Custom, Excise & Service Tax Tribunal
(I) M/S P & J Aromatics (A Unit Of Jeet ... vs Commissioner Of Central Excise, Kanpur on 26 October, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL,
REGIONAL BENCH : ALLAHABAD
Appeal No.E/388-390/2008-EX[DB]
Arising out of Order-in-Original No.08/Comm./M.P./2007 dated 29.11.2007 passed by Commissioner, Central Excise, Kanpur.
For approval and signature:
HONBLE MR. ANIL CHOUDHARY, MEMBER (JUDICIAL)
HONBLE MR. ANIL G. SHAKKARWAR, MEMBER (TECHNICAL)
1. Whether Press Reporters may be allowed to see
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982? : No
2. Whether it should be released under Rule 27 of the
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not? : Yes
3. Whether His Lordship wishes to see the fair copy
of the Order? : Seen
4. Whether Order is to be circulated to the Departmental
Authorities? : Yes
(i) M/s P & J Aromatics (A Unit of Jeet (India) Pvt. Ltd.)
(ii) Shri Yogendra Kumar Singhal, Authorized Signatory
(iii) Shri Praveen Kumar Singhal, Proprietor
APPELLANT(S)
VERSUS
Commissioner of Central Excise, Kanpur
RESPONDENT (S)
APPEARANCE:
Shri K. K. Anand, Advocate for the Appellant (s) Shri Rajeev Ranjan, Joint Commr. (A.R.) for the Department CORAM:
HONBLE MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) HONBLE MR. ANIL G. SHAKKARWAR, MEMBER (TECHNICAL) DATE OF HEARING & PRONOUNCEMENT: 26.10.2016 FINAL ORDER NO.-71062-71064/2016 _ Per Mr. Anil G. Shakkarwar:
The present three appeals are taken up together for decision because they were issued with a common show-cause-notice dated 09.06.2006.
2. The brief facts of the case are that M/s P & J Aromatics were engaged in the manufacture of Pan Masala and Gutkha under the brand name Jeet & Andaaz. The Officers of DGCEI conducted simultaneous searches on 14.12.2005 and 16.12.2005 of 17 premises, including 2 manufacturing units of M/s P & J Aromatics, 7 Godowns, Office premises and residential premises of Shri Yogendra Singhal, who was authorized signatory of M/s P & J Aromatics. They searched premises of the supply of packing material, premises of road transporter at Agra and Hindon, premises of dealer at Hindon and premises of dealer at Jaipur. During the search, some quantity of goods manufactured and various quantities of raw materials were seized. Statements of various persons associated with above stated premises were recorded. On the basis of investigations carried out at the end of transporter, namely M/s Bharat Freight Carrier (referred as M/s BFC) and on the basis of information obtained from Railway Authorities in respect of goods booked for transportation by Railway obtained, it appeared to Revenue that M/s P & J Aromatics evaded Central Excise duty on Jeet & Andaaz brand Gutkha by removing the goods clandestinely without payment of Central Excuse Duty. Statement of Shri Vijay Singh, Booking Clerk of M/s BFC, Agra, was recorded on 14.12.2005 & 20.12.2005. Statement of Shri Uttamchand, Manager of M/s BFC, Hindon, was recorded on 14.12.2005. Statement of Shri Saiyed Tajammun Islam, partner of M/S BFC, was recorded on 22.02.2006. Statement of Shri Neeraj Goyal, partners of M/s Kureshi Roadway, Gangapur who was engaged as delivery agent of M/s BFC, was recorded on 24th March, 2006. Statement of Shri Birdi Chand Jain, proprietor of M/s Jain Transport Company which was engaged as delivery agent of M/s BFC at Karoli was recorded on 24.03.2006. On the basis of said statements, it appeared to Revenue that the appellant M/s P & J Aromatics used to transport Jeet & Andaaz brand Gutkha to various destination through M/s BFC and whenever the consignment was cleared on payment of duty, a regular transport document was prepared and whenever the excisable goods were clandestinely removed without payment of duties, the goods were booked as Pashu Ahaar and transported through M/s BFC and a different size transport document was prepared for the same. Therefore, the Officers of DGCEI collected information in respect of the goods carried by M/s BFC which were booked as Pashu Ahaar and presumed that all of them were cleared by M/s P & J Aromatics clandestinely without payment of duty. They included all such clearances in Annexure-A to the show-cause-notice and alleged that M/s P & J Aromatics cleared 9403 number of bags containing Gutkha cleared clandestinely without payment of duty in the guise of Pashu Ahaar transported by road transport. On the basis of documents seized during the said searches, they approached the Railway Authorities and requested Chief Divisonal Commercial Manager of Agra of Indian Railways to provide copies of 7 GRs and forwarding notes dated 12.12.2005. The Chief Parcel Supervisor of Agra Fort Railway Station provided copy of 7 GRs and forwarding notes to the Investigating Officers. Subsequently, the Officers scrutinized all the GRs book available at Agra Fort, Railway Station covering the period from 01.01.2003 to 14.12.2005 in present of Chief Parcel Supervisor, Agra Fort, Indian Railways and a chart showing the details of GRs by which Zarda Guthka/ Zarda Pouch were booked to different destination was compiled, Revenue presume that all such clearances of Gutkha booked at Agra Fort Railway Station was manufactured by M/s P & J Aromatics, and made allegations that M/s P & J Aromatics has totally cleared 52447 bags of Gutkha through Railway. They further alleged that out of 52447 bags Gutkha booked through Railway, 40553 number of bags of Gutkha was cleared by M/s P & J Aromatics without payment of duty. So, on the basis of such presumptions, M/s P & J Aromatics, Agra was issued with a show-cause-notice dated 09.06.2006 calling upon M/s P & J Aromatics to show cause as to why following goods seized should not be confiscated under Rule 25 of Central Excise Rules, 2002 :-
(i) 33372 number of pouches of Jeet Brand Gutkha (MRP Rs.0.50) valued at Rs.8343/- (after abatement of 50%) seized at Unit No.1 of Noticee No.1.
(ii) 5 bags of Jeet Brand Gutkha valued at Rs.20655/- and 8 bags of Andaaz Brand Gutkha valued at Rs.36,192/-, seized at Unit No.II of Noticee No.1 on 14.12.2005.
(iii) 109 bags of Jeet Brand Gutkha valued at Rs.4,50,279/- and 98 bags of Andaaz Brand Gutkha valued at Rs.443352/- cleared clandestinely and stored at godown premises of Noticeee No.1 at 34/54/4A, Near Sitaram Colony, Agra, seized by the officers on 14.12.2005.
(iv) 8 bags of Andaaz Brand Gutkha valued at Rs.37,584/-, seized at godown premises of Noticee No.1 at OA/02-07, Sita Ram Colony, Balkeshwar, Agra on 14.12.2005.
(v) 2 bags of Jeet Brand Gutkha valued at Rs.8,262/-, seized at M/s Akhil Sales Agency, Jaipur on 02.05.2006.
(vi) 18 bags of Jeet Brand Gutkha valued at Rs.74,358/-, seized at the premises of Gopal Lal Gupta at Kamla Bazar, Hindon City on 14.12.2005.
3. In the said show cause notice, there was a proposal to demand Central Excuse duty of Rs.5,63,686/- involved in the goods seized which were proposed to be confiscated. Further, the said show cause notice also had proposal to confiscate seized packing material as stated below under Rule 25 of Central Excise Rules, 2002,:-
(1) 31.600Kgs. of Jeet Brand Lamination valued at Rs.4,650/-, 18 Kgs of outer packets valued at Rs.3,240/- and 18 kgs f loose Pan Masala valued at Rs.3,240/- seized at the premises of Unit No.1 of Noticee No.1 on 14.12.2005.
(2) 1282.840 Kgs of Laminate pouches seized at Unit No.II of Noticee No.I. (3) 57 rolls of Lamination and 129 rolls of laminations and 13 bags of outer, totally valued at Rs.8,39,500/-, seized at the godown of Noticee No.I at Mahajan Market, Balaji Nagar, Agra on 14.12.2005.
(4) Jeet Brand Lamination & Outer valued at Rs.7,61,875/- and HDPE Outer bags & HDPE bags valued at Rs.9,600/- seized at the godown of NOticee No.I near Ajay Jewelers on 14.12.2005.
4. The said show cause notice also had proposal to demand Central Excise duty amounting to Rs.13,06,19,045/- involved in Gutkha contained in 49956 bags alleged to be cleared without payment of duty on the basis of Annexure prepared in respect of clearance of Pashu Ahaar and clearance of Gutkha presumed to be cleared by M/s P & J Aromatics which was transported through Railway. Further, there were proposal for appropriation of Rs.1.25 crore paid by M/s P & J Aromatics. There were proposals for imposition of penalty and recovery of interest from M/s P & J Aromatics. Further, there was proposal to impose personal penalty under Rule 26 of Central Excise Rules, 2002 on Shri Praveen Kumar Singhal and Shri Yogendra Singhal respectively Proprietor and Authorized signatory.
5. The appellants made submissions before the Original Authority stating that they did not manufacture any goods which were not accounted for in their books of account and they did not clear finished goods without payment of duty. They submitted that they did not clear finished goods in the guise of Pashu Ahaar and that no documents have been seized from any of the premises of appellants, which revealed that Gutkha was cleared by them as Pashu Ahaar. They further stated that none of the GRs issued by M/s BFC for transportation of Pashu Ahaar had any mention of either their name or their Brand on the same. Therefore, all entries of Pashu Ahaar to be treated as clearance of Gutkha without payment of duty is mere presumption. They further contended that all the dispatches of Zarda Gutkha/Zarda Pouch from Agra Fort Railway Station was presumed to be the goods manufactured by appellant, whereas no such document is relied upon to establish any connection of appellant with the transportation of Gutkha transported through Railway and compiled in the information submitted by the Railway Authorities without any connection getting established between entire quantity of Gutkha transported by Railway during the period of demand with the appellant to demand duty on all the quantity of Gutkha transported by Indian Railway after being booked at Agra Railway Station, was without authority of Law. Further, they demanded cross-examination of witnesses before the Original Authority. Cross-examination of following persons was conducted before the Original Authority.
1. Shri Burhanuddin Assistant Commercial Tax Officer, Ailabad, division, Govt. of Andhra Pradesh, Commercial Tax Department on 12.11.2007.
2. Shri Vijay Singh, employee of M/s Bharat Freight Carrier, Agra on 16.10.2007.
3. Shri Rakes Goel, Director, M/s Sandeep Laminator Pvt. Ltd., Udyog Vihar, Gurgaon on 16.10.2007.
4. Shri Sayyed Tajjanul Islam, Partner, M/s. BFC, Hindon, Rajasthan on 04.10.2007.
5. Shri Vikram Kumar Goel S/o Shri Ram Bharose Lal Goel, 11 Virendra Nafgar, Swai Madhopur, Rajasthan on 22.08.2007.
6. Shr R.K. Singh, Chief Executive, M/s Fragrance Specialities, 141/3 Km Stone, Delhi Agra National Highway, Agra on 21.08.2007.
7. Shri Ravi Madan S/o Shri Inderjit Madan, 17 Krishna Colony, Jeeveni Mnadi, Agra on 21.08.2007.
8. Shri Rajeev Chawla S/o Shri Jeet Prakash Chawla, 14, Govindpur, Kamla Nagar, Agra on 20.08.2007.
9. Shri Brahma Nand Gupta S/o Shri Jagdish Prasad on 20.08.2007.
10. Shri Bhagwan Das, S/o Shri Chedi Lal on 20.08.2007.
11. Shri S.S. Agarwal S/o late Shri D.D. Agarwal, 345/3, Balkeshwar Colony, Agra on 20.08.2007.
12. Shri Shekhar Gupta S/o Shri Gopal Lal Gupta, Katia Bazar, Hindon City, Karuli, Rajasthan on 29.06.2007.
13. Shri Vishnu Kant S/o Shri Mahes Chand, Geeta Nagar, Agra on 29.06.2007.
14. Shri Gopal Lal Gupta, Katla Bazar, Hindon City, Karuli, Rajasthan on 29.06.2007.
15. Shri Jawahar Aggarwal of M/s Laxmin Narain Jawahar Lal Agency, Hindon on 27.06.2007.
16. Shri Girdhari Lal Danwani of Akhil Sales Agency, Jaipur, Rajasthan on 27.06.2007.
17. Shri Uttam Chand Jain, Manager of M/s Bharat Freight Carrier, Agra on 27.06.2007.
18. Shri Birdi Chand Jain of Jain Transport Company, Karuli, Rajasthan on 27.06.2007.
19. Shri Niraj Goel S/o Shri Madan Gopal Goyal, Swai Madhopur, Rajasthan on 27.06.2007.
20. Shri Manoj Agarwal, Supervisor M/s P & J Aromatics on 27.06.2007.
21. Shri Deepak Patel S/o Laxmi Narain Agency, Sundar Dharmshala, Kota on 27.06.2007.
22. Shri Sunil Agarwal, Supervisor M/s M/s P & J Aromatics (Unit-II), Agra on 26.06.2007.
23. Shri Abhishek Parihar S/o Shri R.K.S. Parihar, B-563, Kamla Nagar, Agra on 26.06.2007.
6. On the basis of deposition of above stated witnesses, they submitted before the Original Authority that the witnesses have stated before the Original Authority that the statements were taken by Investigating Officers under threat and all of them have retracted their statement during cross-examination. They further submitted that the persons associated with M/s BFC have during cross-examination depose that Gutkha was not booked under the guise of Pashu Ahaar. They further submitted that the dealers were cross-examined and during cross-examinations, the dealers have stated that Officers had promised them that if the dealers give statement as desired by the Officers, they would not be subjected to any personal penalty under Rule 26 of Central Excise Rules and therefore, the statements of dealers before the Officers cannot be relied upon. They further submitted that department has not brought any independent or corroborative evidence to show that all the Railway receipts which were issued by Railway pertaining to booking of Gutkha had any mention of the Brand manufactured by them, name of the manufacturer and that there was no evidence to establish that goods booked as Gutkha through Railway were manufactured by them.
7. Further, in respect of cross-examination of raw materials supplier, they submitted that whenever raw material was purchased, it was duly accounted for in the books of account of both the supplier and the appellant and the payments were made through demand-draft. They further submitted that the major raw material was bettle nut which was purchased from Hiralal Bachilal, Agra and payments made to M/s Hiralal Bachilala have been duly accounted for in the books of account of appellant and there was no evidence on record to show that the appellants ever received Bettle nut which they did not account for in their books of account. The Original Authority adjudicated the show cause notice through Order-in-Original No.08/Commr./MP/2007 dated 29.11.2007. The Original Authority at Page 252 and 253 of his Order-in-Original stated that he has no reason to believe that the statements were taken under threat, duress, pressure or promise as claimed by the advocates of the noticee and that the evidenciary value of the statements was examined by him and it was found that they were corroborative and supportive of the case of the Revenue. He did not accept retractions by Shri Praveen Singhal and Shri Yogendra Kumar Singhal. Therefore, he relied on the statements recorded during investigation, and rejected the deposition before him during the Cross-examination. He ordered as reproduced herein below, I order to:-
(i) Confiscate the 618 packets (33372 pouches) of Jeet brand Gutkha valued Rs.8,343/-(Rs. Eight Thousand Three Hundred Forty Three only) under Rule 25 of the Central Excise Rules, 2002 seized at Unit No.1 of the Noticee No.1. As the goods have already been released to the Noticee No.1 vide provisional release order of dated 11.10.2006 after execution of B-11 Bond and furnishing cash security of Rs.2,086/- (Rs.Two thousand eighty six only). I ordered to appropriate the cash security in lieu of redemption fine.
(ii) confiscate the goods seized at Unit No.1 of the Noticee No.1 i.e. 31.6 Kg of Jeet brand lamination valued at Rs.4,650/- (Rs. four thousand six hundred fifty only) 18 kg of outer packet valued Rs.3,240/- (three thousand two hundred forty only) and 18kg of loose pan masala valued at Rs.3,240/- (three thousand two hundred forty only) under Rule 25 of the Central Excise Rules, 2002. However, I gave an option to the Noticee No.1 to redeem the same, in lieu of confiscation, on payment of redemption fine of Rs.3,000/- (Rs. Three thousand only).
(iii) Confiscate the 5 bags of Jeet brand Gutkha valued at Rs.20,655 (Rs.Twenty Thousand six hundred Fifty Five only) and 8 bags of Andaaz brand Gutkha valued at Rs.26,192 (Rs. Thirty Six thousand one hundred Ninety Two only) under Rule 25 of the Central Excise Rules, 2002 sized at Unit No.II of the Noticee No.1. As the goods have already been released to the Noticee No.1 vide provisional release order dated 11.10.2006 after execution of B-11 Bond and furnishing cash security of Rs.23,876/- (Rs.Twenty Three Thousand Eight Hundred Seventy Six only), I order to appropriate cash security in lieu of redemption fine.
(iv) Confiscate the goods seized at Unit No.II of the Noticee No.1 i.e. 1282.4 Kg Jeet brand lamination valued at Rs.1,60,335/- (Rs.One lac Sixty Thousand Three Hundred Thirty Five Only) under Rule 25 of the Central Excise Rules, 2002. However, I give an option to the Noticee No.1 to redeem the same, in lieu of confiscation, on payment of redemption fine of Rs.40,000/- (Rs. Forty Thousand Only)
(v) Confiscate the 109 bags of Jeet brand Gutkha valued at Rs.4,50,279/- (Rs.Four Lac Fifty Thousand Two Hundred Seventy Nine Only) and 98 bags of Andaaz brand Gutkha valued at Rs.4,43,352 (Rs.Four Lac Forty Three Thousand Three Hundred Fifty Two Only) seized at 34/54/4A, near Sita Ram Colony, Agra Godown premises of the Noticee No.1 under Rule 25 of the Central Excise Rules, 2002. As the goods have already been released to the Noticee No.1 vide provisional release order of dated 11.10.2006 after execution of B-11 Bond and furnishing cash security of Rs.2,22,408/- (Rs.two Lac Twenty Thousand Four Hundred Eight Only), I order to appropriate cash security in lieu of redemption fine.
(vi) Confiscate the 8 bags of Andaaz brand Gutkha valued at Rs.37,584/-(Rs. Thirty Seven Thousand Five Hundred Eighty Four) under Rule 25 of the Cnetral Excise Rules, 2002 seized at OA/0207, Sita Ram Colony, Baleshwar Road, Agra GOdown premises of the Noticee No.1. As the goods have already been released to the Noticee No.1 vide provisional release order of dated 11.10.2006 after execution of B-11 Bond and furnishing cash security of Rs.9,396/- (Rs.Nine Thousand Three Hundred Ninety Six Only), I order to appropriate cash security as redemption fine in lieu of confiscation the goods.
(vii) confiscate the 2 bags of Jeet brand Gutkha valued Rs.8,262/- (Rs. Eight Thousand Two Hundred Sixty Two only) seized at M/s Akhil Sales Agency, Jaipur dealer of the Noticee No.1 vaued at Rs.8,262/- (Rs. Eight Thousand Two Hundred Sixty Two Only) under Rule 25 of the Central Excise Rules, 2002. However, I give an option to the Noticee No.1 to redeem the same, in lieu of confiscation, on payment of redemption fine of Rs.2,065/- (Rs.Two Thousand Sixty Five only).
(viii) confiscate the 18 bags of Jeet brand Gutkha goods seized at the premises of Gopal Lal Gupta, HIndon City dealer of the Noticee No.1 valued at Rs.74,358/- (Rs. Seventy Four Thousand Three Hundred Fifty Eight Only) under Rule 25 of the Central Excise Rules, 2002. However, I give an option to the Noticee No.1 to redeem the same, in lieu of confiscation, on payment of redemption fine of Rs.18,590/-(Rs. Eighteen Thousand Five Hundred Ninety only)
(ix) confiscate the Jeet brand lamination & outer valued at Rs.7,61,875/- (Rs.Seven Lac Sixty One Thousand Eight Hundred Seventy Five only) and HDPE outer bags & HDPE bags valued at Rs.9,600/- (Rs. Nine Thousand Six Hundred Only) seized at Godown of the Noticee No.1, near Ajay Jewelers under Rule 25 of the Central Excise Rules, 2002. However, I give an option to the Noticee No.1 to redeem the same, in lieu of confiscation, on payment of redemption fine of Rs.1,92,870/- (Rs.One Lac Ninety Two Thousand Eight Hundred Seventy Only).
(x) confiscate the 6417 Kgs of Jeet brand lamination & outer, valued at Rs.8,39,500/- (Rs.Eight Lac Thirty Nine Thousand Five Hundred only) seized at Godown of the Noticee No.1, near Mahajan Market, Balaji Nagar, Agra under Rule 25 of the Central Excise Rules, 2002. However, I give an option to the Noticee No.1 to redeem the same, in lieu of confiscation, on payment of redemption fine of Rs.2,09,875/-(Rs.Two lac Nine Thousand Eight Hundred Seventy Five only).
(xi) I confirm the demand of Central Excise duty of Rs.5,63,686/- (Rs.Five lacs Sixty Three thousand Six Hundred Eighty Six only) surcharge of Rs.56,639/- (Rs.Fifty Six Thousand Six Hundred Thirty Nine only) cand cess Rs.12,401 (Rs. Twelve Thousand four hundred one) against Noticee No.1 under Section 11 A(2) of the Central Excise Act, 1944 on the finished goods seized out side the premises of the Noticee No.1 as mentioned at Para No.46.2 of the show Cause Notice.
(xii) I also confirm the demand of Rs.13,06,19,045/- (Rs.Thirteen Crore Six lac Nineteen thousand Forty Five only) against Noticee No.1 under Section 11A(2) of the Central Excise Act, 1944 by invoking the proviso of Sub-Section (i) of Section 11A of the Central Excise Act, 1944 for the demand of Central Excise duty for the extended period upto 5 years. They removed 49956 bags of finished goods without accounting for the same in their records and cleared clandestinely without payment of Centeral Excise duty. As the Noticee No.1 has already deposited Rs.1.25 crore. I appropriate the same against the demand and order for recovery of the remaining amount.
(xiii) I impose a penalty of Rs. 13,06,19,045/- (Rs. Thirteen Crore Six Lac Nineteen Thousand Forty Five only) upon the Noticee No.1 under Section 11AC of the Central Excise Act, 1944 read with Rule 25 of the Central Excise Rules, 2002.
(xiv) I order of recovery of interest from the Noticee No.1 under Section 11AB of the Central Excise Act, 1944.
(xv) I impose a penalty of Rs.50,00,000/- (Rs.Fifty lac) upon Shri Praveen Kumar Singhal (the noticee No.2) under Rule 26 of te Central Excise Rules, 2002 for contravention of the provisions of the Central Excise Act, 1944, and rules made thereunder.
(xvi) I impose a penalty of Rs.20,00,000/- (Rs.Twenty Lac) upon Shri Yogendra Kumar Singhal (the Noticee No.3) under Rule 26 of the Central Excise Rules, 2002 for contravention of the provisions of the Central Excise Act, 1944, and rules made thereunder.
7-A. Aggrieved by the said Order-in-Original dated 29.11.2007, the appellants are before this Tribunal. The grounds of Appeal are repetition of submissions before the Original Authority.
8. Heard the learned counsel for the appellants. He pleaded that the findings of the Ld. Commissioner that Cross-examination is not a part of natural justice, is erroneous. He pleaded that the onus to prove clandestine remove is always on Revenue. They have further elaborated that it is well settled that the clandestine clearances are to be proved on the basis of evidences corroborating each other in respect of receipt of Raw materials, payments for procurement of Raw Material, capacity of manufacture, electricity consumption, buyers of the final product and payments received from the buyers of the final product and stated that there was no evidence brought on record by Revenue to establish any of the said aspects. He further made following submissions during hearing :
(a) Shri Vijay Singh during his cross-examination on 16.10.2007 before the Original Authority has stated that their transport company never carried Jeet and Andaaz brand Gutkha in the guise of Pashu Ahaar and that he totally denied that his transport company was engaged in transportation of Jeet and Andaaz brand Gutkha in the guise of Pashu Ahaar. Further, Shri Uttam Chand Jain was cross-examined before the Original Authority on 27.06.2007. Shri Uttamchand Jain in his cross-examination has stated that they had never transported Gutkha of Jeet & Andaaz brand where description in the billty was that of Pashu Ahaar and the consignments of Jeet and Andaaz brand Gutkha were received on the strength of bills. Shri Saiyed Tajammun Islam during his cross-examination on 04.10.2007, has stated that his statement was recorded under threat by the Officers and that he was compelled to say that statement of Shri Vijay Singh and Shri Uttam Chand were correct and further stated that infact he was not aware of anything about the manner of transportation of Gutkha, manufactured by either M/s P & J Aromatics or any other Company.
(b) Had there been any clearance of Gutkha in the guise of Pashu Ahaar then during the simultaneous raid of 17 premises, it was possible for the Investigating Officers to intercept some consignments of Pashu Ahaar during the process of transportation which contained Jeet & Andaaz brand Gutkha. However, it is undisputed that no such consignment was intercepted by Officers during simultaneous raids.
(c) The Original Authority has made an observation at Page 176 of Order-in-Original that it appeared to him that noticee No.2 and 3 i.e. Praveen Kumar Singhal and Shri Yogendra Kumar Singhal applied some pressure on the Panch witnesses to say something which might suit to their case and that no witness came forward to lodge any complaint against the behavior of the Officers and further observed that he was of the view that there was no need to cross-examine them. He further observed that confessional statement given by the noticee and their acceptance of statements given by Raw material suppliers, their dealers situated at different places in Rajasthan and Railway booking agents were sufficient to adjudicate the case. The learned counsel argued that such an observation by Original Authority, is against the very process of adjudication and that if the reasons given by the noticee, as to why the proposal in the show cause notice should not be concluded, are not required then the process of adjudication becomes redundant.
(d) Annexure-A to show cause notice was prepared by Revenue as claimed by them that the said annexure was based on billty books and challans resumed from M/s BFC however, such billty books and challans are not relied upon document for issue of show cause notice. Since the billty books and challans are not the case records, the Annexure-A does not have any strength of evidence to reliy upon for issue of show cause notice.
(e) RUD 27 relied upon for issue of impugned show cause notice is the information about the goods Zarda Gutkha/Zarda Pouch booked from Agra Railway Station during the period of show cause notice. The said record does not anywhere indicate that said Zarda Gutkha/Zarda Pouch was either booked by the noticee or manufactured by the noticee or the goods so booked were bearing brand name of Jeet & Andaaz. Further, on the basis of such information annexure D1,D2 & D3 etc. were prepared presuming that the entire Zarda Gutkha booked at Railway Station of Agra during the period of show cause notice was manufactured by M/s P & J Aromatics and cleared clandestinely and with such presumption annexure No.D & E were prepared and it was alleged that 45057 bags of Gutkha were cleared by M/s P & J Aromatics without payment of duty and on perusal of information available at Pages 1784 to 1990 of Appeal paper book indicate that there is no proof that said goods were manufactured by M/s P & J Aromatics.
(f) Nothing incriminating was found in the statement of account given to investigators by supplier of bettle nuts Shri Vimal Kumar Jain and that bettle nut is a major ingredient for manufacture of Gutkha and there was no evidence that there was un-accounted procurement of raw materials. He further argued that Rule 25 of Central Excise Rules, 2002 does not authorize confiscation of raw materials of inputs.
9. The learned DR has supported the finding of Original Authority.
10. Having considered the rival contentions, we find that billty books and challans resumed from transporter M/s BFC are not relied for issue of show cause notice and it is claimed by Revenue that Annexure-A to the show cause notice was prepared on the basis of billty books and challans resumed from transporter. Annexure-A indicates that 9403 number of bags of Gutkha were cleared through M/s BFC in the guise of Pashu Ahaar. The statements as stated above of the witnesses which were dealing with goods in BFC have categorically stated during their cross-examination that Gutkha was never booked in the guise of Pashu Ahaar. Therefore, we hold that there is no evidences to establish that 9403 bags of Gutkha was manufactured by M/s P & J Aromatics. We further find from Page No.1784 to 1990 of Appeal paper book that the information given by Railway Authorities is general information in respect of entire Gutkha booked at Agra Railway Station and that information does not indicate that said goods were manufactured by M/s P & J Aromatics. The entire demand on the basis of information given by Railway Authorities that 40553 bags of Gutkha were clandestinely removed is not established. We hold that Revenue could not establish that on the basis of information given by Railway Authorities, M/s P & J Aromatics manufactured 40553 bags of Gutkha and cleared the same without payment of duty. We find a great force in all the arguments put forth by the counsel for the appellants. We also find that Raw materials cannot be confiscated under Rule 25 of Central Excise Rules, 2002. We therefore, modify the impugned Order-in-Original by setting aside the confirmation of demand of Rs.13,06,19,045/- and setting aside the penalty of Rs.13,06,19,045/- and setting aside the order for recovery of interest on Rs.13,06,19,045/- and setting aside the penalty of Rs.50 lakh on Shri Praveen Kumar Singhal and setting aside penalty of Rs.20 lakh on Shri Yogendra Kumar Singhal and setting aside the confiscation of 31.6kg and 1282.4kg of Jeet brand lamination and confiscation of Jeet brand lamination and outer valued of Rs.7,61,875/- and HDPE outer valued at Rs.9,600/- and confiscation of 6417kgs of Jeet brand lamination & outer valued at Rs.8,39,500/-. Accordingly, the Appeal No.388 of 2003 is partially allowed and Appeal Nos.389 & 390 is allowed. The appellants are entitled for consequential relief as per law.
(Dictated and Pronounced in the open Court)
SD/ SD/
(ANIL CHOUDHARY) (ANIL G. SHAKKARWAR)
MEMBER (JUDICIAL) MEMBER (TECHNICAL)
Mishra
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Appeal Nos.E-388-390/08