2005 (8) TMI 540 - AT - Central Excise

Issues Involved:
1. Demand of duty and imposition of penalties on M/s. A. Ravindran for alleged clandestine clearance of 'Pasu'-Branded Chewing Tobacco.
2. Confiscation of seized goods and vehicle.
3. Validity of extended period of limitation invoked under Section 11A(1) of the Central Excise Act.
4. Admissibility and reliability of evidence, including statements and documentary evidence.
5. Non-application of mind by the adjudicating authority.
6. Remarks made by the Commissioner against the counsel during cross-examination.

Issue-Wise Detailed Analysis:

1. Demand of Duty and Imposition of Penalties:
The Commissioner of Central Excise demanded duty exceeding Rs. Two Crores from M/s. A. Ravindran for the period 1997-98 to 2001-02, alleging clandestine clearance of 'Pasu'-Branded Chewing Tobacco without payment of duty. An equal amount of penalty was imposed under Section 11AC of the Central Excise Act. Additional penalties ranging from Rs. 10,000/- to Rs. 20 Lakhs were imposed on other appellants under Rule 209A of the erstwhile Central Excise Rules, 1944, and Rule 26 of the Central Excise Rules 2001/2002.

2. Confiscation of Seized Goods and Vehicle:
The chewing tobacco (both branded and unbranded) seized by the investigating officers was confiscated under Rule 25 of the Central Excise Rules, 2001, with an option for redemption against a fine of Rs. 2.36 lakhs. The vehicle used for transporting the goods was also confiscated with an option for redemption against a fine of Rs. 62,500/-. These fines were appropriated from the cash security/bank guarantee furnished by the concerned parties.

3. Validity of Extended Period of Limitation:
The extended period of limitation under the proviso to Section 11A(1) of the Central Excise Act was invoked by the Commissioner to demand the duty. This was contested by the appellants, who argued that the extended period was not applicable due to lack of evidence of willful suppression or misstatement.

4. Admissibility and Reliability of Evidence:
The evidence included statements from suppliers and slips recovered from one Sivaganesh Kumar, indicating unaccounted procurement of raw tobacco. The appellants argued that these statements were retracted during cross-examination and lacked corroborative documentary evidence. The Commissioner was criticized for ignoring these retractions and for not considering the documentary evidence provided by the appellants, such as lorry bills and certificates from the Tobacco Board and VAOs.

5. Non-application of Mind by the Adjudicating Authority:
The Tribunal found that the adjudicating authority did not carefully examine the evidence presented by both sides. The Commissioner failed to consider the retractions of statements made during cross-examination and disregarded the documentary evidence submitted by the appellants. This led to the conclusion that the finding of clandestine manufacture and removal of branded chewing tobacco was due to non-application of mind.

6. Remarks Made by the Commissioner:
The Tribunal noted unsavoury remarks made by the Commissioner against the counsel during cross-examination, suggesting that witnesses were tutored to support the defense. The Tribunal opined that if the Commissioner was dissatisfied with the witness depositions, he should have posed appropriate queries rather than making such remarks.

Conclusion:
The Tribunal set aside the impugned order and remanded the case to the Commissioner for de novo adjudication in accordance with law and principles of natural justice. The appeals were allowed by remand, emphasizing the need for a thorough and fair examination of all evidence and arguments presented by both sides.

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