2018 (1) TMI 766 - AT - Central Excise

Penalties - Clandestine manufacture and removal - Gutka with brand Pan King - it was alleged that two packing machines were found to be in working condition - Held that - At the factory of M/s MRTPL, at the time of search, the packing machines were found sealed. But there was evidence of the activity of preparation of gutka mix as evidenced by the presence of workers actively engaged as well as the oven which was found in hot condition. Sufficient material has been brought on record by Revenue in their investigation, to establish the fact that S/Shri Chander Kumar Gupta and Himanshu Gupta have master-minded the evasion of excise duty by procuring packing machines illegally and installing the same at the premises at Libaspur and getting gutka manufactured and packed in the said premises - The entire activity has been carried-out and financed by S/Shri Chander Kumar Gupta and Himanshu Gupta. Consequently, their role in the evasion of excise duty stands fully established - penalties imposed on S/Shri Chander Kumar Gupta and Himanshu Gupta upheld. Cross-examination of witnesses - Held that - the witnesses, whose cross-examination have been sought, have voluntarily given the statements. Since all the witnesses were under the control of the appellants, offering them for cross-examination will not serve any purpose since the witnesses can be easily manipulated to deny their earlier statements. Appeal dismissed - decided against appellant.

Summary

Issues:
- Allegation of clandestine manufacture and removal of Gutka with brand "Pan King"
- Involvement of individuals in illegal activities
- Violation of principles of natural justice
- Justification of penalties imposed

Analysis:
1. Allegation of Clandestine Activities:
The case involved allegations of clandestine manufacture and removal of Gutka with the brand "Pan King" by M/s M.R. Tobacco Pvt Ltd (MRTPL). The investigation revealed that gutka packing machines were found working at the premises in Libaspur, Delhi, engaged in packing gutka with the said brand. The raw material mix for gutka was prepared at the factory premises of MRTPL and transferred to Libaspur for manufacturing and packing, implicating individuals in illegal activities.

2. Involvement of Individuals:
The investigation pointed towards the involvement of Shri Chander Kumar Gupta and his son, Shri Himanshu Gupta, in the illegal activities. Statements from various persons, including employees and directors, confirmed their role in the procurement and installation of illegal packing machines at Libaspur for gutka manufacturing and packing. The evidence established their masterminding of the excise duty evasion scheme.

3. Violation of Principles of Natural Justice:
The appellants argued that the impugned order was passed in violation of the principles of natural justice, citing the disallowance of cross-examination of certain witnesses. However, the Tribunal noted that the witnesses were under the control of the appellants, and their voluntary statements were relied upon. Hence, the requirement of Section 9D of the Central Excise Act was deemed satisfied.

4. Justification of Penalties Imposed:
The penalties imposed on Shri Chander Kumar Gupta and Shri Himanshu Gupta were challenged in the appeals. The Tribunal upheld the penalties, considering the evidence presented by the Revenue during the investigation. The involvement of the individuals in the illegal activities, including procuring and installing illegal machines for gutka manufacturing, was deemed established, justifying the penalties.

In conclusion, the Tribunal found no infirmity in the impugned order and upheld the penalties imposed on Shri Chander Kumar Gupta and Shri Himanshu Gupta, dismissing the appeals filed against the Order-in-Original.