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2022 (3) TMI 1253 - AT - Central ExciseClandestine manufacture and removal - Goa-1000 Gutkha - demand mainly based on statements of various persons - opportunity of cross-examination provided or not - invocation of Pan Masala Packing Machines (Capacity and Determination and Collection of Duty) Rules, 2008 - period 01st July, 2008 to 08th February, 2009 - HELD THAT - It is apparent that a statement can be relevant without cross examination only if the person who has given evidence is dead or who cannot be found, or who is incapable of giving evidence, or who is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense. If the above circumstances do not exist then if a statement is to be relied, cross examination of witnesses is a must. The exact nature of effort made to cross-examine and how the statements become relevant under section 9D of Central Excise Act has not been stated. The appellant Shri Dipak Bhogilal Kothari has in his appeal specifically raised a plea of failure of Adjudicating Authority to grant cross examination. It is seen that the relief granted by the Commissioner is solely based on the statement of persons recorded during investigation. It is a fact that the machines were found present in the premises and as per Rule 6 read with sub rule 2 of Rule 17 of Pan Masala Packing Machines (Capacity and Determination and Collection of Duty) Rules, 2008, in such case involving clandestine manufacture the duty needs to be demanded from 1st July, 2008 to the date of which the factory was sealed by the Central Excise officers - In the instant case, the relief has been granted by the Commissioner relying on the statements which are not proven relevant evidence in the current circumstances. For statement to be relevant the conditions prescribed in rule 9 D of Central Excise Act need to be followed. The Revenue too in its appeal has argued that Commissioner had not examined the evidence in the proper perspective and should have confirmed duty for the entire period in terms of sub rule 2 of Rule 17 of Pan Masala Packing Machines (Capacity and Determination and Collection of Duty) Rules, 2008. It is seen that there are many more inconsistencies as the timeline given by each person gives different outcomes. Shri Himanshu Jasubhai Shukla in his statement states that construction of factory lasted for one and half month but it is not consistent with the date when Shri Kantibhai Patel met Shri Kiransingh for the first time. The generator was delivered on document dated 16.01.2009 by Eicher Truck (As per Shri Parekh s statement) but the same was received in the end of the month. The matter remitted back to the Commissioner for fresh adjudication keeping all the issues open - appeal allowed by way of remand.
Issues Involved:
1. Confiscation of goods under Rule 25 (i)(b) & (c) of Central Excise Rules, 2002. 2. Demand of duty amounting to ?5.7 crores against the noticees under section 11A(1) of Central Excise Act, 1944, and Rule 17 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008. 3. Imposition of penalty at the rate of ?1.14 crores each against the noticees. 4. Demand of interest under section 11AB of the Central Excise Act, 1944. 5. Imposition of penalty of ?1.14 crores against each noticee. Detailed Analysis: 1. Confiscation of Goods: The Commissioner confirmed the confiscation of seized goods valued at ?68,42,940 under Rule 25(1)(b) & (c) of Central Excise Rules, 2002, read with Rule 17(1) of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008. This included packing materials, machinery, and finished goods. 2. Demand of Duty: The Commissioner confirmed the demand of ?5.7 crores in Central Excise duty against all five noticees in equal proportion (?1.14 crores each). This was based on the evidence that the factory started production from 31.01.2009 until the raid on 04.02.2009. The duty was calculated based on 15 Pouch Packing Machines (PPMs) installed and operated in the premises, with a duty liability of ?2.85 crores per month (15 PPMs x ?19 lakh per PPM) as per Notification No.42/2008-CE dated 1.7.2008. 3. Imposition of Penalty: A penalty of ?5.7 crores was imposed on all five noticees in equal proportion (?1.14 crores each) under Rule 17(1) of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008, read with Section 11AC of CEA, 1944, and Rule 25 of CER, 2002. 4. Demand of Interest: Interest was ordered to be paid under Section 11AB [now Section 11AA] of CEA, 1944. 5. Imposition of Additional Penalty: An additional penalty of ?1.14 crores each was imposed on all five noticees under Rule 26(1) of CER, 2002, and Rule 17(1) of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008. Appeals and Arguments: Assessee's Appeal: The appellants argued that the Commissioner erred in confirming duty against individual persons and that they were not involved in the seized Gutkha's manufacture. They contended that the unit's location (Gandhinagar) was different from where the packaging machines were found (Kherwa, Taluka of Patdi). They also argued that the goods received from M/s Shree Raj Exports Pvt. Ltd. were shown in their records and were not diverted to the clandestine unit. Revenue's Appeal: The Revenue argued that the Commissioner should have confirmed duty for the entire period from July 2008 to February 2009, as per sub-rule 2 of Rule 17 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008. They contended that the statements relied upon by the Commissioner were not corroborated by independent evidence and that the noticees failed to produce satisfactory evidence regarding the machines' actual date of receipt. Tribunal's Findings: The Tribunal noted inconsistencies in the statements and the failure to grant cross-examination of witnesses, which is crucial under Section 9D of the Central Excise Act. The Tribunal observed that the relief granted by the Commissioner was solely based on statements without fulfilling the conditions prescribed in Section 9D. As a result, the Tribunal set aside the impugned order and remanded the matter back to the Commissioner for fresh adjudication, keeping all issues open. Conclusion: The appeals of Revenue, Royal Marwar Tobacco Products Pvt. Ltd., and Dipak Kothari were allowed by way of remand, with instructions for the Commissioner to specifically state how the requirements of Section 9D have been fulfilled if relying on any statements.
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