9911796707
TMI Blog1998 (1) TMI 201X X X X Extracts X X X X X X X X Extracts X X X X ..... 1944 is justifiable. On all the above three issues, the learned Collector held against the appellants. The learned Collector confiscated the seized goods and allowed them to be redeemed on payment of fine, demanded the duty from the two appellants and also imposed personal penalty. 2. As the two appeals arise out of the same order, therefore, they are being disposed of by this common order. 3. The facts of the case, in brief, are that the Central Excise Officers conducted a search in the factory premises of M/s. Shiv Sons and M/s. Hira Sons and recovered 10,782 containers valued at Rs. 32,211.50. When the appellants herein were asked for producing Central Excise licence and other records, they could not produce the same. In the reasonable belief that the goods were manufactured and stored without obtaining Central Excise licence and were intended to be cleared without discharging Central Excise duty, were considered as liable for confiscation and seized. A show cause notice was issued to the appellants asking them to explain as to why the duty should not be demanded from them in terms of the First Proviso to Section 11A of the Central Excises and Salt Act, 1944 on the product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement of Shri P.D. Gupta, the learned Counsel submitted that the statement was retracted inasmuch as on the first available opportunity which was intimated to the Department through letter that the product described as Sugandhi pan masala contained betel nuts. The learned Counsel therefore, submitted that the retracted statement does not have any evidential value unless it is corroborated by independent witnesses or evidences. On the third aspect that is chemical examiner report, the ld. Counsel submitted that this report only said that the presence of betel nuts and lime could not be detected and desired that executive checks may be conducted. The ld. Counsel submitted that this report cannot be treated as a final document as it had required that executive checks to be conducted. He submitted that no report on the executive checks was made available to the appellants. The learned Counsel also assailed the test report on the ground that it was not made a part of the show cause notice but was supplied only when reply to the show cause notice was submitted. The learned Counsel also argued that in the show cause notice, the Department had not disclosed the basis on which they pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eover a trade opinion or expert opinion or understanding of the product in trade or common parlance becomes relevant only when there is no clear cut identification of the product in the tariff. In the instant case, we find that pan masala is defined in the tariff and hence trade opinion or common parlance understanding becomes irrelevant. Having considered the rival contentions, we hold that three pieces of evidence namely, absence of betel nuts indicated in the label, the statement of Shri P.D. Gupta saying that the product does not contain supari and the chemical examiner s report saying that the presence of betel nuts could not be detected. I put together leads to only one conclusion that the product did not contain betel nuts and hence was not classifiable under Chapter Heading 2106.90 as claimed by the appellants but is correctly classifiable under Chapter Heading 2107.91. 8. The second issue whether seizure at the factory premises was effected on a reasonable belief. Reasonable belief can be held for a number of reasons. It may be an intelligence developed, it may be information received, it may be on verification of the stock, it may be on seeing the product. Now what ingr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wal, Member (J)]. - I propose to dispose of the present appeals as follows and since all the relevant facts have already been stated by my ld. Brother in his proposed order I take up the issues which fall for my determination straightaway :- 12. Regarding classification of the subject product namely Flavoured Pan Masala. 13. The ld. Collector has classified the seized Pan Masala under Heading 2107.91 against the claim of the appellants for its classification under Heading 2107.90. For classifying the subject Pan Masala the ld. Collector has held that since there was no mention of betel nut or supari as one of the ingredients on the container it is classifiable under Heading 2107.91 rejecting the claim of the appellants that it does contain the betel nut. It was contended by ld. Counsel for the appellants that the burden lies on the Department to prove that subject product falls under the sub-heading 2107.91. In the instant case no such evidence has been adduced by the Department to prove that Pan Masala in question does not contain the betel nut on the other hand samples taken up in the instant case were sent to the Chief Chemical Examiner, Delhi who in his report has opined sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose of Notification 175/86 total clearances from the factory would, therefore, have been taken into account for computing the value of clearances. It is immaterial that two firms have been constituted which are separately assessed for sales tax and income tax purposes. 15. From the stay order passed in this case I find that during hearing on the stay application case of Jagjivan Das Co. v. Collector of Central Excise, Bombay, 1985 (19) E.L.T. 441 was cited by the appellants. On the basis of this judgment it was found by the Tribunal that the appellants had a strong prima facie case on this count. The said case was also cited during hearing by the appellants to show that innocuous circumstances such as use of common premises, telephone, telegraphic address, commonness of the Partners, use of some of the machinery belonging to one unit by the other units and the admission contained in the letter requesting the Government to combine the units of energy consumed by other units are not sufficient to conclusively hold that one unit was manufacturing for or on behalf of the other. This judgment of the Tribunal was affirmed by the Apex Court as reported as page A133 of Volume 41 year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctured by the appellants and since sugandhi masala was declared by the appellants in their classification list onus fell on the department to determine whether the said sugandhi masala was liable to duty or not and therefore, the appellants had a prima facie case. During hearing the ld. Counsel took us through the relevant classification list filed by them for the relevant period. From a perusal of the classification lists which are on the record I observe that the appellants have mentioned sugandhi masala (not power operated) and its sale value as non-excisable goods. From the record I also find that the departmental audit was conducted for the relevant period. Under these circumstance, I hold that after declaring that the appellants are manufacturing the sugandhi masala in their classification list more particularly showing these goods as non-excisable it was for the department to ascertain as to whether the same are dutiable or not and for this purpose to ascertain the ingredients of the subject products. Instead of doing so the said classification lists were duly approved without any demur. Under these circumstances, it cannot be said that the appellants suppressed the facts or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mber Technical s view may be upheld. 3. I find in this connection that the Department s case is based on the contents indicated on the container, chemical examiner s report and the statement of one Shri P.D. Gupta and the fact that the product was not declared in the relevant classification list as excisable product. In this respect it is observed that the Tariff distinguishes between products containing betel nuts (supari) and those not containing betel nut is case of flavoured Pan Masala and other similar products and on the presence or absence of supari depends the classification. Therefore, it is necessary for an assessee to make a full and complete declaration about the contents of his product in the classification list of the relevant period. Even if it was his claim or contention that they are not dutiable, the product was required to be shown in the appropriate column during the relevant period. 4. While it is true that mere non-mention of one of the ingredients on the unit container may by itself be not sufficient to conclusively decide the classification, and it is the contents of the container which matter and must be tested for their ingredients, but where the tarif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is is of not much avail, still a question arises whether in these circumstances the principle of natural justice could be said to have been duly observed and whether or not the appellants were entitled to the benefit of doubt. 7. I also observe that the appellants have dropped the points regarding reason to believe for seizure at this stage but it is rather late in the day and any such statement ought to have been made before the original Bench. In any eventuality the basic question remains as to what was the actual composition of the product and the composition of the product and the burden of proving the charge was on the department which they have not been able to establish beyond doubt. The classification cannot be determined correctly unless composition was exactly known (and not merely deduced). 8. I further observe that the ld. Member Technical has not recorded any observation or finding with reference to the admissibility of exemption Notification 175/86 and the question of clubbing. Therefore, the only view which is on record is that of ld. Member Judicial and in the absence of difference of opinion or a reference to the same it may not be appropriate for me, as a thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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