Custom, Excise & Service Tax Tribunal
Shri Tripawan Kumar Ram Prasad Sandhir vs Cce, New Delhi on 14 October, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. II DATE OF HEARING : 22/05/2013. DATE OF DECISION : 14/10/2013. Excise Appeal No. 3958-3961, 4016-4017 of 2004 [Arising out of the Order-in-Original No. 21-23/2004 dated 30/04/2004 passed by The Commissioner of Central Excise, Delhi I.] For Approval and signature : Honble Shri D.P. Panda, Judicial Member Honble Shri Rakesh Kumar, Technical Member 1. Whether Press Reporters may be allowed to see : the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it would be released under Rule 27 of : the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair : copy of the order? 4. Whether order is to be circulated to the : Department Authorities? M/s Pawan Carriers ] Shri Ram Prasad Kedar Nath Halwai, Prop. M/s Ram Prasad Sushil Kumar ] Shri Krishan Gopal, Ram Prasad Sandhir, Partner, C/o M/s Pawan Carriers ] Shri Tripawan Kumar Ram Prasad Sandhir Appellants Partner, C/o M/s Pawan Carriers ] M/s M.R. Tobacco (P) Ltd. ] Shri Chander Kumar Gupta, Director M/s M.R. Tobacco (P) Ltd. ] Versus CCE, New Delhi Respondent
Appearance Shri J.P. Kaushik, Advocate (for Appeal No. E/3958-3961/2004) and Shri Bipin Garg, Advocate (for Appeal No. E/4016-4017/2004) for the appellants.
Shri I. Baig, Authorized Representative (DR) for the Respondent.
CORAM : Honble Shri D.P. Panda, Judicial Member Honble Shri Rakesh Kumar, Technical Member Final Order No. 57993-57998/2013 Dated : 14/10/2013 Per. Rakesh Kumar :-
BACKGROUND OF THE CASE AND INVESTIGATION RESULT.
1.1 M/s M.R. Tobacco (P) Ltd., B-11, Gali No. 7, Samaypur Badli, Delhi (hereinafter referred to as MRT) are manufacturers of Gutkha of various brands namely Pan King, Soni, Mughal etc. which attracted Central Excise duty. Shri Chander Kumar Gupta is the Director of MRT. MRT had been established in March/April 1998. Prior to this, the factory and the brand were owned by M/s M.R. Sales, Delhi (hereinafter referred to as MRS) with Shri Chander Kumar Gupta as a Partner. Other partners of MRS were Shri Anil Kumar, Shri Sudhanshu Gupta, Shri Sushil Kumar, Shri Amit Gupta and Shri Anuj Gupta.
1.1.1 Shri Ram Prasad Kedar Nath Halwai, Prop. M/s Ram Prasad Sushil Kumar, Ahmedabad, a dealer dealing in Pan King Gutkha is alleged to have been receiving non-duty paid consignments of Gutkha cleared by MRT/MRS.
1.1.2 M/s Pawan Carriers is a transport company which is alleged to have transported the consignments of Gutkha cleared by MRT/MRS without payment of duty to M/s Ram Prasad Sushil Kumar, Ahmedabad. Shri Tripawan Kumar Ram Prasad Sandhir and Shri Krishan Gopal, Ram Prasad Sandhir are the partners of M/s Pawan Carriers.
1.2 For manufacture of Gutkha, which is Pan Masala containing Tobacco, in addition to Supari, Katha, Tobacco, Menthol etc. another important raw material required is printed laminated plastic rolls (plastic laminate) with manufacturers name, product name, brand name, MRP etc. printed on them, which are used for making retail pouches of the Gutkha in automatic packing machines. The plastic laminate was being received by MRT/MRS from the units of M/s Flex Industries Ltd. (M/s FIL) at Malanpur and Noida.
1.2.1 M/s Gupta Trading Company, Gwalior with Shri Arvind Kumar Gupta as its Prop. is a dealer of the plastic laminate manufactured by FIL who was receiving the plastic laminates meant for various Gutkha manufacturers manufactured by FIL and, in turn, were supplying the same to the respective manufacturers.
1.2.2 On 29/9/94, a consignment of 419 packages of printed plastic laminate was dispatched by M/s Gupta Trading Company, Gwalior to M/s Arora & Co., J-7, Malkha Ganj, Delhi under his invoice No. 49/94-95 dated 29/9/94, which described goods as printed plastic packaging material GTC 010. The goods were being transported in truck MP-07-1790 of M/s Navin Roadlines. In fact the drivers copy of the consignment note No. 385 dated 29/9/94 accompanying the goods mentioned door delivery at Pan King, while the consignee was M/s Arora & Co., Delhi. Not only this, even the copy of the invoice No. 49/94-95 dated 29/9/94 accompanying the goods had remarks door delivery Samaypur, Badli, Delhi even though the consignee was mentioned as Arora & Co., J-7, Malkaganj, Delhi. This consignment, however, was detained by the Sales Tax officers of U.P. at Sainya Check Post, Agra. The matter went up to the Honble Allahabad High Court which ordered the release of the goods to M/s Gupta Trading Company.
1.2.3 Sometime in November 1997, an intelligence was received by the Central Excise officers that above consignment, though consigned M/s Arora & Company, Delhi, was, after its release from U.P. Sales Tax Authorities, was actually delivered to MRT/MRT. On inquiry in this regard it was learnt that M/s Arora & Company, Delhi was a non-existent entity and the goods released from Sales Tax authorities of U.P. had been transported to the factory premises to MRT/MRT at Samaypur, Badli, Delhi by truck No. HRP-5627 of M/s Saini Roadlines.
1.2.4 Inquiry was conducted with Shri Subhash Chand, owner of the truck No. HRP-5627 who in his statement dated 19/11/97, admitting that his truck was attached to M/s Saini Roadlines, stated that the consignment of 419 packages of plastic laminated material consigned to M/s Arora & Company, Delhi had been delivered at the factory of MRT/MRT at Samaypur, Badli, Delhi.
1.2.5 Shri Kamal Singh, Manager of M/s Saini Roadlines, Agra in his statement dated 22/11/97 also confirmed this fact. From this it appeared that M/s Gupta Trading Company, Gwalior were supplying unaccounted printed plastic laminate to MRS/MRT, Samaypur, Badli, Delhi by sending the same in the name of a fictitious entity M/s Arora & Co., Delhi. It is in this background that on 17/11/98, the factory, residential and other premises of MRS/MRT were searched in course of which a number of incriminating documents were recovered.
1.3 Inquiry was, thereafter, made with
(a) Shri Arvind Gupta, Prop. M/s Gupta Trading Company, Gwalior ;
(b) Shri Anil Sharma, Executive Manager M/s FIL, Malanpur ;
(c) Shri Barun Verma, DGM, M/s FIL, Noida ;
(d) Shri Mahesh Haryana, Accountant, MRS/MRT ;
(e) Shri Chander Kumar Gupta, Director, MRS/MRT ;
(f) Shri Madan Lal, Manager, M/s Pawan Carriers, Delhi, a transporter ;
(g) Shri Tripawan Kumar Ram Prasad Sandhir, Partner, M/s Pawan Carrier ;
(h) Shri Ram Prasad Kedar Nath Halwai, Prop. M/s Ram Prasad Sushil Kumar, Ahmedabad ;
(i) Shri A.P. Singh, GM (Marketing), M/s FIL and Shri Yogeshwar Singh, Executive Manager (Sales), M/s FIL;
(j) Shri Shanti Prasad Sharma of M/s Pandit Transport Company, 7210, Aram Nagar, Delhi ; and
(k) Shri Anil Lamba, Partner, M/s Lamba Road Transport Ltd. ;
in course of which their detailed statements were recorded.
1.4 M/s Pawan Carriers, the transporters, besides an office at Delhi, also have an office and godown in Ahmedabad at 7, Jalaram estate, Sanand Highway, Sarkhej. On 22/11/98, the premises of M/s Pawan Carriers at the above-mentioned address at Ahmedabad were searched and at that time three trucks bearing registration No. HR-29/C 0139, GJ-IT/ T 7303 and DL-1G/A 1436 were found parked outside the said premises. All the three trucks were loaded with a total of 182 bags which were found to be containing 52,05,200 retail pouches of Pan King brand Gutkha collectively valued at Rs. 26,02,600 (MRP). The duty involved on these goods was Rs. 5,20,520/-. These consignments were covered under the invoices issued by M/s Malhotra Trading Co., DDA Market, Kirti Nagar, New Delhi which on inquiry was found to be non-traceable. These consignments of Gutkha, therefore, appeared to have been cleared without payment of duty and hence the same were placed under seizure.
1.4.1 Inquiry with Shri Tripawan Kumar Ram Prasad Sandhir, Partner of M/s Pawan Carrier, revealed that the goods brought to Ahmedabad under the invoice of M/s Malhotra Trading Co., Delhi in the above-mentioned three trucks were to be delivered to M/s Ram Prasad Sushil Kumar whose Prop. is Shri Ram Prasad Kedar Nath Halwai and that on earlier occasions also, they had carried the goods cleared by MRT/MRS, Samaypur, Badli to M/s Ram Prasad Sushil Kumar, Ahmedabad under the invoices issued by M/s Malhotra Trading Co., Delhi and had delivered the consignments to Shri Ram Prasad Kedarnath Halwai. Shri Tripawan Kumar Ram Prasad Sandhir in his statements dated 18/11/98, 19/11/98, 22/11/98 and 25/11/98 has clearly stated that they used to load the goods, received from the factory of MRS/MRT at Samaypur, Badli, that the goods used to be received not under the bills of MRS/MRT but under the bills issued by different parties mostly M/s Malhotra Trading Co., Delhi, that the consignments of Pan King Gutkha being transported by them were being received directly from the factory of MRS/MRT, Samaypur, Badli, that on arrival of the goods at Ahmedabad, they used to call Shri Ram Prasad Kedar Nath Halwai, a dealer of MRS/MRT having phone number 2114417 and that the goods used to be delivered to him. In these statements, he also stated that in respect of transportation of the Gutkha consignment of MRS/MRT, they were not writing the address of the party either in their register or in their GRs, and that they are not having delivery register for the period prior to 1998-1999, as they have destroyed the same alongwith the GRs.
1.4.2 Shri Madan Lal, Manager, M/s Pawan Carrier at New Delhi in his statement dated 17/11/98 and 27/11/98, corroborating the statements of Shri Tripawan Kumar stated that consignments of Pan King brand Gutkha used to be brought from the factory of MRS/MRT by a driver Shri Than Singh and that in the GRs issued, instead of actual description, the codes 104, or 072 or 123 used to be written.
1.4.3 Shri Mahesh Haryana, Accountant, MRS/MRT in his statements dated 17/11/98 and 18/11/99 also confirmed sending of consignments of Gutkha to the office of M/s Pawan Carriers, New Delhi through Shri Than Singh in his tempo. He also stated that MRS/MRT mostly make Gutkha pouches of MRP of 50 paise, that they work in one eight hour shift and that one kg. of laminate can produce 2700 pouches of MRP 50 paise and 2200 pouches of MRP of Rs. 1/-.
1.4.4 In course of inquiry with Shri Ram Prasad Kedar Nath Halwai, he in his statement dated 17/11/98 while admitting that he was trading in the Gutkha/Tobacco for the last 10 years and that he was buying Pan King brand Gutkha for the last 5 years, stated that he has seen the statements dated 18/11/98, 19/11/98 and 22/11/98 of Shri Tripawan Kumar Ram Prasad Sandhir and he agrees with the contents of the same. He also stated that in respect of the consignments of Pan King Gutkha received from MRS/MRT, there were no excise invoices and the payments for the same had been made in cash.
1.5 From the Delhi office of M/s Pawan Carriers, a number of GRs with M/s Malhotra Trading Co. as consignor for transportation of consignments to self in Ahmedabad and with codes 072, or 104, or 123 written on them were recovered which appeared to be for consignments of Gutkha booked by MRS/MRT. On scrutiny of these GRs recovered from the office of the Pawan Carriers, Delhi, it appeared that during the period from 26/6/98 to 16/11/98 were 3014 boras containing 12056 bags of Pan King Gutkha weighing 1,16,455 kgs. had been transported by them from Delhi to Ahmedabad which appeared to have been delivered to M/s Ram Prasad Sushil Kumar, and these clearances appeared have been made by MRS/MRT without payment of duty and the duty involved on these clearances was Rs. 79,56,960/-.
1.6 Statements of Shri Arvind Gupta, Prop. of M/s Gupta Trading Co. (GTC), Gwalior were recorded on 23/2/98, 2/3/98, 17/11/98, 24/3/99 and 26/3/99, wherein he stated that earlier he was working as Accountant with M/s FIL, that subsequently he set up a trading firm M/s Gupta Trading Co. at Gwalior, that he was purchasing plastic lamination for manufacture of retail pouches of Pan Masala and Gutkha for various manufacturers including MRS/MRT, that different code numbers had been allotted to the printed plastic lamination meant for different manufacturers, that the code number GTC 010 and GTC 020 were for the plastic lamination meant for MRS/MRT and in respect of consignments of plastic lamination sold to MRS/MRT, it is these code numbers which were being mentioned in the invoices, that the consignments of plastic lamination meant for delivery to MRS/MRT, Samaypur, Badli, Delhi were being sent in the name of M/s Arora & Co., Delhi, but the goods were actually being delivered at the factory premises of MRS/MRT, that the goods were being sent through various transport companies M/s Saini Roadlines, M/s Navin Roadlines, M/s Lamba Roadlines and M/s Pandit Transport Co., that the bills in the name of M/s Arora & Co., were being raised on the instructions of Shri Chander Kumar Gupta of MRS/MRT, and that though the invoices had been issued in the name of the firm M/s Arora & Co., the printed laminated rolls had been received by MRS/MRT, Samaypur, Badli, Delhi only, as buyers representative used to come to his premises and it was his responsibility to take the material to the destination.
1.6.1 The scrutiny of the records of M/s GTC revealed that during period from 31/8/94 to 07/9/95, they had 49596.4 kgs. of plastic laminate for Pan King brand Gutkha had been supplied to MRS/MRT, and these receipts of plastic lamination had not been accounted for by MRS/MRT in their books of accounts. The total Central Excise duty involved on the retail Gutkha pouches manufactured by using 49,596.4 kg. of plastic lamination was Rs. 1,73,58,810/.
1.7 Inquiry with M/s FIL, Noida revealed that substantial quantity of plastic lamination rolls for manufacture of Pan King brand Gutkha retail pouches were also being procured by MRS/MRT from M/s FIL, Noida also. These supplies from M/s FIL, Noida were in the name of M/s Chandra Packers, Delhi, M/s Karan Packers, Delhi and M/s Vikram Packers, Delhi which on inquiry were found to be fictitious.
1.7.1 Shri Chander Kumar Gupta, in his statement dated 17/11/98 stated that the plastic laminations received from M/s FIL, Noida under the bills in the names of M/s Karan Packers, M/s Vikram Packers and M/s Chandra Packers had been received in his factory at Samaypur, Badli and the same were used in the manufacture of Pan King brand Gutkha and that Shri Sonik Sharma his accountant had signed the challan No. 1853 dated 30/12/96 in respect of printed plastic laminate sent by FIL in the name of M/s Karan Packers and which had been received in his factory at Samaypur, Badli, Delhi. In his further statement dated 21/4/99 he confirmed the correctness of his statement dated 17/11/98. He also confirmed that the plastic laminate received by MRS/MRT in the name of M/s Karan Packers and M/s Vikram Packers, M/s Chandra Packers were not entered in their records and were used in the manufacture of Gutkha cleared without payment of duty.
1.7.2 On scrutiny of the records pertaining to M/s FIL, Noida, resumed under Panchnama dated 30th April 1996 it appeared that M/s FIL, Noida, during 1996 and 1997 had supplied a total quantity of 70,382 kg. of plastic lamination for Pan King brand Gutkha to MRS/MRT by raising the bills in the name of non-existing firms M/s Chandra Packers, M/s Karan Packers and M/s Vikram Packers. The scrutiny of the copies of some of the invoices/challans revealed that the same were bearing the signatures of employees of MRS/MRT as the recipient. The total duty involved on the Gutkha pouches manufactured out of 70,382.3 kg. of plastic lamination was Rs. 2,46,33,700/-.
1.8 As mentioned above, in September 1994, a consignment of 419 bags of printed lamination rolls for Pan King Gutkha, totally weighing 10,660 kgs. and dispatched by M/s GTC, Gwalior to M/s Arora & Co., Delhi had been intercepted by the Sales Tax authorities of U.P. at Sainya Check Post at Agra and thereafter when the goods were released in terms of the orders of the Honble Allahabad High Court to M/s GTC, the same had been delivered to MRS/MRT, Samaypur, Badli, but the receipt of this quantity of plastic lamination was not accounted for by MRS/MRT in their books of accounts and it appeared that this quantity of plastic lamination had been used in the manufacture of Pan King brand Gutkha pouches valued at Rs. 74,62,000/-, the duty involved on which would be Rs. 37,31,000/-.
1.9 In view of the above investigation, three show cause notices dated 4/1/2000, 31/1/2000 and 14/5/99 were issued to MRS/MRT and other noticees. The show cause notice dated 14/5/99 was for recovery of duty of Rs. 5,20,520/- involved on the Pan King brand Gutkha pouches valued at Rs. 26,02,600/- seized from the premises of M/s Pawan Carriers at Ahmedabad alongwith interest and also for imposition of penalty under Section 11AC on MRS/MRT, as these goods appeared to have been cleared without payment of duty in a clandestine manner.
1.9.1 The show cause notice also sought confiscation of the seized goods and the trucks from which the goods had been seized and beside this also, sought imposition of penalty under Section 209A of Central Excise Rules, 1994 on Shri Chander Kumar Gupta, Director MRS/MRT, M/s Pawan Carriers, Delhi, Shri Tripawan Kumar Ram Prasad Sandhir and Shri Krishan Gopal, Ram Prasad Sandhir, Partners of M/s Pawan Carrier.
1.10 Show cause notice dated 4/1/2000 sought recovery of allegedly short paid duty amounting to Rs. 4,57,23,510/- (Rs. 2,46,33,700 + Rs. 1,73,58,810 + Rs. 37,31,000/-) in respect of consignments of Gutkha alleged to have been cleared without payment of duty during December 1994, during 1996, 1997 and from 31/8/94 to 07/9/95 alongwith interest under Section 11AB and also for imposition of penalty on MRS/MRT under Section 11AC. This show cause notice also sought imposition of penalty on MRS/MRT under Rule 52A, 173Q and 226 of Central Excise Rules 1994 and Shri Chander Kumar Gupta, Director MRS/MRT under Rule 209A of Central Excise Rules.
1.11 The third show cause notice dated 30/1/2000 sought recovery of Central Excise duty amounting to Rs. 79,17,360/- in respect of the consignments of Gutkha cleared by MRS/MRT without payment of duty to M/s Ram Prasad Sushil Kumar, Ahmedabad during the period from 26/6/98 to 16/11/98 alongwith interest on it under Section 11AB and also for imposition of penalty on them under Section 11AC. This show cause notice also sought imposition of penalty on MRS/MRT under Rule 52A, 173Q and 226 of Central Excise Rules, 1994 and on Shri Chander Kumar Gupta, Director MRS/MRT, Shri Tripawan Kumar Ram Prasad Sandhir, Partner of M/s Pawan Carriers, Delhi; M/s Pawan Carriers, Delhi and Shri Ram Prasad Kedar Nath Halwai, Prop. M/s Ram Prasad Sushil Kumar, Ahmedabad under Rule 209A of Central Excise Rules, 1994.
1.12 The above three show cause notices were adjudicated by the Commissioner of Central Excise, Delhi I vide order-in-original No. 21-23/204 dated 30th April 2004 by which the above-mentioned three duty demands of Rs. 5,20,520/-, Rs. 4,57,23,510/- and Rs. 79,17,360/- were confirmed against MRS/MRT alongwith interest under Section 11AB and beside this, penalty under Section 11AC of equal amount were imposed on them. The seized goods valued at Rs. 26,02,600/- seized from the office of M/s Pawan Carriers, Ahmedabad were also ordered to be confiscated, but since the goods had been auctioned, the sale proceeds of Rs. 9,02,720/- were ordered to be appropriated. The three seized trucks No. HR-29/C 0139, GJ-IT/ T 7303 and DL-1G/A 1436 were also ordered to be confiscated with option to be redeemed on payment of redemption fine of Rs. 50,000/- each. Beside this, penalty of the following amounts was imposed on Shri Chander Kumar Gupta, Director of MRS/MRT, M/s Pawan Carriers, Shri Ram Prasad Kedar Nath Halwai, Prop. M/s Ram Prasad Sushil Kumar, Ahmedabad, Shri Tripawan Kumar Ram Prasad Sandhir and Shri Krishan Gopal, Ram Prasad Sandhir, Partners of M/s Pawan Carriers.
(1) Shri Chander Kumar Gupta, Director MRS/MRT, Samaypur, Badli, Delhi Rs. 50,00,000/- ;
(2) M/s Pawan Carriers, Khanna Market, Delhi Rs. 1,00,000/- ;
(3) Shri Ram Prasad Kedar Nath Halwai, Prop. M/s Ram Prasad Sushil Kumar Rs. 50,000/- ;
(4) Shri Tripawan Kumar Ram Prasad Sandhir and Shri Krishan Gopal, Ram Prasad Sandhir Rs. 5,000/- each.
1.13 Against the above order of Commissioner, these six appeals have been filed.
2. Heard both the sides.
ARGUMENTS ON BEHALF OF APPELLANTS.
3. Shri Bipin Garg, Advocate, representing M/s M.R. Tobacco (P) Ltd. and Shri Chander Kumar Gupta, Director and Shri J.P. Kaushik, Advocate, the learned Counsel representing M/s Pawan Carriers, Shri Krishan Gopal Ram Prasad Sandhir, Shri Tripawan Kumar Ram Prasad Sandhir, Partners and Shri Ram Prasad Kedar Nath Halwai made the following submissions.
3.1 The submissions made by Shri Bipin Garg, Advocate, the learned Counsel for the appellants MRS/MRT and Shri Chander Kumar Gupta :-
(1) Though the Commissioner made a finding that all the documents were supplied to the appellant under acknowledgement receipts dated 05/6/2000, the un-relied upon document were not supplied at all and certain relied upon documents were also not supplied. Moreover the order was passed by the Commissioner without waiting for the appellants final reply to the show cause notice resulting in, denial of natural justice to the appellant ;
(2) Cross examination of some persons whose statements have been and are relied upon by the department, although was sought, that was not allowed, which is contrary to the judgment of Honble Kerala High Court in the case of Karan Vir Mehta vs. CC, Cochin reported in 1998 (97) E.L.T. 42 (Ker.), the judgment of Honble Andhra Pradesh High Court in the case of Sunder Ispat Ltd. vs. CCE, Hyderabad reported in 2002 (141) E.L.T. 24 (A.P.) and also the judgment of Honble Allahabad High Court in the case of CCE, Meerut I vs. Parmarth Iron Pvt. Ltd. reported in 2010 (260) E.L.T. 514 (All.).
(3) The duty demand of Rs. 37,31,000/- against MRS/MRT based on the alleged receipt of 419 bags of plastic laminate sent by M/s Gupta Trading Co., Gwalior to M/s Arora & Co., Delhi which had been seized by the Sales Tax authorities at Sainya check post. The Commissioner failed to consider release of the consignment of plastic laminate to M/s Gupta Trading Co. but not to the appellant in terms of the directions of Honble Allahabad High Court. The appellant MRS/MRT had neither approached Honble Allahabad High Court nor had ever received this consignment. No affidavit claiming the ownership of the detained 419 bags of printed plastic laminate had been filed by Shri Chander Kumar of MRS/MRT before the U.P. Trade Tax Tribunal. Therefore, the duty demand based on the alleged receipt of this consignment of plastic laminate by the appellant is without any basis.
(4) The duty demand of Rs. 1,73,58,810/- is based on the records recovered from the residence of Shri Arvind Gupta, Prop. of M/s Gupta Trading Co., showing supply of 49,596.40 kg. of plastic laminate of code number GTC 010 or GTC 020 during period from 21/8/94 to 07/9/95 to M/s Arora & Co., Delhi. Neither the code No. GTC 010 and GTC 020 pertains to plastic laminate manufactured by M/s Flex Industries Ltd. for packing of Pan King brand Gutkha manufactured by MRS/MRT nor there is any evidence to prove that the consignments of plastic laminate meant for M/s Arora & Co., Delhi had actually been received by the appellant. Commissioner made his findings on these points on assumptions and presumptions. Moreover, the Departments allegation that the code No. GTC 010 and GTC 020 pertain to printed plastic laminate meant for packing of Pan King brand Gutkha and the consignments of plastic laminate sent by M/s Gupta Trading Co., Gwalior to M/s Arora & Co., Delhi had actually been received by the appellant, are based on the statements of certain persons. The appellant had sought cross examination of those persons, but that was not allowed. Therefore, the statements of the persons on which these allegations are based cannot be taken in evidence.
(5) The duty demand of Rs. 2,46,33,700/- against the appellant is based on alleged receipt of 70,382.3 kg. of printed plastic laminate sent by M/s FIL, Noida to M/s Karan Packers, M/s Vikram Packers and M/s Chandra Packers and it is the departments allegation that all the consignment of plastic laminate sent by M/s Flex Industries Ltd., Noida in the name of these three firms had actually been received by the appellant company. In this regard, the main evidence relied upon by the Department is the statement of Shri Chander Kumar Gupta, Director of the appellant company. But this statement had been retracted by Shri Chander Kumar as the same had been obtained by threat and coercion. The Commissioner in the impugned order has failed to consider the retraction made by Shri Chander Kumar in respect of his statement dated 17/11/98 which had been made at the earliest available opportunity on 18/11/98.
(6) The duty demand of Rs. 79,56,960/- is based on the lorry receipts seized from the premises of M/s Pawan Carriers, New Delhi, but there is no evidence to prove that under those lorry receipts, the consignments of Pan King brand Gutkha booked by MRS/MRT had been transported from Delhi to Ahmedabad. In this regard, the statement of Shri Tripawan Kumar Ram Prasad Sandhir is wholly incorrect and arbitrary, in as much as while Shri Sandhir has stated in his statement, that the LRs were prepared in the name of self and the same were destroyed after delivery of the goods, but if this is so, it is not understood as to how the torn off/destroyed LRs were found by the Departmental officers from M/s Pawan Carriers premises at New Delhi. This statement of Shri Tripawan Kumar Sandhir is, therefore, false. In fact, on this point only, the appellant had sought cross examination of Shri Tripawan Kumar Ram Prasad Sandhir which was not allowed by the Commissioner. Moreover, another evidence in this regard relied upon by the Department is the statement of Shri Ram Prasad Kedar Nath Halwai. But he has also retracted his statements dated 17/11/98 and 24/11/98 stating that these statements were not his voluntary statements.
(7) The duty of Rs. 5,20,520/- has been demanded on the goods valued at Rs. 26,02,600/- seized from the transport godown of M/s Pawan Carriers, Ahmedabad. This consignment had been booked for transport by M/s Malhotra Trading Corporation, Delhi which is of non-existent firm and the Department could not trace its address. There is no evidence that these goods booked by M/s Malhotra Trading Corporation had been cleared by the appellant company without payment of duty. Therefore, neither these goods are liable for confiscation nor the duty demand of Rs. 5,20,520/- on this basis is sustainable.
(8) Merely on the basis of alleged receipt of printed plastic laminate, huge duty demands cannot be made against MRS/MRT when there is absolutely no evidence of procurement of other raw materials like Supari, Tobacco, Katha, Menthol etc. for manufacture of Gutkha.
3.2 The submissions made by Shri J.P. Kaushik, Advocate, on behalf of M/s Pawan Carriers, Shri Tripawan Kumar Ram Prasad Sandhir, Shri Krishan Gopal Ram Prasad Sandhir and Shri Ram Prasad Kedar Nath Halwai, Prop. M/s Ram Prasad Sushil Kumar, Ahmedabad :-
(1) The Departments allegation that all the lorry receipts/ GRs showing booking of consignments of M/s Malhotra Trading Co., Delhi to self in Ahmedabad had actually been booked by the appellant company, is without any basis. This allegation is based on the statements dated 17/11/98 and 27/11/98 of Shri Madan Lal, Manager, M/s Pawan Carriers, New Delhi and statements dated 17/11/98 and 18/1/99 of Shri Mahesh Haryana of MRS/MRT wherein they have stated that one Than Singh, owner of Tata 407 vehicle No. 0366 used to transport the consignments of Gutkha cleared by MRS/MRT to transport office of Pawan Carriers for booking in the name of M/s Malhotra Trading Co., Delhi. But Shri Than Singh has not been examined.
(2) M/s Pawan Carriers had booked the consignments brought by M/s Malhotra Trading Co., Delhi and even if those consignments contained Pan King brand Gutkha cleared clandestinely by the appellant company, there is no evidence on record to prove that M/s Pawan Carriers or its partners had knowledge about the same. In view of this, no penalty can be imposed on M/s Pawan Carriers and its partners.
(3) 182 bags of Gutkha seized at the premises of M/s Pawan Carriers, Ahmedabad had been booked by M/s Malhotra Trading Co. under their proper invoices. There is no evidence to prove that M/s Malhotra Trading Co. is a non-existent entity. Otherwise also, transporter is not required to verify the existence or non-existence of the consigner. Therefore, imposition of penalty on M/s Pawan Carriers and their partners under Rule 209A is totally incorrect. Moreover, in view of judgment of the Tribunal in the case of Steel Tubes of India Ltd. vs. CCE, Indore reported in 2007 (83) R.L.T. 378 (CESTAT LB), penalty under Rule 209 of Central Excise Rules, 1944/Rule 26 of the Central Excise Rules, 2001 is not imposable on a partnership firm as this Rule is not applicable to partnership firm.
(4) No penalty is imposable on Shri Ram Prasad Kedar Nath Halwai as with regard to allegation regarding receipt of 500 packs of Pan King brand Gutkha during period from June 1998 to November 1998, as there is no finding that the goods are liable for confiscation.
ARGUMENT ON BEHALF OF REVENUE
4. Shri I Baig, the learned DR, on behalf of Revenue defended the impugned order reiterating the findings of Commissioner (Appeals) and emphasized on the following grounds :-
4.1 The duty demand of Rs. 2,46,33,700/- against MRS/MRT is based on the records of M/s Flex Industries Ltd., Noida which showed that during 1996 and 1997 70,382.3 kgs. of printed plastic laminate for making of Gutkha pouches had been supplied to M/s Vikram Packers, M/s Chandra Packers and M/s Karan Packers, Delhi. M/s Vikram Packers, M/s Chandra Packers and M/s Karan Packers were found to be fictitious and non-existent entities. Shri Chander Kumar Gupta, Director of MRS/MRT, in his statement dated 17/11/98 stated that during 1996 and 1997, they were procuring plastic laminates for making Gutkha pouches of Pan King brand from M/s Flex Industries Ltd., that the goods were sent by M/s Flex Industries Ltd. in the name of M/s Vikram Packers, M/s Chandra Packers and M/s Karan Packers, so that he did not have to enter those purchases in his books of accounts, and that though the challans were in the name of M/s Vikram Packers, M/s Chandra Packers and M/s Karan Packers, those goods have been received by MRS/MRT and payment of those goods have been made in cash. Not only this, Shri Chander Kumar in his further statement dated 21/4/99 once again confirmed the correctness of his statement dated 17/11/98 in which he had stated that he had received plastic laminates from M/s Flex Industries Ltd. in the name of three firms namely M/s Vikram Packers, M/s Chandra Packers and M/s Karan Packers and he once again confirmed that the material received in the name of these companies were used in the manufacture of Pan King brand Gutkha, which had been cleared without payment of duty. On this point when Shri A.P. Singh, GM (Marketing), M/s Flex Industries Ltd. was asked, he in his statement dated 29/3/99 had also stated that as per the system of their company, the printed packing material goes only to the brand owner and that before accepting orders for branded laminates, they ensure that the person placing the order is the brand name owner or his representative. The statement of Shri A.P. Singh, thus, corroborates the statement of Shri Chander Kumar Gupta. The retraction of his statement by Shri Chander Kumar Gupta, therefore, has no meaning.
4.2 As regards, the duty demand of Rs. 1,73,58,810/-, the same is based on the records of M/s Gupta Trading Co., Gwalior which show that during the period from 31/8/94 to 7/9/95, 49,596.4 kg. of printed plastic laminate described in code as GTC 010 and GTC 020 had been supplied to M/s Arora & Co., Delhi. Shri Arvind Kumar Gupta, Prop. M/s GTC in his statements dated 23/2/98, 2/3/98, 17/11/98 and 24/3/99 has stated that code No. GTC 010 and GTC 020 are for the printed laminate meant for Pan King brand Gutkha, that it is only on the instructions of Shri Chander Kumar Gupta of MRS/MRT that they had raised the bills in respect of supply of printed laminate for Pan King brand Gutkha in the name of M/s Arora & Co., Delhi and, as such, he was not aware as to whether this company is existing or not, that in respect of supplies of printed laminate made in the name of M/s Arora & Co., the payment had been received in cash from MRS/MRT, that the printed laminate was being received by him from M/s Flex Industries Ltd., Malanpur and that on receiving the cash payment from MRS/MRT, he was making the payment to M/s Flex Industries Ltd. also in cash. This statement of Shri Arvind Kumar Gupta, coupled with the fact that M/s Arora & Co. is a fictitious company, clearly shows that all the supplies of printed laminate in the name of M/s Arora & Co., Delhi had actually been received by MRS/MRT, which had been used by them in unaccounted manufacture of Gutkha which had been cleared clandestinely without payment of duty.
4.3 Besides the above, there is one more evidence which also shows that the goods consigned to M/s Arora & Co., Delhi had actually been received in the factory of MRS/MRT at Samaypur, Badli, Delhi. Sometime in 1994, a consignment of 419 packages of printed plastic laminate with description of goods as GTC 010 and consigned to M/s Arora & Co., Delhi, was intercepted by the Sales Tax authorities at Sainya Check Post, Agra. The consignment on examination was found to be containing printed plastic laminate for packing of Pan King brand Gutkha. This consignment though consigned to M/s Arora & Co., Delhi was claimed by Shri Chander Kumar Gupta of MRS/MRT and was actually delivered to the factory of MRS/MRT at Samaypur, Badli, Delhi. In this regard, the statement was recorded of Shri Subhash Chand, owner of the truck of HRP 5627 who in his statement dated 19/11/97 stated that his truck was attached to M/s Saini Roadlines, Agra and that the 419 packages consigned to M/s Arora & Co., Delhi after their release from the Sales Tax authorities, were delivered at the factory premises of MRS/MRT at Samaypur, Badli. In this regard, Shri Kamal Singh, Manager of M/s Saini Roadlines, Agra also in his statement dated 22/11/97 stated that these goods, though consigned to M/s Arora & Co., had been delivered at the factory premises of MRS/MRT at Samaypur, Badli. It was also found that Chander Kumar Gupta, Director MRS/MRT had filed an affidavit before U.P. Trade Tax Tribunal claiming that order for the detained consignment of printed plastic packing material with Pan King trade mark printed on it, was placed by him through Shri Suresh Kumar owner of M/s Arora & Co. and this fact was confirmed by Shri Rajender Narain Kapur, Notary in his statement dated 18/11/98. Not only this, in the judgment dated 9/12/94 of Honble Allahabad High Court, Honble Court has observed that the Tribunal found that MR Sales Corporation, Delhi and Arora & Co., Delhi an inter-connected firms. All these evidences clearly show that all the consignments of printed plastic laminate consigned to M/s Arora & Co., Delhi had actually been ordered by MRS/MRT, and had been received in the factory of MRS/MRT at Samaypur, Badli and used in the unaccounted manufacture of Gutkha which had been cleared clandestinely without payment of duty. Thus, the duty demand of Rs. 1,73,58,810/- is on sound footing. Not only this, the duty demand of Rs. 37,31,000/- based on the use of 419 packages of plastic laminate which had initially been seized by the Sales Tax authorities and subsequently had been delivered to the factory of MRS/MRT is also on sound footing.
4.4 As regards, the duty demand of Rs. 5,20,520/- on 182 bags of Pan King brand Gutkha seized from three trucks No. HR-29/C 0139, GJ-IT/ T 7303 and DL-1G/A 1436, parked outside the premises of M/s Pawan Carriers at Sarkhej, Ahmedabad on 22/11/98 and the duty demand of Rs. 79,56,960/- on 1,16,455 kg. of Pan King brand Gutkha alleged to have been clandestinely cleared by MRS/MRT and despatched to M/s Ram Prasad Sushil Kumar, Ahmedabad, the 2nd demand of Rs. 79,59,960/- has been raised on the basis of the documents in form of GRs recovered from the office premises of M/s Pawan Carriers at 16, Khanna Market, Delhi and also the statements dated 18/11/98, 19/11/98, 22/11/98 and 25/11/98 of Shri Tripawan Kumar Ram Prasad Sandhir, Partner M/s Pawan Carriers, statement dated 17/11/98 of Shri Ram Prasad Kedar Nath Halwai, Prop. M/s Ram Prasad Sushil Kumar, Ahmedabad, statement dated 21/4/99 and 24/9/94 of Shri Chander Kumar Gupta of MRS/MRT and also the statement dated 17/11/98 and 27/11/98 of Shri Madan Lal, Manager of M/s Pawan Carriers. Shri Madan Lal, Manager of M/s Pawan Carriers in his statements dated 17/11/98 and 27/11/98 has stated that his transport company was transporting for some time the Pan King brand Gutkha manufactured by MRS/MRT from Delhi to Ahmedabad, that in the GRs covering the transportation of the consignments of Pan King brand Gutkha, the description of the goods was not being mentioned and instead, on the GRs, a code No. 104, or 123 or 072 used to be written, that either of these three code numbers meant Pan King brand Gutkha, that the consignments of Gutkha were being brought from the factory of MRS/MRT to the office of M/s Pawan Carriers by Shri Than Singh, a tempo driver in his tempo No. DL-1L/C 0366, that most of the times, the goods brought in by Shri Than Singh were without any bills, that whenever he brought the bills/invoices, the same used to be in the name of M/s Malhotra Trading Co., Delhi and never in the name of MRS/MRT, that he was not writing the name of MRS/MRT as the consignor in GRs, as one Shri Pradeep Kumar of MRS/MRT has instructed him to not to do so, and that the consignee was being mentioned as self and whoever produced the original copy of the GRs to their Ahmedabad office, was delivered the said goods. Shri Tripawan Kumar Ram Prasad Sandhir, Partner of M/s Pawan Carriers in his statement dated 18/11/98, 19/11/98, 22/11/98 and 25/11/98 corroborated the statement of Shri Madan Lal and confirmed that in the GRs covering the transportation of Pan King brand Gutkha instead of actual description of the goods, only mentioned the code No. 104, or 123 or 072 were being written, that the address of the consignee was not being mentioned either in the GRs or in their register, that on arrival of the consignments of Gutkha at Ahmedabad, a representative of the consignee used to approach them, that if nobody approached them at Ahmedabad, they use to call Shri Ram Prasad, the dealer of MRS/MRT at Ahmedabad having Phone No. 214417 after which he himself or his representative used to come and collect the goods, and that though the goods were coming from the factory of MRS/MRT at Samaypur, Badli, Delhi, the GRs were mentioning the consignors name as M/s Malhotra Trading Co. Shri Ram Prasad Kedar Nath Halwai in his statement dated 24/11/98 stated that he has seen various statements of Shri Tripawan Kumar Ram Prasad Sandhir and he agrees with the contents of the same. From this it is clear that the 182 bags containing Pan King brand Gutkha seized from the three trucks parked outside the premises of M/s Pawan Carriers at Ahmedabad and which were covered by the GRs mentioning the above-mentioned code numbers, with M/s Malhotra Trading Co. as consignor, had actually being cleared by MRS/MRT without payment of duty and booked for transport to Ahmedabad. From the premises of M/s Pawan Carriers at Delhi, GRs bearing code No. 104 or 072 or 123 were recovered which showed that during the period from 26/6/98 to 16/11/98, 1,16,455 kg. of Pan King brand Gutkha had been booked by MRS/MRT and transported to Ahmedabad on sale to Shri Ram Prasad Kedar Nath Halwai. Thus the duty demands of Rs. 5,20,520/- and Rs. 79,56,760/- are based on adequate evidence on record.
4.5 As regards penalty on the transporters M/s Pawan Carriers and its partners, since they had transported the consignments of Gutkha cleared clandestinely by MRS/MRT knowing that the same were liable for confiscation, penalty has been correctly imposed on them under Rule 209A of Central Excise Rules, 1944. The knowledge of M/s Pawan Carrier about non-duty paid nature of the goods transported by them to Ahmedabad is clear from the facts. Firstly, they accepted the consignments received from MRS/MRT for transport to Ahmedabad even though the same had been brought not under the invoice of MRS/MRT but under the invoice of M/s Malhotra Trading Co. Secondly instead of writing correct description of the consignments, only code No. 072, 94 104 or 123 were written. Since, Shri Ram Prasad Kedar Nath Halwai, has dealt with non-duty paid consignments of Gutkha cleared by MRS/MRT, Delhi, penalty has been correctly imposed on him under Rule 209A of Central Excise Rules, 2002.
FINDINGS AND CONCLUSION OF TRIBUNAL
5. We have considered the submissions from both the sides and perused the records.
6. As regards the preliminary objection of the appellant regarding non-supply of non-relied upon documents and certain relied upon documents, record reveals that this issue was never pleaded in course of proceedings before the Commissioner. Hence, such belated plea made baselessly at this stage, is a dilatory tactics to cause prejudice to Revenue. It was not submitted specifically which are the documents not supplied and how such non-supply deprived the appellant from leading defence.
7.1 First component of duty demand is the duty demand of Rs. 5,20,520/- on 182 bags of Pan King brand Gutkha seized from the three trucks No. HR-29/C 0139, GJ-IT/ T 7303 and DL-1G/A 1436 parked outside the office of M/s Pawan Carriers at Sarkhej Ahmedabad on 22/11/98. There is no dispute that the consignment of the 182 bags loaded in these trucks contained Pan King brand Gutkha manufactured by MRS/MRT and there was no Central Excise invoice showing payment of duty in respect of the same.
7.2 The invoices under which above goods were transported were issued by the consignor M/s Malhotra Trading Co., New Delhi to M/s Shyam Trading Co., Ahmedabad, and M/s Patel Pan House, Ahmedabad, which were found to be fictitious entities. Not only this, M/s Malhotra Trading Co., Delhi has also been found to be a non-existent entity, as all the summons issued to M/s Malhotra Trading Co., Delhi were returned undelivered.
7.3 While the invoices issued by M/s Malhotra Trading Co. were to M/s Shyam Treading Co. and M/s Patel Pan House, the GRs under which the consignments of 182 bags had been booked with M/s Malhotra Trading Co., Delhi, as consignor were showing the consignee as self. Shri Tripawan Kumar Ram Prasad Sandhir in respect of this consignment of 182 bags of Gutkha has stated that the same belongs to their regular client Shri Ram Prasad Kedar Nath Halwai, Prop. M/s Ram Prasad Sushil Kumar. Though Shri Ram Prasad Kedar Nath Halwai in his statement dated 24/11/98 had denied to have known any company named M/s Malhotra Trading Co., Delhi under whose bills the seized goods had been transported.
7.4 Shri Madan Lal, Manager, M/s Pawan Carriers in his statements dated 17/11/98 and 27/11/98 has stated that consignments of Pan King brand Gutkha for transport to Ahmedabad used to be brought to M/s Pawan Carriers godown at Delhi by a driver name Shri Than Singh in his tempo from the factory of MRS/MRT, that while most of the time the goods brought by Shri Than Singh from the factory of MRS/MRT used to be without bills, whenever he brought the bills, the same used to be issued by M/s Malhotra Trading Co., Delhi and never by MRS/MRT and that in the GRs issued for transportation to Ahmedabad the actual name of the consignor MRS/MRT was never mentioned and that instead of the actual description of the goods, only the code No. 104 or 072 or 123 used to be mentioned on the right corner of the GRs.
7.5 Shri Tripawan Kumar Ram Prasad Sandhir in his various statements has also stated that the consignments of Gutkha transported from Delhi to Ahmedabad were being received by Shri Ram Prasad Kedar Nath Halwai, that the employees of Shri Ram Prasad used to come with the original copy of the GR prepared in the name of self and that if on arrival of the goods no one approached them, they used to call Shri Ram Prasad on his telephone No. 214417 after which he himself or his representative used to come and collect the goods.
7.6 The GRs covering the 182 bags bear the codes numbers mentioned above assigned to Pan King brand Gutkha by M/s Pawan Carriers. Thus, from the statements of Shri Madan Lal and Shri Tripawan Kumar Ram Prasad Sandhir it is clear that 182 bags of Pan King brand Gutkha covered under the invoices of M/s Malhotra Trading Co., Delhi had actually been cleared by MRS/MRT, Delhi without payment of duty and had been booked for transport with M/s Pawan Carriers and M/s Pawan Carriers as transporters, had transported these non-duty paid goods knowing very well, that the same are non-duty paid and hence are liable for confiscation. Accordingly, the duty demand of Rs. 5,20,520/- on 182 bags of Gutkha seized from the three trucks parked in front of M/s Pawan Carriers at Sarkhej, Ahmedabad and confiscation thereof as well confiscation of the three trucks is upheld.
8.1 As regards the duty demand of Rs. 79,56,960/-, the same is based on the GRs recovered from the Delhi office of M/s Pawan Carriers each of which was having either of the three code Nos. 104, 072 or 123 written on it, which as explained in the statements of Shri Madan Lal and Shri Tripawan Kumar Ram Prasad Sandhir, were the code numbers assigned for Pan King brand Gutkha.
8.2 As mentioned above, from statements of Shri Madan Lal, it is clear that the consignments of Gutkha cleared by MRS/MRT from their factory at Samaypur, Badli, Delhi were being brought to their office by a driver Shri Than Singh in his tempo and as per the instructions of MRS/MRT, the same were being booked by mentioning the name of M/s Malhotra Trading Co. as consignor.
8.3 The sending of consignments of Gutkha to the office of M/s Pawan Carriers through Shri Than Singh in his tempo is also confirmed by Shri Mahesh Haryana in his statement dated 17/11/98 and 18/1/99. Thus it is clear that all the GRs issued by M/s Pawan Carrier for transportation to Ahmedabad with M/s Malhotra Trading Co., Delhi consignor and with code No. 104 or 072 or 123 written on them were in respect of consignments of Gutkha cleared from the factory of MRS/MRT at Samaypur, Badli, Delhi which had been brought to the office of M/s Pawan Carriers through Shri Than Singh. Since no Central Excise invoices has been issued in respect of these consignments of Gutkha and the total quantity of 1,16,455 kg. of Gutkha has been transported under these GRs, the duty of Rs. 79,56,960/- has been correctly demanded in respect of these consignments. That is confirmed.
9. The duty demands of Rs. 37,31,000/-, Rs. 1,73,58,810/- and Rs. 2,46,33,700/- are based on the alleged receipt of printed laminate for making Pan King brand Gutkha pouches received either directly from M/s Flex Industries Ltd., Noida or from M/s Gupta Trading Co., Gwalior which in turn were receiving the same from M/s Flex Industries Ltd., Malanpur.
9.1 The duty demand of Rs. 37,31,000/- is based on alleged receipt of 419 packages of plastic laminate, which had been supplied by M/s Gupta Trading Co., Gwalior under their bill No. 49/94-95 dated 29/9/94 to M/s Arora & Co., Delhi and which had been intercepted by the Sales Tax authorities at Sainya Check Post, Agra. There is no dispute that Honble Allahabad High Court had directed the release of the goods to M/s Gupta Trading Co. The Departments allegation is that after release of this consignment to M/s Gupta Trading Co., Gwalior, the same had been delivered to MRS/MRT at their factory at Samaypur, Badli, Delhi, while the appellant MRS/MRT claim that they had never taken the delivery of the same.
9.1.1 Records reveals that in September 1994 M/s Gupta Trading Co., Gwalior had dispatched a consignment of 419 packages of printed plastic laminated material valued at Rs. 24,72,726/- and the same was sent to M/s Arora & Co., J-7, Malka Ganj, Delhi. The invoice No. 49/94-95 dated 29/9/94 covering these goods mentioned their description in code words as printed plastic packaging material GTC 010. Subsequently, Shri Arvind Gupta, Prop. M/s Gupta Trading Co., in his statements dated 23/2/98 and 2/3/98 had stated that the printed plastic laminate had been procured from M/s Flex Industries Ltd., Malanpur, that the code words GTC 010 and GTC 020 meant the plastic laminate material meant for Pan King brand Gutkha and that these goods could only be used by MRS/MRT for making Gutkha pouches of Pan King brand.
9.1.2 Subsequently on orders of Honble Allahabad High Court, this consignment was ordered to be released to M/s Gupta Trading Co. Subsequent inquiry revealed that M/s Arora & Co., J-7, Malka Ganj, Delhi is fictitious and non-existent entity. After release, the goods were transported to Delhi by Truck No. HRP 5627, which as per the statement of its owner Shri Subhash Chand, was attached to M/s Saini Roadlines, Agra. Shri Kamal Singh, Manager, M/s Saini Roadlines in his statement dated 22/11/97 stated that the consignment of 419 packages of plastic material had been delivered at the factory premises of MRS/MRT at Samaypur, Badli, Delhi, although in the invoice, the consignee was shown as M/s Arora & Co., Delhi.
9.1.3 The statement of Shri Kamal Singh regarding the actual place of delivery of the consignment of 419 packages of printed plastic laminate is also corroborated by the statements dated 9/1/98 and 21/1/98 of Shri Praveen Kumar Gureja, Partner of M/s Navin Roadlines by which this consignment of plastic laminate had initially been booked for transport to Delhi in September 1994 by M/s Gupta Trading Co. In these statements Shri Praveen Kumar Gureja has stated that at that time as per the delivery instructions mentioned in the GR and the dispatch memo, the goods were to be delivered at the factory premises of MRS/MRT at Samaypur, Badli, Delhi and that the goods could not be delivered at that time as the consignment was detained at the Sainya Check Post, Agra.
9.1.4 As mentioned in para 1.2 above, while the transporters copy of the GR mentioned door delivery at Pan King, the copy of the invoices No. 49/94-95 dated 29/9/94 accompanying the goods also had remark door delivery Samaypur, Badli, Delhi though the consignee in the invoice was M/s Arora & Co., J-7, Malkaganj, Delhi. This is a clear evidence showing that the consignments of printed plastic laminate GTC 010 or GTC 020 sent by M/s Gupta Trading Co., Gwalior to M/s Arora & Co., Delhi were actually meant from MRS/MRT for their factory at Samaypur, Badli, Delhi.
9.1.5 The link of the fictitious entity M/s Arora & Co., Delhi with Shri Chander Kumar Gupta of MRS/MRT, Samaypur, Badli, Delhi is also clear from the following facts on record :-
(a) Though MRS/MRT deny that they had claimed ownership of the consignment of 419 bags of printed laminate meant for packing of Pan King brand Gutkha in retail pouches, detained by the U.P. Trade Tax Authorities and they deny having any relationship with M/s Arora & Co., Delhi, Shri Chander Kumar Gupta had filed an affidavit before U.P. Trade Tax Tribunal stating that the order for the said printed plastic material on which Pan King trade mark is printed, was placed by them through Shri Suresh Kumar, Prop. M/s Arora & Co., Delhi for door delivery and this is confirmed by the statement dated 18/11/98 of the Notary Shri Rajendra Narain Kapoor before whom Shri Chander Kumar Gupta had appeared on 29/10/94 and had signed the affidavit in presence of Shri Nand Kishore, Clerk of Shri Ashok Kumar Sharma, Advocate ;
(b) Shri Nand Kishore in his statement dated 20/11/98 has confirmed that on 29/10/94 Shri Chander Kumar Gupta had signed the affidavit in his presence before the Notary Shri Rajender Narain Kapur. The statement of Shri Nand Kishore is corroborated by the statement of Shri Ashok Kumar Sharma.
(c) Shri Arvind Gupta of M/s Gupta Trading Co. in his statement dated 17/11/98 has stated that Shri Chander Kumar Gupta had accompanied him to the office of the Advocate Shri Ashok Kumar Sharma and had given an affidavit stating that for the seized goods, they had placed the order through Arora & Co., Delhi and that after release of the goods on order of Honble Allahabad High Court, he had dispatched the consignment to MRS/MRT, Samaypur, Delhi.
(d) Judgment dated 07/11/94 of U.P. Trade Tax Tribunal mentions that the consignment of 419 packages had been purchased by M/s Gupta Trading Co., Gwalior from M/s Flex Industries Ltd., Malanpur in the name of MRS on a telephone message from Arora & Co., Delhi, and that consignee M/s Arora & Co., Delhi is alleged to have nexus with MRS, Mainpuri, which is claimed to be a branch of MRS, Delhi.
(e) Judgment dated 9/12/94 of Honble Allahabad High Court also mentions that the Tribunal found Arora & Co., Delhi and MRS, Delhi to be inter-connected firms.
9.1.6 In view of the above fact and also in view of the fact that M/s Arora & Co., Delhi has been found to be a non-existent entity, it is clear that all the consignment sent by M/s Gupta Trading Co., Gwalior to M/s Arora & Co., Delhi have in fact been received by MRS/MRT at their factory at Samaypur, Badli, Delhi.
9.2 From the above evidence on record, it is clear that the consignment of 419 packages of printed plastic laminate dispatched by M/s Gupta Trading Co. under their invoice No. 49/94-95 dated 29/9/94 after release from the Sales Tax authorities of U.P. had actually been delivered at the factory premises of MRS/MRT at Samaypur, Badli, Delhi. Therefore, the duty demand of Rs. 37,31,000/- based on the receipt of 419 packages of printed plastic laminate has to be upheld.
9.3 As regards the duty demand of Rs. 1,73,58,810/-, the same is based on the supply of printed plastic laminate by M/s Gupta Trading Co., Gwalior during period from 31/8/94 to 7/9/95. These supplies were under the invoices issued to M/s Arora & Co., Delhi and describing the goods in the invoices as GTC 010 or GTC 020.
9.3.1 Shri Arvind Gupta in his statement, mentioned above, has clarified that the codes GTC 010 and GTC 020 are the code numbers for printed plastic laminate material meant for Pan King brand Gutkha and this statement of Shri Gupta is also supported by the fact that while the consignment of 419 bags supplied by M/s Gupta Trading Co. to M/s Arora & Co., Delhi under invoice dated 29/9/94 and which had been detained by U.P. Trade Tax Authorities at Sainya Check post, Agra, was found to be containing printed plastic laminate for packing of Pan King brand Gutkha of MR Sales Corporation, Delhi, in the invoice dated 29/9/94, issued by M/s Gupta Trading Co., the description of the goods was mentioned as GTC 010.
9.3.2 As mentioned above, while M/s Arora & Co., Delhi has found to be a fictitious entity, Shri Arvind Kumar Gupta, Prop. M/s Gupta Trading Co. in his detailed statements dated 17/11/98 and 24/3/99 has stated that the consignment of printed plastic laminate meant for packing of Pan King brand Gutkha were being supplied in the name of M/s Arora & Co., Delhi only on the instructions of the owner of Pan King brand Gutkha and those consignment were actually being delivered at their factory at Samaypur, Badli, Delhi.
9.3.3 Some of the consignment of plastic laminate supplied by M/s Gupta Trading Co., Gwalior to M/s Arora & Co., Delhi had been transported through M/s Lamba Roadlines Pvt. Ltd. In this regard, inquiry was made with Shri Anil Lamba, Partner of M/s Lamba Roadlines Pvt. Ltd. and he in his statements dated 24th September 1998, 30th November 1998 stated that though the invoice was issued to M/s Arora & Co., Delhi, the goods booked by M/s Gupta Trading Co., had been delivered at the factory of MR Sales Corporation at Samaypur, Badli, Delhi and in this regard Shri Anil Lamba submitted photocopy of GR No. 18199 dated 21/4/94 under which a consignment of 5222.55 kgs. of Plastic packing material roll GTC 010 had been transported and its trip sheet, which mentioned the place of delivery as Pan King factory, while the invoice had been issued to M/s Arora & Co., Delhi.
9.3.4 The statement of Shri Anil Lamba corroborates the statement of Shri Arvind Gupta and also the statement of Shri Kamal Singh, Manager M/s Saini Roadlines, wherein it had been stated that the consignments whose consignee was mentioned as M/s Arora & Co., Delhi had actually been delivered at the factory of M/s Pan King at Samaypur, Badli, Delhi. The evidence discussed in para 9.1.1 to 9.1.3 above also supports the inference that all the consignments mentioned in the invoices of M/s Gupta Trading Co as being sold to M/s Arora & Co., Delhi, with description of goods as printed plastic packaging material GTC 010 or GTC 020 had been delivered at the factory of MRS/MRT at Samaypur, Badli, Delhi.
9.3.5 In view of the above evidence on record, the duty demand of Rs. 1,73,58,810/- based on receipt of 49596.4 kg. of printed plastic laminate received from M/s Gupta Trading Co., Gwalior during period from 31/8/94 to 07/9/95 is upheld.
9.4 The duty demand of Rs. 2,46,33,700/- is based on the records regarding supply of printed plastic laminate during 1996 and 1997 recovered from the office of M/s Flex Industries Ltd., Noida. The records recovered from the office premises of M/s Flex Industries Ltd., Noida showed that during this period, 70,382.3 kg. of printed plastic laminate for Pan King brand Gutkha had been supplied to M/s Chandra Packers, M/s Karan Packers and M/s Vikram Packers.
9.4.1 While above firms were found to be fictitious, Shri Chander Kumar Gupta in his statement dated 17/11/98 has stated that the laminates in the name of M/s Karan Packers, M/s Chandra Packers and M/s Vikram Packers had actually been received in his factory at Samaypur, Badli, Delhi and used in the manufacture of Gutkha.
9.4.2 Statement dated 17/11/98 of Shri Chander Kumar Gupta was again affirmed by him in his further statements dated 21/4/99 and 24/4/99, wherein he again stated that the printed plastic laminate received from M/s Flex Industries Ltd. under the bills in the name of M/s Karan Packers, M/s Chandra Packers and M/s Vikram Packers had been received in his factory at Samaypur, Badli, Delhi and that plastic material has been used in the manufacture of Pan King brand Gutkha pouches which had been cleared without payment of duty.
9.4.3 The statements of Shri Chander Kumar Gupta admitting that the consignment of printed plastic laminate supplied by M/s FIL, Noida to M/s Karan Packers, M/s Vikram Packers and M/s Chandra Packers had been received in his factory at Samaypur, Badli, Delhi is also corroborated by the fact that challan No. 1853 dated 30/12/96 No. 2145 dated 17/2/97 and 2095 dated 6/2/97, issued by M/s FIL, Noida for supply of printed plastic laminate to M/s Karan Packers were resumed during investigation and signatures on these challans indicated that the goods covered under these challans issued to M/s Karan Packers had been received by Shri Sonik Sharma and Shri Mahesh Haryana of MRS/MRT in factory of MRS/MRT.
9.4.4 Though Shri Chander Kumar retracted his statement, in view of the fact that he had made this statement initially on 17/11/98 and subsequently after about six months on 21/4/99 he had confirmed that statement as correct, and these statements are corroborated other independent evidence also, his subsequent retraction has to be treated as an afterthought.
9.4.5 In view of above evidence it is bound to be held that all the consignments of printed plastic laminate supplied by M/s Flex Industries Ltd. in the name of M/s Karan Packers, M/s Chandra Packers and M/s Vikram Packers had actually been received by MRS/MRT in their factory at Samaypur, Badli, Delhi and used in the manufacture of Pan King brand Gutkha pouches which had been cleared without payment of duty. Therefore, the duty demand based on the receipt of the plastic laminate in the name of Chandra Packers, has to be upheld. We order accordingly.
10. It has been pleaded that merely on the basis of evidence of receipt of printed plastic laminate by MRS/MRT, the duty demand against them cannot be confirmed in absence of evidence of purchase of other raw materials like Supari, Tobacco, Katha, Menthol etc. 10.1 In our view, for manufacture of Gutkha packed in retail plastic pouches, the printed plastic laminate is also a principal raw material and on the basis of the evidence of huge quantity of unaccounted receipt of such plastic laminate by MRS/MRT, added to preponderance of probability, presumption can also be made under Section 114 of the Indian Evidence Act that this unaccounted plastic laminate has been used for unaccounted manufacture of Gutkha cleared by them clandestinely without payment of duty and the burden of proving that there was no unaccounted manufacture and clearance of Gutkha would be on the appellant MRS/MRT. Since MRS/MRT have not produced any cogent evidence to discharge their burden of proof, the allegation of duty evasion based on unaccounted receipt of plastic lamination has to be held as proved by preponderance of probability, which is the required degree of proof in adjudication proceedings. Though the main evidence of unaccounted receipt of printed plastic laminate by MRS/MRT is in form of documents recovered from M/s Gupta Trading Co., Gwalior (their invoices issued to M/s Arora & Co., Delhi regarding sale of plastic packing material of code GTC 010 or GTC 020) and from M/s Flex Industries Ltd., Noida (invoices issued to M/s Karan Packers, M/s Vikram Packers and M/s Chandra Packers) as discussed in aforesaid paras 9.1, 9.1.1, 9.1.2, 9.1.3, 9.1.4, 9.1.5, 9.1.6, 9.2, 9.3, 9.3.1, 9.3.2, 9.3.4, 9.3.5 and 9.4 above, there is sufficient oral as well as documentary and circumstantial evidence to link those documents with MRS/MRT and prove that the non-existent entities M/s Arora & Co., M/s Karan Packers, M/s Vikram Packers and M/s Chandra Packers were nothing but fronts created by MRS/MRT for receiving unaccounted printed plastic laminate.
10.2 Similarly, the recovery of GRs with M/s Malhotra Trading Co., Delhi as consignor and bearing code No. 072, or 104 or 123 from the Delhi office of M/s Pawan Carriers, which on the basis of oral evidence on record, have been linked to MRS/MRT, are sufficient to give rise to a presumption that the consignments of Gutkha transported to Ahmedabad under these GRs had been manufactured and cleared clandestinely by MRS/MRT and since MRS/MRT have not been able to produce any evidence in their defence, the allegation of duty evasion based on these GRs has also be treated as proved by preponderance of probability.
10.3 For linking the 182 bags of Gutkha covered under GRs issued by M/s Pawan Carriers, seized at Ahmedabad and the GRs seized from Delhi office of M/s Pawan Carriers on the basis of which duty demand of Rs. 79,56,960/- is based, with MRS/MRT, Samaypur, Badli, Delhi, the statement of Shri Madan Lal of M/s Pawan Carriers, corroborated by the statements of Shri Mahesh Haryana of MRS/MRT and Shri Ramprasad Kedarnath Halwai of M/s Ramprasad Sushil Kumar is sufficient and in this regard, inability of the investigating officers to trace Shri Than Singh and examine him is not fatal.
11. The cross examination of two main witnesses Shri Mahesh Haryana, Accountant, MRS/MRT and Shri Madan Lal, Manager, M/s Pawan Carriers had been allowed and therefore on this count the appellant cannot have any grievance. As regards cross examination of other witnesses Arvind Gupta, since his statements implicating MRS/MRT are corroborated by other independent evidence on record, there was no denial of natural justice of not permitting cross examination.
12. In view of the above discussion, we uphold the duty demands of Rs. 5,20,520/-, Rs. 79,17,360/-, Rs. 1,73,58,810/-, Rs. 37,31,000/- and Rs. 2,47,33,700/-. As all these demands are in respect of the goods cleared clandestinely without payment of duty, the extended period under proviso to Section 11A (1) has correctly been invoked in view of the fraud committed against Revenue with intent to evade the duty and penalty on MRS/MRT under Section 11AC of Central Excise Act, 1944 for the period w.e.f. 28/9/96 and under Rule 173Q (1) (d) of the Central Excise Rules, 1944 for period prior to 28/9/96 has been correctly imposed. In other words, imposition of penalty on MRS/MRT equal to the duty demand confirmed against them is upheld.
13. As regards interest on duty under Section 11AB, since this Section had been inserted by Section 76 of Finance Act, 1996 w.e.f. 28/9/96, interest on duty under this Section would be chargeable only in respect of clearances w.e.f. 28/9/96 and not in respect of clearances made during the period prior to 28/9/96.
14. As regards penalty on Shri Chander Kumar Gupta, Director of MRS/MRT under Rule 209A of the Central Excise Rules, 1944, he would be liable for this penalty as, as discussed above, he has knowingly dealt with the excisable goods which he knew or had reason to believe were liable for confiscation.
15. As regards imposition of penalty on M/s Pawan Carriers, its Partners Shri Tripawan Kumar Ram Prasad Sandhir and Shri Krishan Gopal, Ram Prasad Sandhir, we find that M/s Pawan Carriers had transported the consignments of Pan King brand Gutkha received from the factory of MRS/MRT under the invoices of M/s Malhotra & Co., Delhi. From the statement of Shri Madan Lal, Manager of M/s Pawan Carriers and Shri Tripawan Kumar it is clear that they were aware of the actual description of the goods and the fact that the same had been received from the factory of MRS/MRT at Samaypur, Badli, Delhi and were non-duty paid in as much as no excise invoices had accompanied the goods. The fact that in the GRs, instead of writing actual description of the goods, only the codes 104 or 072 or 123 were being written also indicates that they were aware of the actual description of the goods. M/s Pawan Carriers and its partners are, therefore, involved in transportation of the excisable goods which they knew were liable for confiscation and therefore penalty on them has been correctly imposed under Rule 209A of Central Excise Rules, 1944.
16. As regards the imposition of penalty on Shri Ram Prasad Kedar Nath Halwai, Prop. of M/s Ram Prasad Sushil Kumar from the evidence on record discussed above it is clear that he has dealt with the excisable goods cleared by MRS/MRT without payment of duty, penalty on him under Rule 209A has been correctly imposed.
17. In view of the above discussion, the duty demands against MRS/MRT are upheld. However, the demand of interest on this duty under Section 11AB is upheld only in respect of clearances w.e.f. 28/9/96. The imposition of penalty on MRS/MRT under Section 11AC of Central Excise Act, 1944/Rule 173 Q (1) (d) of Central Excise Rules, 1944 is also upheld. The penalty imposed on M/s Pawan Carriers, Shri Tripawan Kumar Ram Prasad Sandhir, Shri Krishan Gopal, Ram Prasad Sandhir, Shri Ram Prasad Kedar Nath Halwai, Prop. M/s Ram Prasad Sushil Kumar under Rule 209A of the Central Excise Rules, 1944 are also upheld.
18. All six appeals are dismissed, except to the extent of levy of interest explained in para 17 of this order indicated aforesaid.
(Order pronounced in the court on 14/10/2013.)
(Rakesh Kumar) (D.N. Panda)
Technical Member Judicial Member
PK
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