Custom, Excise & Service Tax Tribunal
Nobel Joseph vs Ahmedabad-Ii on 6 September, 2018
In The Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench At Ahmedabad
Appeal No. E/511-517/2009-SM
Appeal No. E/11017,11029/2013-SM
[Arising out of 171 to 178/2008 (Ahd.II)CE/ID/ Commr(A)/Ahd dated 29.12.2008 and Order-in-Appeal No. 67 to 68/2013(Ahd-
II)CE/AK/Commr(A)/Ahd dated 19.03.2013 passed by the Commissioner (Appeals) -Ahmedabad-ii]
M/s Zen Tobacco Pvt. Ltd. Appellant
Nobel Joesph
Mahendra Das
J Santosh Kumar Dube
Niraj Satish Budhiraja
Mustafa Sales Agency
Rashmin M Majithia
Rashmin M Majithia
Zen Tobacco Pvt. Ltd.
Vs
C.C.E. Ahmedabad-ii Respondent
Represented by:
For Appellant: Mr. D. K. Trivedi & Mr. P.M. Pandya (Adv.) For Respondent: Mr. S.K. Shukla (A.R.) CORAM:
HON'BLE MR. RAMESH NAIR, MEMBER (JUDICIAL) Date of Hearing:26.06.2018 Date of Decision:06.09.2018 Final Order No. A /11870-11878/2018 Per: Ramesh Nair These are 9 appeals arising out of same search, seizure and investigation against two Orders in Appeal passed by the Commissioner (Appeals) Ahmedabad. As the appeals have arisen out of same search and seizure, all these appeals are taken together for disposal/decision. The details of these appeals are as under:-
Sr.No. Appeal No Appellant Status
1. E/511/2009 Zen Tobacco Pvt Ltd Manufacturer
2. E/512/2009 Nobel Joseph Retail seller
3. E/513/2009 Mahendra Das Dealer
4. E/514/2009 J Santosh Kumar Dube Retail seller
5. E/515/2009 Niraj Satish Budhraja Dealer
6. E/516/2009 Mustufa Sales Agency Retail seller
7. E/517/2009 Rashmin M Majithia Director-ZTPL
8. E/11017/2013 Rashmin M Majithia Director-ZTPL
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9. E/11029/2013 Zen Tobacco Pvt Ltd Manufacturer
2. Zen Tobacco Pvt Ltd is the only manufacturer and referred to here as M/s ZTPL. After the search, seizure and investigation, Show Cause Notice dated 09.08.2006 was issued proposing confiscation of seized goods, and also demanding duty of Rs. 11,00,883/- from ZTPL and proposing to impose penalty on ZTPL & others. However, after considering submissions by the Appellants, Additional Commissioner vide Order-in-Original No. 55/2008 dated 04.06.2008 confirmed the demand of duty Rs. 2,43,671/-, out of total duty demand of Rs.
11,00,883/-, holding that in respect of the goods involving duty of Rs. 8,57,212/-, identification numbers had been correlated with the duty paying documents. Additional Commissioner had ordered confiscation of the goods involving excise duty of Rs. 2,43,671/- and gave option to respective parties to redeem the same on payment of fine and penalties.
3. M/s ZTPL and 6 others filed appeals against the said Adjudication Order confirming duty of Rs. 2,43,671/- and against R/F and penalties imposed. Similarly, Department also filed one appeal against ZTPL where duty demand of Rs. 8,57,212/-, out of total duty demand of Rs. 11,00,883/-, was dropped by adjudicating authority. Commissioner (Appeals), Ahmedabad vide Order-in-Appeal No. 171 to 178/2008 (Ahd.II)CE/ID/ Commr(A)/Ahd dated 29.12.2008 dismissed all the appeals filed by M/s ZTPL and 6 others and allowed the said appeal filed by Department and enhanced amount of penalty imposed. The Commissioner (Appeals) enhanced the penalty from Rs.20,000/- to Rs.1,00,000/- on Rashminbhai Majithia, Director ZTPL though no
3|Page E/511-517/2009 &E/11017,11029/2013-SM further SCN was issued by department or Commissioner (Appeals) for enhancement of any penalty on him.
4. Hence, M/s ZTPL and 6 others filed EA-3 appeal Nos E/511 to 517/2009 against Order-in-Appeal No. 171 to 178/2008 (Ahd.II)CE/ID/ Commr(A)/Ahd dated 29.12.2008.
5. Further, in the meanwhile, on the basis of various statements recorded during investigation of the case, another Show Cause Notice dated 28.12.2007 was also issued demanding total central excise duty of Rs. 47,21,745/- from M/s ZTPL and for imposing penalty on ZTPL and its Director Rashminbhai Majithia, which was confirmed in Adjudication and upheld in first appeal. However, on second appeal by Appellants ZTPL, this Tribunal vide Final Order No. A/1001- 1002/WZB/AHD/2011 dated 07.06.2011 remanded the matter for fresh adjudication after observing the principles of Natural Justice, as Order was passed without providing relied upon documents and without allowing cross-examination. Thereafter, during remand adjudication proceedings, Additional Commissioner vide his Order dated 31.03.2012 confirmed the demand of duty Rs. 47,21,745/- and imposed equal penalty on ZTPL under Section 11AC of the CEA 1944 and also imposed a penalty of Rs.10,00,000/- on Rashminbhai Majithia, Director of ZTPL. But, in first appeal, Commissioner (Appeals), Ahmedabad vide O-I-A No. 67 to 68/2013(Ahd- II)CE/AK/Commr(A)/Ahd dated 19.03.2013 reduced the demand of duty & penalty from Rs.47,21,745/- to Rs.30,54,404/- and reduced penalty imposed on Director of ZTPL Shri Rashminbhai Majithia to Rs.2 Lakh under Rule 26(1) of the Central Excise Rules.
4|Page E/511-517/2009 &E/11017,11029/2013-SM
6. Hence, ZTPL and its Director Shri Rashminbhai Majithia are in appeal against confirmation of duty demand of Rs.30,54,404/- and penalty vide their Appeal Nos E/11029/2013 and E/11017/2013 respectively.
7. M/s ZTP and 6 other appellants were represented by the Advocate shri D.K. Trivedi, who has also filed written synopsis with relied upon case laws, whereas the Department was represented by Shri S.K.Shukla Ld. Superintendent (AR). I have heard both the sides at length and have considered the documents available on records including synopsis and case laws as well as submissions of both sides. Ld. Departmental representative has reiterated the finding recorded against ZTPL & others in the impugned Orders and argued that there are statements showing removal of goods by ZTPL without payment of duty and other evidences and invoices. He also argued that the department is not required to prove such case of clandestine removal with mathematical precision.
8. Briefly stated the facts are that M/s ZTPL is a manufacturer engaged in manufacture of Chewing Tobacco, which they claim to clear on payment of the duty. On the basis of some intelligence, officers of Directorate General of Central Excise Intelligence [DGCEI] searched the factory premises of M/s Zen Tobacco Pvt. Ltd. on 13.02.2006. The officers had also carried out search at the residential premises of shri Rashmin Majiithia Director of M/s ZTPL, dealers & persons dealing in their product, Chewing Tobacco, premises of their suppliers and transporters.
9. During the course of searches no goods were seized from the factory premises of ZTPL. However, officers seized following cartons
5|Page E/511-517/2009 &E/11017,11029/2013-SM of chewing tobacco, from dealers, buyers, transporters engaged by the dealers:-
Sr. Date Name of the Party No. of Value
No. Ctns.
Seized.
1. 13.02.2006 M/s Rahul Transport Sales Co. Pvt. Ltd. 301 Rs. 26,90,205/-
(goods transported by M/s Shivam
Sales Corporation, Ahmedabad.)
2. 13.02.2006 M/s Mustufa Sales Agency, Ahmedabad. 10 Rs. 36,000/-
3. 13.02.2006 M/s Shivam Agency, Nagpur. 21 Rs.1,08,517/-
4. 14.02.2006 Shri Nobel Joseph, Chennai 5 + 2 small Rs. 26,800/-
boxes
5. 14.02.2006 M/s Balaji Pan Centre, Chennai-J. 160 bags + Rs. 4,09,080/-
Santosh Kumar-Prop. 5 Ctns
TOTAL Rs.32, 70,602/-
10. It is seen that this case has two different issues as under :-
(1) Seizure and Confiscation of the goods totally valued at Rs.
32,70,602/- along with demand of excise duty of Rs. 11,00,883/- by SCN dated 09.08.2006 (2) Excise duty Demand of Rs.30,54,405/- upheld by OIA dated 19.03.2013 As the case involving seizure on 13/14-02-2006 has resulted in confiscation of goods, I would first like to examine the issue related to seizure & confiscation of the goods. The seizures of goods were from five different premises as mentioned in para 9 above. Each seizure/confiscation will have to be examined separately. 10.1 As regards Seizure of goods valued at Rs. 26,90,205/- from the premises of above mentioned M/s Rahul Transport Sales Co. Pvt. Ltd, I find as under :-
a) It is seen that 301 cartons containing goods valued at Rs.
26,90,205/- have been seized, but the said seized goods have not been directly transported from the factory of ZTPL to the said premises of Rahul Transport.
b) It is also seen that M/s Shivam Sales Corporation, one of the dealers of M/s ZTPL had dispatched 955 cartons of Chewing Tobacco under their Invoices and GRs to the said M/s Rahul Transport for onward transportation to customers at Wadi in Maharashtra.
6|Page E/511-517/2009 &E/11017,11029/2013-SM
c) Transport Company, while transporting 654 cartons, had sent invoices issued by the said Shivam Sales Corporation. Some of the invoices, sent by Transport Company did not tally with the identification numbers as mentioned on the cartns when officers visited the premises of Rahul Transport.
d) Shri Babubhai C. Mehta godown in-charge of Transport Company has affirmed by his Affidavit dated 31.01.2007 about mishandling of goods and invoices at their end.
e) No discrepancy was found in the stock of goods at the business premises of Shivam Sales Corporation which shows that it was not clandestine removal.
f) The Panchnama at Rahul Transport, has shown the identification marks of 256 cartons out of 301 cartons.
g) M/s ZTPL has shown to the satisfaction of Additional Commissioner that the cartons with those identification marks were removed under cover of invoices and on payment of duty by M/s ZTPL to M/s Shivam Sales Corporation.
h) Adjudicating Authority has given finding in Order-in-Original dated 04.06.2008 that there is no evidence that M/s ZTPL had used parallel identification marks because no invoice of the same serial number and same identification mark have been detected or relied upon in S.C.N. There is no rebuttal of the said specific finding by the Department.
i) The Commissioner (Appeals) does not appear to have seen these documents while allowing appeal of Department holding that Additional Commissioner mentioned only 8 cartons in Adjudication Order. It seems that the learned Commissioner (Appeals) has not appreciated that Additional Commissioner had mentioned the Representative ID numbers in the Adjudication Order.
j) Regarding remaining 45 cartons, it is mentioned that identification were marks available on the cartons i.e. inside the outer coverings which officers does not appear to have seen. In any case, there is no evidence on record that the said cartons were cleared by M/s ZTPL without payment of duty. In the case of U.O.I. Vs MSS Foods Products Ltd., 2011 (264) ELT 165 (MP), it has been held by Madhya Pradesh High Court that it is necessary to establish that excisable goods were clandestinely removed without payment of duty from the factory. In the present matter the department has not established by any independent and tangible evidence that removal of the said 45 cartons by M/s ZTPL were without payment of duty. Hence, confiscation of goods valued at Rs. 26,90,205/- from M/s Rahul Transport Sales Co. Pvt. Ltd. Ahmedabad is not sustainable and it deserves to be set aside.
7|Page E/511-517/2009 &E/11017,11029/2013-SM
k) Consequently, confiscation of goods valued at Rs. 26,90,205/- from M/s Rahul Transport Sales Co. Pvt. Ltd, Ahmedabad is not sustainable and it deserves to be set aside.
10.2 As regards Seizure of goods valued at Rs.1,08,517/- from Shivam Agency Nagpur, I find that the said seized goods have not been directly transported from the factory of ZTPL to the said Shivam Agency; that 21 cartons seized from Shivam Agency Nagpur were purchased by them from M/s Geeta Trading Company Nagpur out of the 30 cartons purchased by them from M/s ZTPL earlier. It is also seen that the said 21 cartons were sold under commercial Invoice No. 451 dated 28.01.2006 and goods were transported under lorry receipt No. 4901272. In view of such documentary proof and in absence of evidence of clearance of said goods by M/s ZTPL without payment of duty, clandestine removal of goods valued at Rs.1,08,517/- is not established, Consequently, confiscation of the said goods valued at Rs.1,08,517/- from Shivam Agency Nagpur is not sustainable and it deserves to be set aside.
10.3 As regards Seizure of goods valued at Rs.36,000/- from Mustufa Sales Agency, Ahmedabad, I find that the said 10 cartons valued at Rs.36,000/- were only detained by the officers at premises of Mustafa Sales Agency and there is no evidence or even statement of proprietor of Mustafa Sales Agency that the said goods were removed by M/s ZTPL without invoice and without payment of duty. Appellant ZTPL has clarified that the said 10 cartons were sold to Mustafa Sales Agency under ZTPL's Invoice No.329 dated 19.05.2005 and the said invoice is part of seized documents. This fact of clearance of goods on payment of duty under Invoice No.329 dated 19.05.2005 has not been denied by revenue or it is not the caase of the revenue that the goods
8|Page E/511-517/2009 &E/11017,11029/2013-SM cleared under the said Invoice No.329 dated 19.05.2005 were different than the goods seized and confiscated. The finding of the Commissioner (Appeals) is erroneous as he has referred to batch number without co-relating with the Invoice and it is not understood as to how it can be concluded from only batch number that the detained goods were not received under Invoice. Consequently, confiscation of goods valued at Rs.36000/- from Mustufa Sales Agency, Ahmedabad is not sustainable and it deserves to be set aside. 10.4 As regards Seizure of goods valued at Rs. 4,09,080/- from M/s Balaji Pan Centre, Chennai-J. Santosh Kumar-Prop., I find as under :-
(1) That the said 160 bags of Chewing Tobacco were seized from the premises of Balaji Pan Centre, Chennai.
(2) The Adjudicating Authority had released 86 bags and 5 cartons as identification number tallied with the goods supplied by M/s ZTPL to one M/s Raju Enterprises of Pondicherry from whom Balaji Pan Centre had purchased the same.
(3) According to the appellants, the remaining 74 bags also had identification marks, which were not seen by the officers.
(4) M/s ZTPL had not sold goods directly to Balaji Pan Centre and there is no evidence about transportation of goods from ZTPL premises at Ahmedabad to Chennai.
(5) The ld. Commissioner (Appeals) has upheld confiscation without giving any clear findings that the seized goods were removed clandestinely by M/s ZTPL.
(6) Revenue has erred in confiscating goods and demanding duty on unjustified finding that in invoice word carton was mentioned. In this regards, Appellant has clarified that word carton is pre-
printed in the invoice as bulk clearance is in such cartons. It may be noted that merely because the printed word carton was not changed, the goods do not become non-duty paid goods, particularly when Additional Commissioner has found that identification number tallied with duty paying invoices issued by ZTPL.
9|Page E/511-517/2009 &E/11017,11029/2013-SM (7) It is also seen that in second proceedings, learned Commissioner (Appeals) in Order-in-Appeal dated 19.03.2013 had not confirmed duty in respect of goods allegedly supplied to Balaji Pan Centre.
(8) The allegations are based only on statements of Santosh Kumar Dubey, but allegations are not based on any documentary evidence. It is also seen that said shri Santosh Kumar Dubey has retracted his statement during cross-examination before adjudicating authority.
(9) The learned Commissioner (Appeals) has also observed that statement of said shri Santosh Kumar Dubey has not been corroborated by any independent evidence and his statement that Prabhat Kumar, Sales Manager of ZTPL was supplying goods to him without bill has been denied by said Prabhat Kumar in his statement recorded under Section 14 of Central Excise Act. (10) Shri Santosh Kumar Dubey, in his cross-examination, has clearly deposed that he had purchased the Chewing Tobacco from Raju Enterprises as well as from open market. He has categorically denied to have received any chewing tobacco from Prabhat Kumar.
(11) In any case there is no evidence or any material on record as to how the goods were received by Prabhat Kumar and where he was storing goods at Chennai.
(12) In absence of any material showing transportation of goods from Ahmedabad to Chennai, there is no substance in the department's case which deserves to be rejected. (13) In the appeal filed by Department, reference has only been made to the statement of Santosh Kumar Dubey without bringing any material on record to contradict his testimony during cross-examination.
(14) It is settled law that the serious allegation of clandestine clearance cannot be made merely on the basis of statement which has not been corroborated by any other evidence. (15) In CCE Vs Anil Agarwal 2013 (287) ELT 489 the Tribunal has held that sole reliance of Revenue on the statement without any other evidence is not proper.
(16) Consequently, confiscation of goods valued at Rs. 4,09,080/-
from M/s Balaji Pan Centre, Chennai-J. Santosh Kumar-Prop. is not sustainable and it also deserves to be set aside. 10 | P a g e E/511-517/2009 &E/11017,11029/2013-SM 10.5 As regards Seizure of goods valued at Rs.26,800/- from Nobel Joseph, Chennai, I find as under :-
(1) Confiscation of goods and duty has been demanded on the basis of seizure of goods valued at Rs.26,800/- from the premises of Noble Joseph at Chennai and his statements.
(2) The Commissioner (Appeals) has dropped the demand vide Order-in-Appeal dated 19.03.2013 holding that the allegations are based only on the statement and entries made in his private records without independent corroboration.
(3) It is submitted by Appellants that the factual position is that Noble Joseph is having a business premises in the name and style of Super Stores at Begum Bazar, Hyderabad. He had purchased goods worth Rs.28 Lakhs on payment of duty from M/s ZTPL during the period from July to December, 2005 and out of those goods, he was selling Chewing Tobacco at Chennai also.
This fact has been mentioned by him in his Reply dated 01.03.2007 to S.C.N. dated 09.08.2006. He has also deposed these facts during his cross-examination which have not been rebutted by the Department. Nobel Joseph has categorically denied to have purchased any goods without invoices from M/s ZTPL.
(4) His statement that said Prabhat Kumar, employee of ZTPL used to sell ZTPL's goods without bill has been denied by Prabhat Kumar in his statement. Further, Director of ZTPL shri Rashminbhai Majithia has also stated in his statement dated 31.10.2007 that Prabhat Kumar's main job is to promote their products in his area of operation and he used to give feedback about potential clients in South India.
(5) Adjudicating Authority has discarded deposition of Nobel Joseph by saying that there is no proof of transportation of goods by him from his store at Hyderabad to Chennai. The ld. Advocate contended that if the Adjudicating Authority had any doubt, he himself could have sought the answer from him during his deposition. Moreover, the Department has not adduced any material to show transportation of goods from ZTPL's premises in Ahmedabad to Nobel Joseph's premises at Chennai and thus revenue has not discharged its heavy burden to prove charge. Appellants have placed Reliance on the decision in Rama Shyama Papers Ltd. Vs CCE, 2004 (168) ELT 494 wherein the Tribunal has also set-aside demand of duty as Revenue had not been able to adduce any corroborative evidence to show movement of goods. The learned Advocate also relied upon the decision in CCE Vs Renny Steel Castings Ltd., 2011 (274) ELT 94 wherein the Tribunal has held that since entries made in the private records were not corroborated with the transporters and no authorized person of the Company had admitted to 11 | P a g e E/511-517/2009 &E/11017,11029/2013-SM unaccounted production and clearance, there is no case of clandestine removal.
(6) Consequently, confiscation of goods valued at Rs.26,800/- from Nobel Joseph, Chennai is not sustainable and it also deserves to be set aside.
11. As regards the duty Demand amounting to Rs.30,54,404/- upheld by OIA dated 19.03.2013, On behalf of M/s ZTPL, it is submitted by the Advocate Shri D K Trivedi that the entire case of clandestine manufacture and removal of goods has been made on the basis of seizure of goods/documents from the premises of third parties and on the basis of statements of persons without independent corroboration. It is contended that though the factory premises and Registered Office of M/s ZTPL were searched by surprise, no seizure of any unaccounted goods/cash has been made by the officers. No discrepancy whatsoever has been found in the stock of raw materials as well as finished goods. There is no statement of any employee of M/s ZTPL confirming such manufacture of unaccounted final products and removal without invoice and without payment of duty. It is a settled law that the cases of clandestine manufacture & removal have to be established by revenue with tangible evidences. I find force in the contention of the Ld. Advocate who has also relied upon judgment in Case of Vishwa Trading Pvt. Ltd., 2013 (287) ELT 243 (Guj), wherein the Hon'ble High Court of Gujarat did not find any merit in Department's appeal as on the date of visit of officers, stock of raw material and finished goods were tallying with the recorded goods. It is further, observed here that revenue has not brought on record statement of any transporter for transporting of both raw materials to, and final products from, the factory premises of M/s ZTPL. Advocate has also relied upon the decision in CCE Vs Ganesh Agro Steel Industries, 2012 (275) ELT 470 wherein the Tribunal has held that in 12 | P a g e E/511-517/2009 &E/11017,11029/2013-SM absence of confessional statement of any of the employee or office bearer of assesse and statement of transporters, charge of clandestine removal cannot be established. Advocate has vehemently argued that once finished goods has left factory on due payment of duty, M/s ZTPL are not questionable or answerable for the goods found in the market and they are not liable to account for the said goods, which have been cleared after payment of duty from their factory. I find that there is no seizure in factory of ZTPL, all seizures have been made at the premises of others.
12. I find that duty has been demanded on the basis of a letter dated 24.12.2005 of M/s Gopal Sales, Chandrapur, it has been alleged that following goods were supplied by ZTPL without payment of duty to M/s Gopal Sales:-
(a) Free Stocks received from Shivam Rs.12,65,500/-
(b) Stocks from Shivam Agencies Rs.18,92,560/-
(c) Bonus from you Rs.50,00,000/- 12.1 It is submitted by Advocate regarding (a) above free Stocks received from Shivam Rs.12,65,500/- that without any basis it has
been considered that these goods were supplied to M/s Gopal Sales without payment of duty. The Advocate has also argued that said letter was regarding reconciliation of Scheme Amount and Target Scheme. M/s ZTPL also provide incentive to dealers, like most of Companies. Ld. Advocate has also argued that the free stocks received from Shivam mentioned in the said letter does not mean that the goods were supplied to Gopal Sales without payment of duty. He has argued that in fact 175 cartons were sold by ZTPL to one Geeta Traders, Ahmedabad on payment of duty and as they were not be able to sell those goods completely, 140 cartons were sent to M/s Shivam
13 | P a g e E/511-517/2009 &E/11017,11029/2013-SM Agency Nagpur by Geeta Traders under commercial invoice. A copy of Geeta Traders' letter dated 10.02.2006 under which they had sent 140 cartons to Shivam Agency had been submitted to the Department along with Journal Voucher which had been ignored by the Department as well as by the ld Commissioner (Appeals). Advocate has also argued that as Shivam Sales also could not sell, those goods were sent to Gopal Sales and since Shivam Agency had not made any payment towards those goods, they did not issue bills. These facts have been stated by Rashminbhai in his statement dated 02.08.2006. It is seen that Neeraj Satish Budhiraja of Shivam Agency has also confirmed this position in his statement. Nowhere it has been stated in his statement dated 17.07.2006 that goods were clandestinely cleared by ZTPL. Thus, charge of clandestine removal of goods by ZTPL without payment of duty does not prove. It seems an undue inference has been drawn by the ld Commissioner (Appeals) which is not permissible in law as held by Apex Court in Oudh Sugar Mills Vs U.O.I., 1978 (2) ELT (J172) (SC). It is thus evident that said goods were not cleared without payment of duty.
12.2 I find that It is submitted by Ld. Counsel regarding (b) above regarding Stock from Shivam Agency worth Rs.18,92,560/-, that Commissioner(A) has presumed without any basis that there was documentary evidence about the said clearances. In fact, there is no documentary evidence that ZTPL had sent those goods to Shivam Agency without invoice for being dispatched to M/s Gopal Sales. It is contended by Advocate that no reasonable person would first send goods without invoice to Nagpur and then transport the same to Chandrapur and would take double risk of goods being intercepted. Further, Neeraj Satish Budhiraja has not stated in his statement that 14 | P a g e E/511-517/2009 &E/11017,11029/2013-SM the said goods were received without invoice from ZTPL. He has merely stated that Shivam Agency had not issued any bill while selling those goods to Gopal Sales. Again he has clarified in his cross- examination that the said goods were out of goods worth Rs. 2 Crores approx. purchased by Shivam Agency from ZTPL under invoices on payment of duty and as Gopal Sales needed the goods, Shivam Agency had sold to them and took payment in cash. The learned Advocate contended that if dealer does not issue bill, it does not lead to conclusion that the manufacturer had sent goods to dealer without invoice. The statement of Neeraj Budhiraja stands corroborated by the Affidavit of Hari Chand Gidwani, Prop of Gopal Sales who has also further affirmed that the said goods were not purchased by him from ZTPL.
12.3 I find that regarding (c) above on "Bonus From you", worth Rs.50,00,000/- the learned Advocate has argued that this entry in Gopal Sales letter does not suggest that the goods worth Rs.50 Lakhs were supplied by ZTPL to Gopal Sales that too without payment of duty. He has also argued that the factual position in this regard is that two firms, namely Pooja General Stores and Payal Sales Corporation, falling within area of Gopal Sales, had sold goods of Rs.49,18,410/- which was rounded to Rs.50,00,000/- for purposes of bonus. The learned Commissioner has termed explanation as an afterthought merely because of rounding off figure. The ld. Counsel contended that Rashminbhai Majithia in his statement dated 15.06.2006 has stated that the said bonus amount represents sale effected in the area of Gopal Sales. Thus it can't be said that explanation was an afterthought at all. In this connection, I further find that shri Hari Chand Gidwani has affirmed in his Affidavit that "Bonus from you" was in respect of 15 | P a g e E/511-517/2009 &E/11017,11029/2013-SM sale effected by Payal Sales Corporation and Pooja General Stores in his area and he was, therefore, eligible for incentive. I also find that there is no independent evidence to show movement of alleged goods worth Rs.50 Lakhs from factory of ZTPL at Ahmedabad to Chandrapur. The ld. Counsel referred to decision in CCE Vs Ganesh Agro Industries, 2012 (275 ELT 470 wherein the Tribunal has held that in absence of any confessional statement of employee and transporter, the case of clandestine removal cannot be based on assumption and presumption. It is settled by a number of judgments that charge of clandestine removal is a very serious charge and it has to be established by independent, tangible, cogent and admissible evidences. There has to be evidence about clandestine purchase of raw material required to manufacture alleged goods, discrepancy in stock of raw material or final product. Appellants have also relied upon the judgment of Gujarat High Court in CCE Vs Chhajar Singh Kanwal, 2011 (272) ELT 202 (Guj). Some other decisions relied upon by learned Advocate are as follows:
(1) Nissan Thermoware Pvt. Ltd. Vs CCE, 2009 (246) ELT 191. (2) CCE Vs Nissan Thermoware Pvt. Ltd., 2011 (266) ELT 45 (Guj) holding that evidence has to be pointed out which corroborates the fact of clandestine manufacture and removal of final products.
(3) CCE VS Ash Castings Pvt. Ltd., 2010 (252) ELT 191 (HP). (4) (i) R.A. Casting Vs CCE, 2009 (237) ELT 674 (T-Del).
(ii) CCE Vs R.A. Casting 2011 (269) ELT 337 (ALL).
(iii) CCE Vs R.S. Casting 2011 (269) ELT A408 (SC).
12.4 I also find that it is also argued by Revenue that the department is not required to prove its case with mathematical precision. But the Revenue has to establish such a degree of probability that a prudent person may, on its basis, believe in the existence of the fact in issue. But as against that I find that the Tribunal has also held in, 2005 (69) RLT 352 that a finding of clandestine removal requires positive 16 | P a g e E/511-517/2009 &E/11017,11029/2013-SM evidence to support it. It is settled law that Department has to prove charge of clandestine manufacture & removal with evidence. No demand of duty can be raised on the basis of mere probability. The Tribunal in the case of Pan Parag India Ltd. Vs CCE, Kanpur, 2013 (291) ELT 81 (T-Del) has held that theory of preponderance of probabilities is applicable only when there are strong evidence leading to only one conclusion of clandestine activities. The theory of preponderance of probabilities cannot be accepted in cases of weak evidences of doubtful nature. The settled law is that Charge of clandestine removal is required to be proved by sufficient evidences and in the present matter, these are no evidence on the basis of which such a serious charge of clandestine manufacture and clearance can be established.
12.5 It is argued by Advocate that there is no evidence on record, not even any statement, that goods were cleared without payment of duty by ZTPL to the said M/s Shiv Enterprises Surendra Nagar. The amount of Rs.16,840/- was received as the same was payable by the said Shiv Enterprises for the goods supplied to them earlier on payment of duty. The Advocate also referred to the grounds wherein it has been contended that ZTPL had neither received any excess tobacco nor any laminates.
13. In respect of the penalty imposed on Rashminbhai Majithia, Director of ZTPL, It is argued by the Advocate that no penalty is imposable since there has been no clandestine removal. In any case, penalty under first SCN dated 09.08.2006 cannot be imposed as he was never put to notice as to why penalty should not be imposed upon him. Thus, Additional Commissioner (Appeals) travelled beyond the 17 | P a g e E/511-517/2009 &E/11017,11029/2013-SM scope of SCN in imposing penalty of Rs.20,000/- on Rashminbhai Majithia. Further, the ld. Commissioner (Appeals) has also acted without any jurisdiction to enhance the said penalty to Rs.1,00,000/- though no appeal was filed by Department for enhancement of penalty or any notice was issued by Commissioner(Appeals) proposing to enhance penalty already imposed by O-I-O. Thus penalty is liable to be set-aside. Penalty of Rs. 2 Lakh confirmed by Commissioner (Appeals) in impugned Order dated 19.03.2013 is also liable to be set-aside in absence of any material to show that he had dealt with any excisable goods with the knowledge that the same are liable to confiscation. Penalty is imposable on director only if there is any specific finding of personal gain which is missing here. Advocate has also relied upon the decision in case of Gujarat Borosil Ltd. Vs CCE, Surat, 2007 (217) ELT 367 (Tri-Ahmd. Advocate has also pleaded that these appeals filed by M/s ZTPL and 5 others may be allowed as there was no proposal for imposition of penalty on them in SCN dated 09.08.2006. Moreover, Revenue has not established that they had dealt with excisable goods which they knew or had reason to believe that goods are liable to confiscation and inspite of that they had dealt with goods.
14. The case of Revenue is that M/s ZTPL indulged in clandestine manufacture and removal of their final product chewing tobacco; that goods were seized from different premises and persons dealing with goods had stated in their statements that goods were received without bills. On the other hand it has been submitted by the ld. Advocate for ZTPL that neither any goods were seized from factory premises of ZTPL nor any discrepancies were found in their records and stock of raw materials and finished goods. The various persons have denied to 18 | P a g e E/511-517/2009 &E/11017,11029/2013-SM have received goods either during the course of cross-examination or by affirming Affidavit or in their replies to show cause notice. The ld. Advocate has also contended that goods were seized from the possessions of third parties and though M/s ZTPL are not answerable to all goods found in the market, they have tallied their identification marks found on the goods with the duty paying invoices. I find force in the submissions made by ld. Advocate on behalf of ZTPL and others. The DGCEI officers did not find any discrepancy in the physical stock of both raw materials and finished products vis-à-vis the recorded stock. Moreover, there is no statement on record from any official or employee of M/s ZTPL confessing about the manufacture of excess goods and their removal from the factory without payment of duty. In similar case, Division Bench of this Tribunal has observed in Vishwa Traders Pvt. Ltd. Vs CCE, 2012 (278) ELT 362 (Tri-Ahmd) that the charge of clandestine manufacture and removal has to be proved beyond doubt and there is nothing to prove that the Appellants had clandestinely manufactured and cleared the final product. The Hon'ble Gujarat High Court has also dismissed the appeal filed by Revenue, by observing that since the stock of raw material and finished goods tallied with the recorded goods, the Assessee had not clandestinely manufactured or removed the goods. This order in Vishwa Traders is upheld by Gujarat High Court and supreme Court in 2013(287)ELT.43 (Guj) and 2014(303)ELT.A24(SC) respectively.
15. The case of Revenue is that goods were clandestinely removed to some cities. However, there is no evidence brought on record to show their transportation from ZTPL's factory at Ahmedabad to those cities. Not a single statement of truck driver has been brought on record who had allegedly transported clandestinely removed goods to 19 | P a g e E/511-517/2009 &E/11017,11029/2013-SM Nagpur, Chennai, Chandrapur etc. The Hon'ble High Court of Gujarat has held in CCE Ahmedabad-II Vs Chhaju Singh Kanwal, 2011 (272) ELT 202 (Guj) that clandestine removal is not established in absence of investigation to ascertain discrepancies in the stock of raw material or final product, extra working hours of the factory, electricity consumption, payment of transportation bills, etc. The Tribunal in Rama Shyama Papers Ltd. Vs CCE, 2004 (168) ELT 494 has set-aside the demand of duty as the Revenue has not been able to adduce any corroborative evidence to show the movement of the goods from the premises of the Assessee.
16. I find that ZTPL and others have pointed out that wherever identification marks were recorded by DGCEI officers in Panchnama, M/s ZTPL has shown corresponding invoices showing removal of those goods on payment of duty. In absence of evidence relating to clandestine clearance of goods from factory, absence of statement from any employee of ZTPL and no evidence of transportation of the goods, charge of clandestine removal is not proved against M/s ZTPL.
17. I find that the ld. Advocate for ZTPL has rightly contended that only on the basis of Gopal Sales letter and statement it cannot be charged that goods more than Rs.81 Lakhs were removed without invoices. Again, there is no evidence of transportation of these goods from ZTPL to premises of Gopal Sales in Maharashtra. A letter which has been sent for reconciliation of Incentive/Target Scheme does not lead to conclusion that goods mentioned therein were supplied clandestinely. Onus is on Department to prove that goods were removed without payment of duty. M/s ZTPL have provided documentary proof about goods being sold to Gayatri Traders on payment of duty and the said goods partly reaching Gopal Sales. 20 | P a g e E/511-517/2009 &E/11017,11029/2013-SM Similarly the sale of goods by Shivam Agency Nagpur to Gopal Sales out of stock of goods purchased by them from ZTPL cannot be regarded as clandestine removal of goods from ZTPL. There is no evidence to support this assumption. This is evident also from the statement of Neeraj Satish Budhiraja. Regarding "Bonus from you", I find that the department has not verified facts and has presumed without evidence that goods worth Rs.50 Lakhs were given as bonus by ZTPL to Gopal Sales. The position has been clarified by Hari Chand Gidwani, Prop. of Gopal Sales in his Affidavit by affirming that goods of ZTPL were sold by Payal Sales Corporation and Pooja General Stores in his area for which it was binding for ZTPL to give him incentive. In absence of any corroborative evidence, Revenue has not been able to establish charge of clandestine removal of goods to Gopal Sales.
18. I find there is no independent evidence to show that any goods were removed by ZTPL without payment of duty to any person or firm. This Tribunal has been consistently holding that the charge of clandestine removal cannot be proved merely on the basis of statement. In this regard reference is made to the decision in CCE VS Anil Agarwal 2013 (287) ET 489 (T-Del) has held as follows:
"The Hon'ble Delhi High Court in decision in the case of Commissioner of Income Tax v. Dhingra Metal Works - 2010 (101) E.L.T. 603 (Del.) has held that though a confessional statement is important piece evidence but it cannot be held to be conclusive. As such the sole reliance of the revenue on the statement of Sh. Agarwal without any other evidence to reflect upon the clandestine activities of the respondent is not proper and just. Even for applying the ratio of decision of Hon'ble Supreme Court in the case of D. Bhoormull, there has to be some evidence for assessment and then the degree of evidence has to be adjudged. In the present case, I note that there is virtually no evidence on record to reflect upon the clandestine activities of manufacturer-respondent. In view of the above I find no infirmity in the views of the Commissioner 21 | P a g e E/511-517/2009 &E/11017,11029/2013-SM (Appeals) all the three appeals filed by the revenue are rejected."
19. I find that since the charge of clandestine manufacture and removal against M/s ZTPL is not established, penalty is not imposable on ZTPL, the Director and other persons. I also agree with the ld. Advocate that penalty could not have otherwise been imposed on Rashminbhai Majithia and five others as they were not required to show cause for imposition of penalty under the show cause notice dated 13.02.2006. Further, in Adjudication Order issued under de- novo proceedings, it was not open to the Adjudicating Authority to impose a penalty on Rashminhai Majithia in excess of penalty imposed in the initial proceedings.
20. As the Revenue has not adduced sufficient evidences to prove the charge of clandestine manufacture and removal, the case of clandestine removal has not been established, the seized goods mentioned above are not liable to confiscation and consequently such confiscations are set aside.
21. I, therefore, allow the appeals filed by M/s ZTPL and 6 others, with consequential reliefs, if any as may be available to the said M/s ZTPL and 6 others, in accordance to law.
(Pronounced in the open court on 06.09.2018) (Ramesh Nair) Member (Judicial) Neha