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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 ..... 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 signatory of M/s. DTC is Shri Ashish Srivastava M/s. DTC clears its products to various dealers including M/s. Udai Traders, M/s. R.P. Products, M/s. New Sashi Zarda Bhandar. 4. M/s. Udai Traders is a proprietary concern of Sh. Udai Chand Chaurasia and M/s. R.P. Products is the proprietary concern of Sh. Raj Kumar Chaurasia. M/s. New Sashi Zarda Bhandar is the proprietary firm of Smt. Sashi Rastogi and she is assisted in her business by her husband Sh. H.K. Rastogi and Son Sh. Aniket Rastogi. M/s. Rastogi General Store, Allahabad and M/s. Chaurasia Traders, Tulsipur are also dealers for the product of M/s. DTC. 5. M/s. Kashi Laminators Pvt. Limited (hereinafter referred to as KLP) are engaged in manufacture of plastic product classifiable under sub-heading No. 3920.38, 3923.90, 3920.39, 3920.32 and 3915.90 of the First Schedule to the Central Excise Tariff Act, 1985 and they supply packing material to M/s. DTC. Sh. Bhupesh Bansal is the MD and Sh. Vivek Sinha is authr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re 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 establish the excess unaccounted production and since supari is the most fundamental raw material for manufacture of pan masala and gutka and the availability of the same in unaccounted excess quantity reasonably leads to believe the intention of the appellants to manufacture finished goods out of the same for eventual unaccounted clearance and evasion of duty. The contention regarding failure of the investigating agency to weigh the supari and katha has been rejected on the ground that the same was not disputed at the time of seizure. The contention of the appellants relating to absence of any excess quantity of tobacco at the time of search has been rejected while holding that though tobacco is crucial and key ingredient in the manufacture of gutka, it could be that the excess quantity thereof could have been hidden by the appellants at the time of seizure. The lamination/pouch rolls were procured during the period from 01/03 to 11-3-2004 from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. DTC to mislead any prospective investigation. It has been further held that the entire evasion was a gross conspiracy involving manufacturer, dealer and the transporter and transport document recovered establish the same. Regarding the liability to pay the duty on 21 bags of gutka and 18 bags of pan masala sales from M/s. UT, it has been held that notice for confiscation thereof should have been issued to M/s. UT and not to M/s. DTC. As regards seizure of 110 bags of pukar brand gutka from the truck, 10 bags seized in the godown of M/s. Narayan Transport and Forwarding Agency and 40 bags from the godown of M/s. New Mallik Transport it has been held that the goods were found without any duty paying document. Regarding shortage of 124300 pouches of pukar brand gutka and 27000 of pukar brand pan masala, benefit of doubt has been given to the appellants on account of improper and incomplete search. As regards 19 bags of pukar and 21 bags of pukar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llected 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 scroll itself establishes transportation of clandestinely cleared product by the appellants. In the absence of any evidence regarding actual manufacture of the product on such large scale and establishing the link between the product transported by the transporter with the product alleged to have been manufactured by the appellants, the authority below could not have jumped to the conclusion adverse to the interest of the appellants. Besides, there is no mention of M/s. DTC anywhere in transport documents and some of the transporters had merely stated that they had transported pukar brand product without disclosing the name of the appellants as the manufacture of the product. Undoubtedly, the Commissioner himself has held that similar product with the similar brand name was manufactured in Nepal and available in India, besides that to do away with the meanace of duplicate product, the appellants had filed nine FIRs. In similar circumstances, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ants 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 the transporter that the goods transported by them were cleared or loaded by M/s. DTC. No purchasers of so-called clandestinely removed product has ever been examined and no evidence from the buyers side of the alleged clandestinely removed product has been ever sought to be collected or placed on record. In fact, no investigation has been carried out with reference to any of the consignees of the product manufactured by the appellants The so-called transporter documents also do not disclose the appellants to be consigner. He further submitted that no cross-examination was permitted even though prayed for and no reason has been disclosed in rejecting such prayer. The penalty has been imposed without disclosing any involvement of the persons in any clandestine removal of the goods or the matters relating thereto. 12. The Departmental Representative on the other hand submitted that the panchnama drawn clearly disclose seizure of the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 materials based on the calculation of that 24 machines were running at a speed of 120 pouches per minute with average working hours of 8 per day and for 30 working day in a month it was evident that there was enough scope for ample production and at least to the tune of 35,76,96000 nos. of gutka pauches which must have been clandestinely removed by the appellants. 13. On consideration of rival contentions, and in the facts and circumstances of the case it is seen that undisputedly there had been manufacture of similar product with the similar brand in Nepal and the said product is available in India and there is a clear finding to that effect by the authority below in the impugned order. Equally the records disclose and the Commissioner has confirmed that the appellants had filed FIRs in respect of manufacture and availability of such products in India. However, unfortunately there was no investigation in that regard nor even in relation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpugned 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 were joined as the parties to the proceedings nor even any show cause notice was issued to them. We have not been pointed out any part of the show cause notice which could disclose allegation of conspiracy. Even the impugned order does not record that being the case of the department. Curiously enough the case of the department as noted by the Commissioner in the impugned order does not include allegation of conspiracy and yet the Commissioner has arrived at the finding of the conspiracy. 16. As regards the excess quantity of 714 kgs. of supari and availability of 250 kgs. of katha, the specific defence raised by the appellants was that no statutory records required recording of balance of supari and katha. The requirement of such recording was deleted from Form-IV Register at the relevant time. The Commissioner has rejected the contention only on the ground that the same was not raised at the time of raid and was raise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight 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 removal of the goods by the assessee. The evasion of duty cannot be assumed without analyzing materials on record. 19. The Commissioner on the basis of arithmetic calculations about of the packing material to ascertain how many pouches it could have manufactured and correspondingly would have stored the pan masala/gutka has arrived at the conclusion about possibility of use of huge quantity of lamination rolls for the purpose of clandestine removal of the goods. As rightly pointed out by the learned Advocate for the appellants apart from mere arithmetical calculations in that regard, the adjudicating authority has not analysed the evidence on record to find out whether the arithmetical calculation are born out from the materials on record or not. 20. The Commissioner has further held that recovery of nine slips has sufficiently proved possibility of taking finished goods for the purpose of evasion by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igures 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, though cannot be denied but need not be stressed to a extent that the evidence of slips be brushed aside". The above observations of Commissioner are indeed meaningless as "Sanjay Kumar, LKO" on the slips is a code name and does not appear to be the name of a person. The Commissioner should have tested the correctness of the statement of Shri Bhupesh Bansal, M.D. M/s. KL by permitting his cross-examination. 23. Though in support of allegation of duty evasion by M/s. DTC of Rs. 5,18,16,960/- on 17992 bags of Pukar brand gutkha booked through some transport companies to outstation customers, there is oral evidence in form of - (a) statement dated 19-5-2004 of Ashish Srivastava, Authorized Signatory of M/s. DTC; (b) statements dated 12-8-2004, of Proprietor of M/s. Narain Transport & Forwarding Agency, Lucknow, statement dated 29-3-2004 of Shri Rad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actory 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 the view of the Consultant that the premises of M/s. DTC was not searched completely, there is a possibility that the goods found short were actually present in the third floor as submitted by their defence. I am compelled to extend this benefit of doubt to the assessee as panchnama and the cross-examination leaves me without any doubt regarding improper and incomplete search of the premises of M/s. DTC". This finding is contrary to the other findings and certainly warrants further analysis of the materials in accordance with the provisions of law. 27. As regards the cash recovered from the premises there is also no attempt on the part of the adjudicating authority to ascertain its link with the proceeds of the goods alleged to have been clandestinely removed. The link cannot be established on mere assumption. There must ..... X X X X Extracts X X X X X X X X Extracts X X X X
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