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M/s.Indian wood Pvt.Ltd., Bareilly are manufacturer of katha. They supplied katha to HSG. Shri R.K.Agarwal is the Manager (Finance) in this company. M/s.Awadh Wood Product are partnership firm manufacturer of katha and Shri Rajendra Kumar Maheshwari is the partner, Shri Ashwini Kumar Sharma and Rakesh Kumar are the accountants in this factory.

3. As per facts on records, Revenue received information as regards evasion of duty by HSG. As a result of information received by the Revenue, searches were conducted at the factory premises of HSG, M/s.Anju Agencies, M/s.Gopal Grinding Agencies, M/s.Mahesh & Company and M/s.Santhan Cold Storage and at the premises of various dealers of M/s.Harsingar brand pan masala/gutkha on 04.07.2001. At the time of search of factory of HSG manufacturing operations were found in full swing and 54 pouch filling machines were found installed and working. Scrutiny of the records revealed that RG-1 register was found written only upto 30.06.2001. It was found that 55 bags of gutkha were found to be not accounted for in the books of accounts and the same were seized. The seized goods were given to Shri Mahesh Bajpai, the authorised signatory under supurdnama dated 04.07.2001 for safe custody. Certain other discrepancies were also noticed in the records. Two vehicles loaded with 70 bags of Harsingar brand Gutkha consigned to M/s.Sudhir Chand Gupta and M/s.Jaiswal Stores under invoices No.607 and 608 both dated 04.07.2001 issued by M/s.Anju Agencies were also intercepted. Statements of drivers as also of supervisors were recorded admitting loading of the goods from the factory of HSG and not from M/s.Anju Agencies. As according to te Revenue the goods were not duty paid, the trucks alongwith the goods loaded therein were seized.

- Raw materials for manufacturer of pan masala/gutkha are supari, kattha, lime, perfume, cardamom, menthol and tobacco. The percentage of these raw materials in the HSGs main product gutkha is as under:

 GUTKHA                              SADA PAN MASALA



Supari

Kattha

Tobacco

Cardamom

Lime

Menthol

Perfume

                Total:
70%

14%

10%

2.50%

2%

1%

0.50%

100%
Supari

Kattha

Cardamom

Lime

Menthol

Perfume

                Total:
80%

14%

2.5%

2%

1%

0.50%

_____

100%

(A) Supari ? Supari is the main raw material to manufacture gutkha or pan masala, as the case may be.

? At pages 47-49 of the impugned Order, allegations have been made about supari and the findings on these allegations are at pages 198-213.

? At the said pages the Commissioner has held that if supari to the extent held by him was procured by the HSG, such supari was sufficient to manufacturer pan masala and gutkha involving duty liability as mentioned hereafter.

? That in order to manufacture the extent of the gutkha/Pan Masala as confirmed by the Commissioner suprari will be 1.07 crore kgs.

? Tobacco is another important raw material for manufacture of gutkha. At the HSGs factory, out of its total production, more than 95% was that of gutkha and extent of tobacco used in the manufacture of gutkha is 10%. For manufacturing gutkha involving duty of Rs. 137.76 crores, the requirement of tobacco was 13.76 lakh kgs.

? In the entire order passed by the Commissioner, there is no finding at all about receipt of any quantity of tobacco clandestinely. The HSGs submissions that without tobacco it was simply not possible to manufacture such alleged quantity of gutkha has been ignored by the Commissioner by holding that the adjudicating authority is not required to go into such issues  para 53.2/page 242.