2002 (8) TMI 245 - AT - Central Excise

Summary

Issues Involved:
1. Confirmation of duty and confiscation of goods.
2. Validity of duty demand of Rs. 32,00,000/-.
3. Confiscation of 9 pouching machines.
4. Confiscation of cash amounting to Rs. 8,43,000/-.
5. Imposition of penalties on appellants.

Summary of Judgment:

1. Confirmation of Duty and Confiscation of Goods:
The Commissioner confirmed the duty of Rs. 14,300/- for 8 bags of Pukar Brand Sada Pan Masala found short in the premises of appellant no. 1. The confiscation of 5 bags of Pukar Brand Sada Pan Masala valued at Rs. 44,697.50 and 48 kgs of loose Sada Masala recovered from unregistered premises, as well as 5 bags of Pukar Brand Gutkha valued at Rs. 44,687/- seized from the premises of M/s. U.P. Marketing, and 3 bags of Pukar Gutkha and Pukar Sada Pan Masala valued at Rs. 33,576/- seized from M/s. R.P. Products, was affirmed. The correctness of this part of the order was not questioned by the appellants.

2. Validity of Duty Demand of Rs. 32,00,000/-:
The duty demand of Rs. 32,00,000/- for August and September 1997 was contested. The Commissioner based the demand on an understanding between the Department and the association of Pan Masala manufacturers to pay duty @ Rs. 1 lakh per machine per month. However, there was no legal force to this understanding, and appellant no. 1 was not a party to it. The duty could only be affirmed based on actual production and clandestine removal of goods, which was not proven. Therefore, the duty demand of Rs. 32 lakhs and the equal amount penalty u/s 11AC and 173Q of the Rules were set aside.

3. Confiscation of 9 Pouching Machines:
The confiscation of 9 pouching machines allegedly installed at rented premises owned by appellant no. 3 was set aside. There was no reliable evidence proving the actual use of these machines for manufacturing Pan Masala during the disputed months. No raw material or finished goods belonging to appellant no. 1 were found at the premises.

4. Confiscation of Cash Amounting to Rs. 8,43,000/-:
The confiscation of Rs. 8,43,000/- u/s 121 of the Customs Act was set aside. There was no evidence proving that this amount was the sale proceeds of Pan Masala sold clandestinely without payment of duty. The cash was found at the premises of M/s. R.P. Products, not appellant no. 1. The statement of Shri Rajkumar Chourasia did not confirm the non-payment of duty on the Pan Masala.

5. Imposition of Penalties on Appellants:
The penalties on M/s. R.P. Products and M/s. U.P. Marketing were maintained at Rs. 10,000/- each. However, penalties on their proprietors, Shri Rajkumar Chaurasia (Rs. 50,000/-) and Shri Udai Chand Chaurasia (Rs. 2,00,000/-), were set aside as separate penalties on proprietors were not legally sustainable. The penalty on Shri Pankaj Chaurasia was reduced to Rs. 25,000/- considering his limited role. The penalty of Rs. 5,000/- on Shri N.K. Pandey, the accountant, was maintained.

Conclusion:
The impugned order of the Commissioner was partly affirmed and partly set aside. The appeals were disposed of in these terms.