2018 (9) TMI 11 - AT - Central Excise

Clandestine removal - Nasha Brand Pan Samagri - no samples of finished goods were drawn from the premises of the appellant - Held that - Whether the goods manufactured by the appellant contains tobacco or not is to be determine only by the test conducted by chemical examination which is not done in this case. The physical examination by the Revenue officer is not acceptable who is not a chemical examiner. The duty liability cannot be fastened on the appellant on mere assumptions and presumptions. Admittedly, Revenue has failed to prove the case with documentary evidences and no cross-examination of the witness has been granted to the appellant which in gross violation of principles of natural justice in terms of Section 9D of the Central Excise Act 1944 - allegations of clandestine removal of dutiable goods is not sustainable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against demand confirmation, penalty imposition, and confiscation of goods due to alleged clandestine removal of dutiable goods.

Analysis:
The appellant contested the demand of ?1,33,00,372.00 along with penalties and confiscation of goods following a search in their premises. The appellant, engaged in manufacturing 'Nasha Brand Pan Samagri,' argued that their goods did not contain tobacco and, therefore, did not require Central Excise registration. Despite no samples being drawn from the appellant's premises, a sample from the market alleged the presence of tobacco without any test report. The appellant was accused of clandestinely clearing goods without duty payment, leading to the issuance of a Show Cause Notice. The matter was adjudicated, confirming the duty demand, interest, and penalties. The appellant appealed, challenging the allegations.

The appellant's counsel emphasized the absence of tobacco in their product, highlighting the lack of drawn samples or test reports to support the Revenue's claims. They argued that without proper testing, allegations based on market samples were unsustainable. The appellant also raised concerns about the inability to cross-examine the affidavit filer, citing a violation of Section 9D of the Central Excise Act 1944, referencing a relevant High Court case.

In response, the Learned A.R. contended that physical examination could determine the presence of tobacco in the 'Pan Samagri,' negating the necessity for testing.

After hearing both sides, the Tribunal concluded that the crucial issue revolved around whether the goods contained tobacco, which required chemical testing. Since no such test was conducted, the physical examination by a Revenue officer was deemed insufficient, as they were not a chemical examiner. The Tribunal highlighted that in cases of disputed composition, a test report was essential to ascertain the chemical content accurately. Due to the absence of a test report and lack of documentary evidence from the Revenue, the defense's claim that their product did not contain tobacco prevailed. The Tribunal ruled in favor of the appellant, stating that duty liability could not be imposed based on assumptions and presumptions. Moreover, the failure to provide documentary evidence and cross-examination rights to the appellant violated principles of natural justice under Section 9D of the Central Excise Act 1944. Consequently, the impugned order was set aside, and the appeal was allowed, granting relief to the appellant.