was not possible for the employees of the transport company to find out the brand name of gutka contained in the gunny bags inasmuch as no such brand name is admittedly written on the outer surface of the said gunny bags. Further, ld. Advocate appearing for the appellants have been able to demonstrate some of the statements as being contrary to the records.
64. The Tribunal in the case of Kothari Pouches Ltd. Vs. Commissioner of Central Excise, New Delhi reported in 2001 (135) ELT 531 (Tribunal-Delhi) has held that the charges of clandestine removal cannot be upheld on the basis of the documents of transporters relied on by the department without any independent corroborative evidences. Further, the Tribunal in the case of Commissioner of Central Excise, Chennai Vs. R.B. Steels Pvt. Ltd. reported in 2009 (243) ELT 316 (Tribunal-Chennai) has held that merely on the basis of the account and the records maintained by the transporters, in the absence of the identification of the persons, who maintained them and their cross examination, clandestine removal cannot be upheld in the absence of any other material corroboration. To the similar effect is the majority decision of the Tribunal in the case of the Chariat Cement Co. Vs. Commissioner of Customs reported in 2003 (161) ELT 598 (Tribunal-Calcutta). The Honble Patna High Court in the case of Commissioner of Central Excise Vs. Brims Products reported in 2011 (271) ELT 184 (Patna) has held that even when the investigations with the transporters revealed that they had received consignment of betel nuts, the presumption of Revenue authorities that the same was used in clandestinely removed pan masala cannot be held to be a substitute for the legal positive evidence as based on investigaton conducted only at transporters end, no presumption could be drawn with regard to manufacture and removal of Pan masala. The Honble High Court even observed that the Revenue has to prove its case beyond reasonable doubt and proof by mere preponderance probabilities was not sufficient. Honble High Court further observed that in absence of positive evidence, benefit of doubt has to go in favour of the assessee.The Tribunal in the case of Raj Petroleum Products Vs. CCE reported in 2005 (192) ELT 806 (Tribunal) has held that when the documentary evidence does not establish clandestine removal the oral statements which travels beyond the documentary evidences has to be viewed with suspicion.
65. In view of the ratio of the above decisions, that the charges of clandestine removal cannot be proved on the basis of third party documents without there being any positive evidence on record to link the third party documents with the assessee. When we apply ratio of law laid down in the above decisions to the facts of the present case, we find that though the appellants factory was visited and searched by the officers, nothing incriminating was recovered from the same except the allegations of the shortages of menthol and gunny bags with which we have already dealt with. To confirm such a huge demand of duty on the allegation of clandestine manufacture, the Revenue is expected to prove the procurement of such a huge quantity of raw materials along with the packing materials and the capacity of the assessee to manufacture such a huge quantity. After all to manufacture such a huge quantum of pan masala or gutka, the appellant admittedly needed lot of raw materials. There is no evidence on record as regards procurement of such huge raw materials neither source of the same has been identified by Revenue. Similarly, we find that the Revenue has not bothered to record the statements of the workers of the appellant, who are engaged in the actual manufacture and packing of the gutka/pan masala. In most of the cases, no buyers stand identified and where the buyers were identified either no inquiry was conducted with them (the cases of M/s. Santosh Tobacco and M/s. Gupta Chemical Works) or if inquiry was conducted, they have denied having received the consignments of gutka through the transporters mentioned above. As such, we are of the view that confirmation of demand of duty based upon the half written ambiguous records of the third party is neither justified nor warranted nor is in accordance with law.
62. In view of the foregoing, we dispose of the appeals as under:-
62.1Appeals filed against Order-in-Original No.141/05 dated 9.6.2005.
62.1.1 In respect of appeals filed by VCPL and its Director, Shri H. Sunder, only duty demand of Rs.6,93,285/- along with interest under Section 11 AB and penalty of equal amount under Section 11 AC is upheld. The remaining duty demand against VCPL including the duty demand on 9 bags of gutka seized from office of M/s. Harsh Transport Co. at Bhopal and 30518 pouches of Vimal gutka seized from Shri Lakshmi Prakash Gupta, Seoni, interst thereon and penalty under Section 11 AC is set aside. The penalty under Rule 26 of Central Excise Rules on Shri H. Sunder is reduced to Rs.5,00,000/- (Rupees Five Lakh only).
62.1.2. Penalty under Rule 26 of Central Excise Rules on M/s.GG Carriers, M/s. Delhi Indore Transport Company, M/s. Singhal Transport Company, Shri Paramjit Singh Kakkar, Prop., M/s. Singhal Transport Company, M/s. Harsh Transport Co. and M/s. Gopi Road Lines is set aside and the appeals filed by them and Shri Paramjit Singh, Prop., M/s. Singhal Transport Company are allowed.
62.1.3. Confiscation of the truck no.HR 38D-4117 of M/s. Singhal Transport Co. is set aside.
62.1.4. Confiscation of Tata 407 tempo DL-1LA 6232 of Shri Kayum Khan and penalty on him is set aside and as such, the apeal filed by Shri Kayum Khan is allowed.
62.1.5. Confiscation of 210 bags of Vimal gutak seized from the premises of M/s.Singhal Tranport Company and 950 pouches of Vimal gutka seized from M/s. Gobind Stores, Jaipur and redemption fine in respect of them is upheld.
62.1.6. Confiscation of 9 bags of Vimal gutka seized from Bhopal office of M/s. Harsh Transport Company and redemption fine in respect of them is set aside.
62.1.7. Confiscation of 30518 Vimal gutka pouches seized from Shri Lakshmi Prakash Gupta of Seoni, redemption fine in respect of them and penalty on Shri Gupta is set aside. The appeal filed by Shri Lakshmi Prakash Gupta is thus allowed.
62.1.8. Confsication of printed plastic laminates seized from M/s. Pragati International, Delhi, redemption fine in respect of the goods and penalty on M/s. Pragati Internatiional is upheld. The appeal filed by M/s. Pragati International is dismissed.
62.1.9. Impositon of penalty on M/s. Santosh Tobacco is set aside and appeal filed by them is allowed.
62.1.10. The Appeals filed by the Revenue is dismissed.
62.2. Appeals filed against Order-in-Appeal No.152/05 dated 21.11.2005.
62.2.1. The duty demand of Rs.2,75,15,400/- against VCPL, interest thereon under Section 11 AB and penalty on them under Section 11AC is set aside. Penalty under Rule 26 of Central Excise Rules, 2002 on Shri H. Sunder is also set aside.
62.2.2. Penalty unde Rule 26 of Central Excise Rules, 2002 on M/s. Laxmi Freight Cariers (P) Ltd., Shri Gopal Krishan Parashar, Shri Paramjit Singh Kakkar, Prop., M/s. Singhal Transport Company and Shri R.K. Tripathi of VCPL are set aside and as such, the appeals filed by them are allowed.
62.2.3. Penalty under Rule 26 of Central Excise Rules, 2002 on M/s. Gopi Road Lines is set aside and their appeal is allowed.
62.2.4. Confiscation of 25 bags of sweet supari from the premises of M/s.Gopi Road Lines and redemption fine in respect of them is upheld.
62.3 The appeals stand disposed off as above.
[order pronounced on 21.10.2013].
( Archana Wadhwa ) Member (Judicial) ( Rakesh Kumar ) Member (Technical) Ckp.
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