2018 (1) TMI 871 - AT - Central Excise

Clandestine removal - chewing tobacco - compounding scheme - Held that - The appellant is not availing the compounding scheme at the time of manufacture of chewing tobacco. So, the appellant was not paying any duty - it is evident that the appellant was manufacturing the chewing tobacco without paying any duty in the clandestine manner. When it is so, then then there is no reason to interfere with the impugned order. Matter remanded to the original authority to verity whether there was any manufacturing activity for the period Jan. to May 2013 or not and levy the duty and penalty for this period, accordingly, but by providing reasonable opportunity to the appellant.

Summary

Issues involved:
1. Clandestine removal of goods
2. Duty demand for a specific period
3. Cross-examination rights of the appellant
4. Verification of manufacturing activity for a specific period

Detailed Analysis:
1. The appellant was engaged in manufacturing chewing tobacco, which was sold in pouches. A search revealed pouch packing machines, raw material, and finished goods. The appellant was accused of clandestine removal, and penalties were imposed. The appellant denied involvement in manufacturing gutkha and challenged the duty levy. The Tribunal found the appellant guilty of manufacturing chewing tobacco without paying duty clandestinely, based on statements of involved persons.

2. The appellant argued that there was no manufacturing activity from January to May 2013 due to the absence of machines. The Tribunal remanded the matter to verify this claim and determine duty and penalty for this period, providing a reasonable opportunity to the appellant. The impugned order was otherwise upheld.

3. The appellant contended that the lower authority violated natural justice by not allowing cross-examination of a witness. The Tribunal held that the statements of involved persons did not require verification or cross-examination as they merely stated ownership details. The appellant's argument based on the K.K. Sales case was considered but not accepted.

4. The appellant's counsel referenced the Lakshman Exports case and argued against the duty levy for a specific period. The Tribunal acknowledged this argument and remanded the matter for verification of manufacturing activity during the mentioned period, ensuring a fair opportunity for the appellant. The impugned order was upheld except for this specific issue.