2017 (10) TMI 1026 - AT - Central Excise

Clandestine removal - tobacco - Held that - The factual position reveals that the appellant have been paying duty on such preparation from unit 1. Hence, 3990 kgs of lime mixed tobacco is, liable to payment of excise duty and since the same has been seized in non registered premises, confiscation of the same ordered by the lower authorities is required to be upheld along with option to redemption by payment of redemption fine. Demand of excise duty amounting to ₹ 4,57,367/- on 1335000 pouches cleared from Bagol factory - Held that - It stands admitted by the proprietor categorically in his statement that 8110 kgs of lime mixed tobacco were manufactured in unit 2 (farmhouse) and the same was cleared to unit 1 and subsequently packed in 1335000 pouches each of 6 gms at Bagol factory and the same was cleared without payment of duty. Such demand have been upheld on the basis of the inculpatory statement by both Shri Lakshmilal Chaplot as well as Shri Bhavesh Chaplot. The demand of duty raised is liable to be upheld along with interest as well as penalty of equal amount under section 11AC. The imposition of personal penalty of ₹ 10000-/- on Shri Bhavesh Chaplot is also required to be upheld under Rule 26 of the Central Excise Rules 2002. Appeal dismissed - decided against appellant.

Issues:
1. Confiscation of seized tobacco from two manufacturing units.
2. Duty liability on goods manufactured and cleared from unit 2.
3. Benefit of SSI and AED exemption notifications.
4. Allegations based on assumptions and presumptions.
5. Transfer of goods between manufacturing units.
6. Confiscation and duty liability on lime mixed tobacco.
7. Classification of seized goods as chewing tobacco.
8. Duty demand on pouches cleared from Bagol factory.
9. Upholding of penalties and personal penalty.

Issue 1: Confiscation of seized tobacco from two manufacturing units
The Appellate Tribunal noted that M/s. Nirmal Products were manufacturing lime mixed tobacco in a farm house (unit 2) and transferring it to their registered unit (unit 1) for packing and clearance. The tribunal upheld the confiscation of 3990 kgs of tobacco seized from unit 2, as it was found fit for human consumption and not eligible for SSI or AED exemptions.

Issue 2: Duty liability on goods manufactured and cleared from unit 2
The tribunal considered the statement of the proprietors admitting the manufacture and clearance of lime mixed tobacco from unit 2 to unit 1 without payment of duty. Based on these admissions, the tribunal upheld the duty demand on 1335000 pouches cleared from the Bagol factory, along with interest and penalties under section 11AC. The personal penalty on one of the proprietors was also upheld.

Issue 3: Benefit of SSI and AED exemption notifications
The tribunal concluded that the seized goods did not qualify for the benefit of SSI exemption notification no. 8/2003 and AED exemption notification no. 09/1996, as they were found to be fit for human consumption and not covered by the exemptions.

Issue 4: Allegations based on assumptions and presumptions
The tribunal rejected the argument that the allegations were based solely on assumptions and presumptions. It relied on the statements of the proprietors admitting to the clandestine clearance of tobacco, which did not require further proof by the Revenue.

Issue 5: Transfer of goods between manufacturing units
The tribunal found evidence that lime mixed tobacco manufactured in unit 2 was transferred to unit 1 for packing and clearance. The transfer and clearance without payment of duty led to the upheld duty demand and penalties.

Issue 6: Confiscation and duty liability on lime mixed tobacco
The tribunal determined that the lime mixed tobacco seized from unit 2 was liable for excise duty payment, as it was fit for human consumption and classified as chewing tobacco under the Central Excise Tariff.

Issue 7: Classification of seized goods as chewing tobacco
The tribunal clarified that the seized goods were classified as chewing tobacco under the Central Excise Tariff, based on the presence of lime in the tobacco mix, which is required for chewing tobacco.

Issue 8: Duty demand on pouches cleared from Bagol factory
The tribunal upheld the duty demand on 1335000 pouches cleared from the Bagol factory, as admitted by the proprietors in their statements, leading to the imposition of interest and penalties.

Issue 9: Upholding of penalties and personal penalty
The tribunal upheld the penalties imposed by the lower authorities, including the personal penalty on one of the proprietors, based on the admissions made in their statements. The impugned order was upheld, and the appeals were dismissed on 17.08.2017.

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