2023 (11) TMI 152 - AT - Central Excise

Clandestine removal - Who is the manufacturer liable for payment of duty under Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 - seizure of two Pouch Packing Machines PPM found installed in the premises of M/s Laxmi Tobacco Company, during search of the said Premises by the Central Excise officers on 19.09.2013. HELD THAT - There is no dispute on the facts that on a specific information, Central Excise Officers have detected an unregistered factory on 19.09.2013, where 2 Pouch Packing Machines PPM were found installed and in working condition, manufacturing notified goods i.e. Pan Masala Containing Tobacco known as Gutkha . Some notified goods, raw materials and packing materials totally worth Rs. 15 lakhs required to manufacture such Gutkha were also found lying there, which are seized on 19.09.2013. Both the sides have fairly agreed that said unregistered factory has not followed Rules or paid duty under Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 in respect of 2 pouch packing machines PPM found installed at the premises of M/s Laxmi Tobacco Company on 19.09.2013. There is no clinching tangible evidence or any corroborative evidence against Appellant Shri Paresh R Amin to connect him with actual manufacture and also to establish him as a manufacturer. Thus, Shri Paresh R Amin cannot be treated as the manufacturer liable to duty, interest and penalty in this case. However, the facts of seizure of two PPM found duly installed and goods seized in the premises on 19.09.2013 also have to be considered independently even without the support of any such of statements - It is not acceptable that owner of any premises would allow any third party to enter his premises to carry on business, may it is for the licit or the illicit business by any such third party. Any person with reasonable prudence will at least prepare a written rent agreement and clear evidences of rent receipts to keep his skin safe of any such illicit business, if any. Shri Purshottambhai C Patel is father of Shri Ashwinbhai Patel and in their Father-Son relation partnership document may not be necessarily prepared at all times. In view of the undisputed fact that there is no partnership deed between the appellant Shri Pareshbhai R Amin and Shri Ashwinbhai Patel, factory premises was not rented out to so called partnership firm as there was no rent agreement or payment of rent, the machines were not found purchased by the so called partnership firm or even Shri Pareshbhai R. Amin, the goods were cleared on the letterhead of Laxmi Tobacco Company etc, it cannot be said that the appellant is the manufacturer therefore even if the fact of clandestine manufacture and its clearance is established but the appellant not being manufacturer, liability of duty, penalty cannot be fastened against the appellant. The impugned order confirming demand of duty with interest and Penalty is not sustainable against the Appellant Shri Paresh Ramanbhai Amin - The impugned order-in-original qua Shri Paresh Amin is set aside - Appeal of Appellant Shri Paresh Ramanbhai Amin is allowed - Appeal disposed off.

Summary

Issues Involved:
1. Determination of the manufacturer liable for payment of duty under Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008.
2. Validity of statements and evidence linking the appellant to the manufacturing activities.
3. Legitimacy of the duty, interest, and penalty imposed on the appellant.

Summary:

1. Determination of the Manufacturer Liable for Duty:
The primary issue was to ascertain who is the manufacturer liable for payment of duty under the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008. The case involved the seizure of two Pouch Packing Machines (PPM) found installed in the premises of M/s Laxmi Tobacco Company during a search by Central Excise officers on 19.09.2013. The officers discovered that the machines were used for manufacturing "Pan Masala Containing Tobacco" (Gutkha) without Central Excise Registration and without paying the required duty. The machines and goods valued at Rs. 15,53,700/- were seized under the reasonable belief that they were liable for confiscation.

2. Validity of Statements and Evidence:
The Revenue's case was based on the seizure of the PPMs and associated materials, and statements recorded during the investigation. Statements from Paresh R. Amin, Purshottambhai C. Patel, and Ashwin Purshottambhai Patel suggested a partnership for illicit manufacture of Gutkha. However, no written agreement of partnership or rent agreement was found. Paresh R. Amin retracted his statement, claiming he was falsely implicated. The adjudicating authority did not take the statements on record as per section 9D of the Central Excise Act, 1944, and did not allow cross-examination of the witnesses. Consequently, these statements were excluded from the evidence.

3. Legitimacy of Duty, Interest, and Penalty:
The Tribunal found no tangible or corroborative evidence against Paresh R. Amin to connect him with the actual manufacture of Gutkha. It was established that the premises where the PPMs were found belonged to M/s Laxmi Tobacco Company, owned by Purshottambhai C. Patel. The Tribunal concluded that the owner of the premises could not escape responsibility for the manufacturing activities and the liability to pay duty. However, since there was no partnership deed, rent agreement, or evidence of Paresh R. Amin's involvement in the manufacturing activities, the Tribunal held that he could not be considered the manufacturer liable for duty, interest, and penalty.

Conclusion:
The impugned order confirming the demand of duty with interest and penalty against Paresh R. Amin was not sustainable. The Tribunal set aside the order-in-original dated 30.09.2014 and allowed the appeal of Paresh R. Amin, granting consequential relief as per the law.