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TMI Blog2012 (9) TMI 815X X X X Extracts X X X X X X X X Extracts X X X X ..... 005 - 732-737/2011-EX(PB) - Dated:- 12-8-2011 - Justice R.M.S. Khandeparkar, Shri Rakesh Kumar, JJ. REPRESENTED BY : S/Shri Bipin Garg, Amit Awasthi, Advocates, Shri Alim Ali, Auth. Rep., and Sh. Pankaj Bhatia, Advocate, for the Appellant. Shri Sunil Kumar, DR, for the Respondent. [Order per : Justice R.M.S. Khandeparkar, President (Oral)]. Heard at length the learned Advocate for the appellants and DR for the respondent. Perused the written submissions. 2. These appeals arise from the common order dated 27-5-2005 passed by the Commissioner, Lucknow. By the impugned order while holding that the appellants are involved in clandestine removal of the goods in the connivance with the dealers and transporters, duty has been confirmed along with interest and imposition of penalty. 3. The appellant M/s. Durga Trading Company (hereinafter referred to as DTC) is engaged in manufacture of pan masala and gutka under brand name Pukar classifiable under Chapter Heading 2106.00 and 2404.49 respectively of the First Schedule to the Central Excise Tariff Act, 1985. It is a proprietary concern owned by Smt. Asha Chaurasia w/o Sh. Udai Chand Chaurasia. The authorized signator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ags of gutka seized from M/s. New Mallik Transport and as the said amount has already been deposited, it is ordered to be appropriated. The proceedings regarding the confiscation of the goods seized from the premises of M/s. New Sashi Zarda Bhandar are dropped. 9. A sum of Rs. 13,18,000/- seized from the residential premises of the appellants has been ordered to be confiscated alon gwith sum of Rs. 10,61,000/- seized from the business premises of M/s. R.P. Products as also sum of Rs. 2,93,000/- seized from the residence of Sh. Pankaj Chaurasia. Likewise sum of Rs. 10,03,000/- and Rs. 3,70,000/- seized from the residence of Sh. Raj Kumar Chaurasia and Sh. Pushkar Chaurasia are ordered to be confiscated. Penalty of Rs. 1,50,000/- has been imposed against M/s. Udai Traders, Rs. 1 lakh against M/s. R.P. Product and Rs. 9,23,123/- against M/s. KPL, penalty of Rs. 10 lakh against Sh. Bhupesh Bansal and penalty of Rs. 1 lakh against Lal Chand Agarwal were also imposed. 10. Dealing with the case of the appellants, the Commissioner has held that the shortage of excess quantities of supari of about 714 kgs. and katha of about 250 kgs. were crucial for investigation in their attempt to es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that the recovery of the pen drive has been established and the contents thereof are also factually correct. It has also been held that the employment of such large number of labourers and paying them in an unaccounted manner brings out the fact that M/s. DTC was engaged in clandestine production and clearances. The clearance of 17992 bags of gutka without payment of duty has been held to have been established by the recovery of transporters documents from five different agencies. The said documents are in the nature of large scroll slips giving summary picture of transport details of finished goods transported on behalf of M/s. DTC. It has been held that the transporting agencies had confirmed that the entries in the said scroll pertained to pukar brand product. The contentions of the appellants that apart from appellants many other companies were manufacturing the same product by the same name including a firm in Nepal and that therefore they had even filed FIRs in that regard have been rejected. It has also been observed that though there were several entries in the scrolls not pertaining to pukar brand but they might have been made by the transporters in collusion with M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ants Sh. Bhupesh Bansal and Sh. Lal Chand Agarwal, it has been held that both were involved in unaccounted transaction and therefore liable for penalty. The proceedings against M/s. New Sashi Zarda Bhandar have been dropped on account of failure to establish the allegation against the same. 11. The impugned order is sought to be challenged on various grounds. According to learned Advocate appearing for the appellants the impugned order has been passed without factual basis being established to arrive at the findings which have been arrived at by the lower authority. According to him they are based on surmises and without any evidence on record to support the same. Drawing our attention to the transporter s documents in the form of scroll giving summary of various transportation on behalf of various companies, he submitted that the scroll relates to various companies. There was no investigation in that regard. Without any evidence being collected to establish the link between the entries in the scroll relating to the transportation carried out by the transporter with the product allegedly clandestinely manufactured by the appellants, the authority below erred in holding that the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e final product. Merely because the appellants had procured poly bags or lamination/pouches rolls that cannot lead to any conclusion of manufacture of such a huge quantity of the final product in a short span of eleven days. He further submitted that the authority below erred in relying upon the contents of the pen drive without any cogent proof in that regard. The authority also erred in ignoring the explanation furnished regarding the use of the labour on the house construction site by the appellants. Admittedly, the pen drive was found in the house of Sh. Pankaj Chaurasia. Undisputedly, there was no shortage of finished goods. There was absolutely no record found pertaining to any clandestine removal of the final product by the appellants. The entire duty has been claimed on the basis of scrolls prepared on the basis of some unsigned private documents allegedly resumed from the transporter s premises. He further submitted that the appellants did not manufacture zarda. The documents based on which the scroll has been prepared and based on which the duty liability sought to be fastened on the appellants mostly relate to transportation of zarda. There is no statement from any of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unts. A Tata truck at Faizabad Road containing 110 bags of pukar gutka without proper invoices also remain explained. Various documents seized in the course of investigation revealed sale proceeds of the finished goods as well as raw material which clearly established clandestine removal of goods. In the course of search 24 pauches machines were found in working condition. The entire arrangement of transportation of clandestinely removed goods was made directly or indirectly by M/s. DTC. Relationship and nexus between UT and RT is clearly revealed from the fact that both were engaged in almost similar business having their godown at 910 Datia House, Lucknow, besides that the document seized in the course of the investigation establish this nexus. Shri Ashish Srivastava who was the authorized signatory of M/s. DTC was reporting to Shri Uday Chaurasia in all the matters relating to M/s. DTC. Though, the generator shed for electricity used for production of Pukar, and godown of RP/UT, but expenses were met by DTC which disclose common interest of all these persons involved in the matter. Non-availability of stock clearly shows the magnitude of manipulation in the stock of raw material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to whether the statements established link between the documents and the goods manufactured by the appellants. Apparently, the statements of some of the transporters disclose that they were the transporters of the appellants as well as that the goods transported by them were Pukar brand product. Being so, it was necessary for the authorities below to analyse those statements in detailed after affording the assessee to cross-examine the deponents. No such exercise has been done by the learned Commissioner. 15. The appellants are also justified in contending that the Commissioner erred in travelling beyond the scope of the show cause notice while arriving at the finding of conspiracy. Indeed, there is no charge of conspiracy in the show cause notice. The conclusion in that regard has been arrived at for the first time in the impugned order itself. What is curious to note is that though there is finding of conspiracy in the impugned order, yet we do not find that all the alleged conspirators were made parties to the proceedings. Neither the transporters nor the employees of the appellants who have been stated to have connived with the appellants in clandestine removal of the goods w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aving raised such dispute at the time of raid. The objection was raised on the ground that the quantity of supari and katha was not weighed at the time of raid and it was calculated on mere assumption basis. Once the fact that the quantity was not weighed is not in dispute merely because objection in that regard was raised in answer to show cause notice, cannot be a ground to reject the same. It is well established practice for raiding party to weigh the quantity of the products and not to ascertain the weight by approximation basis. Rather it is necessary for the adjudicating authority to ascertain from the analysis of all the materials on record whether the same establishes correctness of the weight as disclosed in the panchnama. No such exercise has been done by the adjudicating authority. 18. The Commissioner has further held that the excess or shortage of tobacco/gutka is to be presumed as the appellants might have hidden the excess tobacco. The finding is apparently totally perverse. One cannot jump to such conclusion without analyzing the evidence in that regard and more particularly in cases where the department has to discharge burden to establish the case of clandestine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 1-3-2004 to 11-3-2004 period is based on some slips recovered from the residential premises of Lal Chand Agarwal, Father of Bhupesh Bansal, Managing Director of M/s. KL. These slips are stated to contain datewise details of despatch of pouch rolls to M/s. DTC and each of these slips bears the name - Sanjay Kumar, LKO Shri Bhupesh Bansal in his statement dated 12-7-2004 has clarified that Sanjay Kumar, LKO in the code for M/s. DTC and all the slips on which the words Sanjay Kumar, LKO figure appears to pertain to M/s. DTC. Para 4.9 of the show cause notice also, while explaining the contents of these slips, mentions Sanjay Kumar, LKO as a code name allotted for the party to whom the lamination is to be sent. Thus Sanjay Kumar, LKO does not appear to be a person. Therefore the Commissioner, in para 2 (e) of the impugned order has strangely observed that Sanjay Kumar, LKO whose name figures in the slips for M/s. DTC is no doubt a crucial witness whose presence would have authenticated the validity of the slips but the investigations inability for trace and record the statement of Shri Sanjay Kumar need not be given importance ....... the importance of Sanjay Kumar, tho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose to permit cross-examination of deponents and thereafter to decide the matter. No such exercise having been done and the entire adjudication exercise has been done in a perfunctionery manner, the order deserves to be set aside for remand of the matter for consideration afresh. 25. On the finding by the Commissioner is that there was no excess quantity of tobacco found in the appellants premises nor the shortage thereof. It is undisputed fact that tobacco is a crucial and key ingredient in the manufacture of gutka and there is a clear finding in the impugned order itself. Strangely the Commissioner has discarded the contention in that regard on an assumption that it might be that the appellants might have hidden the excess quantity of tobacco. Simultaneously, there is also finding that the entire premises of the appellants factory was inspected. In such circumstances, it was highly improper for the Commissioner to assume that there was excess quantity of tobacco and/or that it might have been hidden by the appellants. 26. The Commissioner has arrived at a finding that having gone through the relevant documents, statements and cross-examination, I am inclined to agree with t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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