2016 (10) TMI 904 - AT - Central Excise

Clandestine removal of goods - manufacture of Pan Masala and Gutkha - Held that - the contentions of Revenue in the grounds of appeal are more or less repetition of show cause notice. We find that the show cause notice and earlier Order-in-Original dated 27.05.2005, have merged into the final order dated 12.08.2011 passed by this Tribunal, as per the doctrine of merger. The issue for our consideration is present appeals before us is whether the impugned order in original is sustainable with reference to the directions that were given by this Tribunal in its said final order dated 12.08.2011. The grounds of appeal by Revenue & M/s Durga Trading Company are stated is foregoing paras. In none of the grounds, either Revenue or M/s Durga Trading Company would establish that any of the direction given by this Tribunal while remanding the matter to Original Authority have been violated while passing the impugned Order-in-Original. We therefore, hold that present Order-in-Original is sustainable in respect of all the above stated appeals. Therefore, all the above stated appeals are dismissed.

Summary

Issues Involved:
1. Suppression of production and clandestine removal of goods by M/s Durga Trading Company (DTC).
2. Discrepancies in physical stock and unaccounted goods.
3. Seizure of cash and goods from various premises.
4. Demand of Central Excise Duty and penalties.
5. Admissibility and reliability of evidence, including statements and cross-examinations.
6. Confiscation of seized goods and cash.
7. Compliance with Tribunal's remand directions.

Issue-wise Detailed Analysis:

1. Suppression of Production and Clandestine Removal of Goods by DTC:
The case involved allegations against DTC for suppressing production and clandestinely removing unaccounted goods to various dealers without paying Central Excise duty. The investigation revealed discrepancies in the stock and removal of goods without proper accounting. The Tribunal initially remanded the case for re-evaluation, emphasizing the need for proper investigation into the duplicity of products and assessment of evidence linking seized documents to the alleged clandestine activities.

2. Discrepancies in Physical Stock and Unaccounted Goods:
During the search at DTC's premises, discrepancies were found in the stock of raw materials and finished goods. There were shortages and excesses in various items, which DTC could not explain satisfactorily. The Tribunal directed a thorough analysis of these discrepancies, including the statutory requirements for recording quantities and the accuracy of weights disclosed in the Panchnama.

3. Seizure of Cash and Goods from Various Premises:
The officers seized significant amounts of cash and goods from DTC, its trading partners, and associated individuals. The Tribunal highlighted the need to establish a clear link between the seized cash and the proceeds from the alleged clandestine removal of goods. The adjudicating authority was instructed to analyze the materials retrieved from the Pen Drive and other documents to ascertain their connection to the alleged activities.

4. Demand of Central Excise Duty and Penalties:
The Original Authority confirmed a duty demand of ?39,08,160 against DTC for removing 1357 bags of excisable goods without payment of duty. The authority also confirmed a duty of ?4,60,800 on goods seized in transit and imposed penalties accordingly. However, demands related to certain seized goods and shortages were dropped due to lack of evidence. The Tribunal's remand order required a reassessment of these demands, considering the credibility of evidence and statements.

5. Admissibility and Reliability of Evidence:
The Tribunal's remand emphasized the need for a proper investigation into the credibility of slips, documents, and statements. It was noted that mere possibilities of clearance could not substitute for evidence of actual clearance. The adjudicating authority was instructed to permit cross-examination of deponents and analyze the materials thoroughly to establish links with the alleged clandestine activities.

6. Confiscation of Seized Goods and Cash:
The Original Authority ordered the release of seized cash and goods from various premises, including M/s New Shashi Zarda Bhandar and M/s R.P. Products, as the link to clandestine activities was not sufficiently established. The Tribunal's remand required a detailed analysis of the seized items and their connection to the alleged evasion of duty.

7. Compliance with Tribunal's Remand Directions:
The Tribunal's final order dated 12.08.2011 provided specific directions for re-evaluating the case, including the need for proper investigation, cross-examination, and analysis of evidence. The Original Authority's impugned order dated 01.11.2012 was assessed for compliance with these directions. The Tribunal found that the grounds of appeal by both Revenue and DTC did not establish any violation of these directions, leading to the dismissal of all appeals.

Conclusion:
The Tribunal upheld the Original Authority's order dated 01.11.2012, confirming the duty demand and penalties against DTC while dropping certain demands and confiscation orders due to lack of evidence. The appeals filed by the Commissioner of Central Excise, Lucknow, and M/s Durga Trading Company were dismissed, affirming the compliance with the Tribunal's remand directions.