2015 (1) TMI 1088 - AT - Central Excise

Waiver of pre deposit - illegal manufacture and clandestine clearance of the Pan Masala/ Gutkha - Held that - lot of evidence is required to be scrutinized and examined before arriving at a final verdict. The fact that Shri Vijay Mishra has not been found by the Revenue nor has been produced by the assessee and his address had been found to be fake, coupled with the evidence of recovery of supari and oven machine from the residential premises read with the statements of the workers, tilt the weight of the evidence towards the Revenue. However, keeping in view the fact that there is no inculpatory statement by the appellant and he has produced the rent deed which was not questioned by the Revenue and keeping in view the financial condition of the appellant, who is an individual and not a body corporate, we deem it fit to direct the appellant to deposit an amount of Rs . 10,00,000 within a period of twelve weeks, subject to which the pre-deposit of balance amount of duty and penalty shall stand waive - Partial stay granted.

Issues: Application to dispense with pre-deposit duty, illegal manufacture and clearance of Pan Masala, ownership of premises, retracted worker statements, tenant lease agreement, non-locatable tenant, recovery of supari and oven, liability for manufacturing activities, evidentiary weight, financial condition of the appellant.

Analysis:

1. The main issue in this case was the application to dispense with the pre-deposit duty of Rs. 1,00,00,000 confirmed against the applicant for alleged illegal manufacture and clandestine clearance of Pan Masala. The appellant claimed innocence based on a lease agreement with a tenant named Vijay Mishra, who could not be located by the Revenue officers despite efforts. The appellant argued that the manufacturing activities were carried out by the tenant, absolving them of liability.

2. The search conducted at the premises revealed a pouch packing machine on the first floor, with workers initially stating they worked for the appellant but later retracting their statements, claiming to work for someone else. The appellant contended that the workers were coerced into their initial statements, and the subsequent retractions should be considered valid. The Revenue argued that the workers' initial statements established the appellant's ownership of the machine and their involvement in the manufacturing process.

3. The appellant presented a rent agreement with Vijay Mishra to support their claim that the premises were leased out, but the Revenue could not locate Vijay Mishra at the given address. Additionally, the recovery of supari and an oven from the appellant's residential premises raised suspicions about their involvement in the manufacturing activities. The evidentiary weight was analyzed, considering the lack of inculpatory statements by the appellant and their financial condition.

4. After evaluating the submissions and evidence, the Tribunal found that further scrutiny was necessary before reaching a final decision. While the evidence pointed towards the Revenue's favor due to the untraceable tenant, recovery of goods, and worker statements, the appellant's submission of the rent deed and financial circumstances were also considered. As a result, the Tribunal directed the appellant to deposit Rs. 10,00,000 within twelve weeks, with the remaining duty and penalty pre-deposit waived, taking into account the appellant's individual financial status.

5. The judgment highlighted the importance of thorough examination of evidence, including witness statements, lease agreements, and physical evidence, to determine liability in cases of alleged tax evasion and clandestine activities. The decision balanced the need for compliance with the financial constraints of the appellant, emphasizing the significance of presenting valid documentation and cooperating with investigations in such legal proceedings.

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