1998 (8) TMI 296 - AT - Central Excise

Issues Involved:
1. Alleged clandestine removal of cigarettes by the appellants.
2. Verification of stock and records of cigarette consignments.
3. Statements and defenses of the appellants and related parties.
4. Imposition of duty, confiscation, and penalties by the Commissioner of Central Excise.
5. Examination of evidence and burden of proof regarding clandestine manufacture and removal.

Detailed Analysis:

1. Alleged clandestine removal of cigarettes by the appellants:
The case revolves around the allegation that the appellants were involved in the clandestine removal of cigarettes. Intelligence collected by the authorities indicated that the appellants were engaged in such activities. A team of officers visited the premises of M/s. Kabra Enterprises, where they found 110 C.F.Cs. of Esquire Filter Cigarettes with packing dates indicating they were manufactured in January 1995 or later. The appellants argued that these were replacements from M/s. GTC Industries Ltd., Durg, received on verbal requests.

2. Verification of stock and records of cigarette consignments:
The stock register of M/s. GTC Industries Ltd., Durg, revealed that during the relevant period, their closing stock of cigarette C.F.Cs. was nil at the end of each day as they dispatched the cigarettes on the same day they were received. The investigation showed that specific consignments were cleared to various entities on the same day they were received, leaving no stock. The appellants contended that the exchange of old stock with fresh stock was a normal business practice and that no documentation was required under Central Excise Rules.

3. Statements and defenses of the appellants and related parties:
Shri B.L. Kabra, proprietor of M/s. Kabra Enterprises, stated that the cigarettes were slow-moving items received as replacements. M/s. GTC Industries Ltd. and M/s. Kabra Enterprises argued that the total stock of cigarettes matched the book balance and that no records of the exchange were maintained as it was not necessary. Shri H.R. Sarawgi contended that no evidence was presented to show his involvement in the alleged evasion of duty. Shri Paramanand Sahu, in charge of the godown of M/s. GTC Industries Ltd., adopted similar arguments.

4. Imposition of duty, confiscation, and penalties by the Commissioner of Central Excise:
The Commissioner of Central Excise ordered the confiscation of 110 C.F.Cs., allowing them to be redeemed on payment of a fine of Rs. 1.00 lakh. Duty amounting to Rs. 4,88,400/- was confirmed, and personal penalties were imposed on various parties, including Rs. 3,50,000/- on M/s. M.P. Tobacco Company Limited, Rs. 3.00 lakh each on M/s. GTC Industries Ltd., Durg, and M/s. Kabra Enterprises, and Rs. 1.00 lakh each on Shri H.L. Sarawgi and Shri Paramanand Sahu. The appellants contested these penalties, arguing that the department did not produce evidence of clandestine manufacture or removal.

5. Examination of evidence and burden of proof regarding clandestine manufacture and removal:
The tribunal reviewed the evidence and submissions. It noted that there was no evidence of clandestine receipt of excess tobacco or higher consumption rates. The only evidence was the presence of cartons with packing dates of January 1995. The appellants explained that these were replacements, a common business practice. The tribunal found that the department had not provided sufficient evidence to prove clandestine manufacture and removal beyond doubt. Consequently, the benefit of doubt was given to the appellants, and the impugned order was set aside, allowing the appeals and granting consequential relief in accordance with the law.

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