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2004 (10) TMI 488 - AT - Central ExciseDemand of duty on scented supari - dutiability of betel-nut powder (supari) - Valuation of goods - Clandestine removal - Confiscation - assumptions and presumptions - grant of abatement under Section 4(4)(d)(ii) - HELD THAT - After an assessment of the whole evidence we find that the quantitative basis for the demand of duty is what is contained in the Mahazar dated 4-4-1997 rather than anything stated by the witnesses. Nothing relating to such weighments can be basis for demanding duty on goods alleged to have been clandestinely manufactured and cleared prior to the said date. To raise such a demand is a presumptive or speculative exercise which cannot be countenanced. Any demand of duty on an assessee for a given period should be founded on positive evidence indicating manufacture and clearance without payment of duty of excisable goods during that period. It cannot be raised on the basis of some formula devised from facts pertaining to goods produced after the said period as in the instant case. In the present case insofar as the period 1-4-1995 to 11-3-1997 is concerned there is no evidence whatsoever whether it be one of procurement and utilization of raw material or of production and clearance of supari out of the factory or of sale of such goods to show that the assessee had clandestinely manufactured and removed supari during the said period. Hence we are unable to sustain the demand of duty raised by the Commissioner on M/s. Ravi Kumar Co. for the period 1-4-1995 to 11-3-1997. A demand for the subsequent period on the same basis was held unsustainable. In the case of Emami Ltd. v. CCE Kolkata 2002 (7) TMI 160 - CEGAT KOLKATA a similar view was taken by the Tribunal. We find there is no dearth of decisions on the point which are in favour of the appellants in the instant case. We therefore set aside the demand of duty. The goods were seized on the premise that they were kept for clandestine removal. This again is only a speculation which cannot be a basis for seizure and confiscation. We set aside the confiscation. Having found that the demand of duty is not sustainable the penalties imposed on M/s. Ravi Kumar Co. and others are also liable to be vacated and we do so. Finished goods (scented supari) which were allegedly removed by M/s. Ravi Kumar Co. were seized from the premises of their dealers namely S/Shri Paranthaman Veerabhadran and Vijayalakshmi Enterprises and those goods were also confiscated by the Commissioner on the ground that the goods were received from M/s. Ravi Kumar Co. and were not accounted for. We have already rejected the charge of clandestine removal levelled against M/s. Ravi Kumar Co. It would follow that the goods seized from the dealers premises cannot be considered to be goods removed by M/s. Ravi Kumar Co. Consequently the confiscation of the goods seized from the dealers premises is not sustainable. In the result the appeals of all the parties are allowed with consequential reliefs.
Issues Involved:
1. Demand of duty on M/s. Ravi Kumar & Co. 2. Confiscation of excisable goods from M/s. Ravi Kumar & Co. and their dealers. 3. Imposition of penalties on M/s. Ravi Kumar & Co. and their dealers. 4. Revenue's challenge on the non-dutiability of scented supari prior to 16-3-1995. 5. Revenue's challenge on the abatement of duty under Section 4(4)(d)(ii) of the Central Excise Act, 1944. Detailed Analysis: 1. Demand of Duty on M/s. Ravi Kumar & Co. The demand of duty amounting to Rs. 80,12,969/- was challenged by M/s. Ravi Kumar & Co. on the grounds that it was based on an arbitrary formula devised by the Central Excise officers. The Tribunal found that the demand was speculative and lacked positive evidence of clandestine manufacture and clearance of scented supari during the period from 1-4-1995 to 11-3-1997. The Tribunal noted that the quantitative basis for the demand was not discernible from the Mahazar dated 4-4-1997 and that no weighment of goods was conducted. The Tribunal referenced the decision in Ghodavat Pan Masala Products, which rejected a similar demand based on theoretical calculations. Consequently, the Tribunal set aside the demand of duty. 2. Confiscation of Excisable Goods The goods seized from M/s. Ravi Kumar & Co. and their dealers were confiscated on the premise that they were intended for clandestine removal. The Tribunal found this to be speculative and unsupported by positive evidence. It noted that the alleged excess stock of finished goods was not excess at all and was about to be accounted for in RG-I. Therefore, the Tribunal set aside the confiscation of goods from M/s. Ravi Kumar & Co. and their dealers, including those seized from the premises of S/Shri Paranthaman, Veerabhadran, and Vijayalakshmi Enterprises. 3. Imposition of Penalties Penalties were imposed on M/s. Ravi Kumar & Co. and their dealers under Rule 173Q and Section 11AC of the Central Excise Act, 1944. Given that the demand of duty and the confiscation of goods were found unsustainable, the Tribunal vacated the penalties imposed on M/s. Ravi Kumar & Co. and the other appellants. 4. Revenue's Challenge on Non-Dutiability of Scented Supari Prior to 16-3-1995 The Revenue challenged the Commissioner's finding that scented supari was not dutiable prior to 16-3-1995, based on the Hon'ble Madras High Court's judgment in the case of A.R. Safullah and Others. The Tribunal noted that the judgment had not been stayed in the Writ Appeal. Consequently, the Tribunal affirmed the Commissioner's order holding that betel-nut powder (supari) was non-dutiable for the period prior to 16-3-1995. 5. Revenue's Challenge on Abatement of Duty The Revenue also challenged the abatement of duty allowed to the assessee under Section 4(4)(d)(ii) of the Central Excise Act, 1944. The Tribunal referenced the Larger Bench decision in Srichakra Tyres, upheld by the Supreme Court in CCE, Delhi v. Maruti Udyog Ltd., which supported the grant of abatement. Therefore, the Tribunal rejected the Revenue's appeal on this ground. Conclusion: The Tribunal allowed the appeals of M/s. Ravi Kumar & Co. and other parties, setting aside the demand of duty, confiscation of goods, and imposition of penalties. The Revenue's appeal was rejected, affirming the non-dutiability of betel-nut powder (supari) prior to 16-3-1995 and the grant of abatement under Section 4(4)(d)(ii). The judgment provided consequential reliefs to the appellants.
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