2018 (5) TMI 658 - AT - Central Excise

Valuation - manufacture of Gutkha - whether the appellant have been rightly imposed with Central Excise duty of ₹ 2,51,94,517/- for the period from 01/04/2011 to 06/09/2012 under the provisions of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 (for short PMPM Rules) read with Section 11 A (4) of the Act along with equal amount of penalty? - reliability on statements - Held that - there is no abnormal delay in retracting the statement dated 07/09/2012 by the appellant. Such retraction was done in about 10 days time from the date of search - the statement of the appellant dated 07/09/2012 is not a valid piece of evidence also hold that the same is bad under Section 9D of the central excise Act. The appellant have led cogent evidence that he had acquired the packaging machine-FFS only on 20th of August. 2012 and the same was transported to the factory premises on 21/08/2012 and further the said machine was repaired and/or put in working order on 01/09/2012 when the new single phase motor was purchased for the said machine. Such evidence have not been found to be untrue and the learned Commissioner have erred in rejecting the evidence without any proper enquiry and oppertunity of hearing. The appellant is liable to Central Excise duty under Section 3A of the Act read with the PMPM Rules for the period 02/09/2012 to 06/09/2012 - the appellant is liable to penalty equal to the amount of duty - appeal allowed in part.

Issues Involved:
1. Imposition of Central Excise Duty
2. Confiscation of Excisable Goods
3. Validity of Statements and Evidence
4. Retraction of Statements
5. Cross-Examination of Witnesses
6. Calculation of Duty Liability
7. Penalty Imposition

Issue-Wise Detailed Analysis:

1. Imposition of Central Excise Duty:
The primary issue was whether the appellant was rightly imposed with Central Excise duty of ?2,51,94,517/- for the period from 01/04/2011 to 06/09/2012 under the PMPM Rules, 2008, read with Section 11 A (4) of the Act. The appellant was found manufacturing Gutkha without registration and evading duty. The Tribunal concluded that the appellant was liable for duty under Section 3A of the Central Excise Act read with the PMPM Rules for the period 02/09/2012 to 06/09/2012, as evidence showed the manufacturing activities commenced from 02/09/2012.

2. Confiscation of Excisable Goods:
The order included the confiscation of excisable goods valued at ?53,100/- with an option to redeem on payment of fine of ?15,000/-. The Tribunal set aside the confiscation of seized goods, valued at ?53,100/-, as they were not removed from the factory of the manufacturer and were not dutiable.

3. Validity of Statements and Evidence:
The appellant contended that the statement recorded on 07/09/2012 was under duress and should not be considered valid evidence. The Tribunal found that the appellant’s statement was not a valid piece of evidence under Section 9D of the Central Excise Act, supported by affidavits from panch witnesses and Shri Leelu, who confirmed the use of duress by the officers.

4. Retraction of Statements:
The appellant retracted his statement on 17/09/2012, claiming it was made under duress. The Tribunal noted that there was no abnormal delay in retraction, which occurred about 10 days after the search. The retraction was supported by affidavits, indicating that the statement was not given voluntarily.

5. Cross-Examination of Witnesses:
The appellant requested cross-examination of witnesses and officers involved in the search, which was denied by the Commissioner. The Tribunal held that the refusal to allow cross-examination and the rejection of affidavits without proper enquiry vitiated the impugned order.

6. Calculation of Duty Liability:
The duty was calculated based on the number of packing machines and the retail price of pouches. The Commissioner recalculated the duty at ?2,51,94,517/- after considering the applicable rates. The Tribunal held that the appellant was liable for duty only for the period from 02/09/2012 to 06/09/2012, as the evidence showed manufacturing activities commenced from 02/09/2012.

7. Penalty Imposition:
An equal amount of penalty was imposed along with a personal penalty of ?5,000/- on Shri Abhishek Jain. The Tribunal upheld the penalty equal to the duty amount but set aside the personal penalty on Shri Abhishek Jain, as separate penalties on the proprietorship firm and its proprietor were not permissible.

Conclusion:
The Tribunal allowed the appeal in part, setting aside the confiscation of goods and the personal penalty, while upholding the duty liability and corresponding penalty for the period from 02/09/2012 to 06/09/2012. The impugned order was found to be vitiated due to the refusal to allow cross-examination and improper rejection of evidence.

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