2023 (10) TMI 805 - AT - Central Excise

Clandestine manufacture and clearance of excisable goods - unmanufactured tobacco - actual manufacturer of the unmanufactured tobacco - levy of penalty u/r 26 on Shri Suresh Prasad Sah, Appellant 2 - HELD THAT - From the documents available, it is clearly established that the lease agreement was a bogus one. Shri Suresh Prasad has impersonated another person and introduced him as Shri Mahesh Prasad before the Notary. Mahesh Prasad is non existent. There is no evidence that Shri. Gautam Kushwaha was in any way connected with the manufacturing activity. Thus, it is found that the department has considered Appellant 1, the owner of the premises as the manufacturer of the goods found in the said premises. Evidence available on record to implicate Shri Krishna Kumar as the manufacturer - HELD THAT - Appellant 1 has made a genuine lease agreement and leased out the property on a monthly rent of Rs.6000/. The department has verified the genuineness of the lease agreement from the Notary and found that the lease agreement executed by him was genuine - there is no material evidence available on record to establish that he is directly involved in the manufacturing activities. There is no evidence that the machines were purchased in his name. There is no evidence that he has purchased raw materials from the market using cash. The goods has not been physically cleared to any customers. In the absence of any such evidence, we hold that Appellant 1 cannot be held as the manufacturer of the goods found in the premises rented out by him. Levy of penalty under section 26 of the Central Excise Rules 2002 on Shri Suresh Prasad Sah, Appellant 2 - HELD THAT - It is observed that his involvement in the clandestine manufacture and clearance is very well established by his own admission. He is also involved in introducing a non-existence person Shri Mahesh Prasad before the Notary for executing the lease agreement. Accordingly, he is liable for penalty under section 26 of the Central Excise Rules 2002. Accordingly, the penalty imposed on Shri Suresh Prasad Sah is upheld. Appeal disposed off.

Summary

Issues involved:
The issues involved in the legal judgment are related to the evasion of Central Excise duty through clandestine manufacture and clearance of excisable goods, specifically unmanufactured tobacco, in premises without proper registration and following Central Excise law. The judgment addresses the responsibility of the individuals involved in the illegal activities and the imposition of penalties accordingly.

Summary of Judgment:

Issue 1: Identification of Actual Manufacturer
The primary issue in the appeal was to determine the actual manufacturer of the unmanufactured tobacco illegally produced in the premises. The appellant, who owned the premises, had leased it out to a non-existent person, leading to confusion regarding responsibility. The investigation revealed inconsistencies in statements made by the individuals involved, raising doubts about their credibility. The department concluded the premises owner as the manufacturer based solely on ownership, without substantial evidence linking him directly to the manufacturing activities. Consequently, the tribunal set aside the duty demand and penalty imposed on the premises owner, as there was insufficient proof of his involvement in the illegal manufacturing.

Issue 2: Involvement of Co-Appellant in Illegal Activities
The co-appellant admitted to being involved in the illegal manufacture and clearance of unmanufactured tobacco. Despite changing statements multiple times, his active participation was established through his own admission and introduction of a non-existent person for the lease agreement. The tribunal upheld the penalty imposed on the co-appellant under the Central Excise Rules 2002, considering his clear involvement in the clandestine activities.

Conclusion:
The judgment concluded by setting aside the duty demand and penalty on the premises owner due to lack of substantial evidence linking him to the illegal manufacturing activities. However, the penalty imposed on the co-appellant was upheld based on his admission and involvement in the unlawful practices. The confiscation of goods and allowing release on redemption fine as per the impugned order was also confirmed. The appeals were disposed of accordingly, with the decision pronounced in open court on 18/10/2023.