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TMI Blog2013 (10) TMI 944X X X X Extracts X X X X X X X X Extracts X X X X ..... medabad with M/s Malhotra Trading Co., Delhi consignor were in respect of consignments of Gutkha cleared from the factory of MRS/MRT at Samaypur, Badli, Delhi which had been brought to the office of M/s Pawan Carriers through Shri Than Singh - Since no Central Excise invoices has been issued in respect of these consignments of Gutkha and the total quantity of Gutkha has been transported under these GRs, the duty has been correctly demanded in respect of the consignments. Caldestine Removal 0f Goods - Extended Period of Limitation – Evasion of Duty – Penalty u/s 11AC - Held that:- The goods cleared clandestinely without payment of duty, the extended period under proviso to Section 11A (1) has correctly been invoked in view of the fraud committed against Revenue with intent to evade the duty and penalty on MRS/MRT under Section 11AC of Central Excise Act, 1944 for the period w.e.f. 28/9/96 and under Rule 173Q (1) (d) of the Central Excise Rules, 1944 for period prior to 28/9/96 has been correctly imposed. Interest on Duty u/s 11AB - The Section had been inserted by Section 76 of Finance Act, 1996 w.e.f. 28/9/96, interest on duty under this Section would be chargeable only in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduct name, brand name, MRP etc. printed on them, which are used for making retail pouches of the Gutkha in automatic packing machines. The plastic laminate was being received by MRT/MRS from the units of M/s Flex Industries Ltd. (M/s FIL) at Malanpur and Noida. 1.2.1 M/s Gupta Trading Company, Gwalior with Shri Arvind Kumar Gupta as its Prop. is a dealer of the plastic laminate manufactured by FIL who was receiving the plastic laminates meant for various Gutkha manufacturers manufactured by FIL and, in turn, were supplying the same to the respective manufacturers. 1.2.2 On 29/9/94, a consignment of 419 packages of printed plastic laminate was dispatched by M/s Gupta Trading Company, Gwalior to M/s Arora & Co., J-7, Malkha Ganj, Delhi under his invoice No. 49/94-95 dated 29/9/94, which described goods as printed plastic packaging material - GTC 010. The goods were being transported in truck MP-07-1790 of M/s Navin Roadlines. In fact the driver's copy of the consignment note No. 385 dated 29/9/94 accompanying the goods mentioned -door delivery at Pan King, while the consignee was M/s Arora & Co., Delhi. Not only this, even the copy of the invoice No. 49/94-95 dated 29/9/94 accomp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s FIL and Shri Yogeshwar Singh, Executive Manager (Sales), M/s FIL; (j) Shri Shanti Prasad Sharma of M/s Pandit Transport Company, 7210, Aram Nagar, Delhi ; and (k) Shri Anil Lamba, Partner, M/s Lamba Road Transport Ltd. ; in course of which their detailed statements were recorded. 1.4 M/s Pawan Carriers, the transporters, besides an office at Delhi, also have an office and godown in Ahmedabad at 7, Jalaram estate, Sanand Highway, Sarkhej. On 22/11/98, the premises of M/s Pawan Carriers at the above-mentioned address at Ahmedabad were searched and at that time three trucks bearing registration No. HR-29/C 0139, GJ-IT/ T 7303 and DL-1G/A 1436 were found parked outside the said premises. All the three trucks were loaded with a total of 182 bags which were found to be containing 52,05,200 retail pouches of 'Pan King' brand Gutkha collectively valued at Rs. 26,02,600 (MRP). The duty involved on these goods was Rs. 5,20,520/-. These consignments were covered under the invoices issued by M/s Malhotra Trading Co., DDA Market, Kirti Nagar, New Delhi which on inquiry was found to be non-traceable. These consignments of Gutkha, therefore, appeared to have been cleared without payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e eight hour shift and that one kg. of laminate can produce 2700 pouches of MRP 50 paise and 2200 pouches of MRP of Rs. 1/-. 1.4.4 In course of inquiry with Shri Ram Prasad Kedar Nath Halwai, he in his statement dated 17/11/98 while admitting that he was trading in the Gutkha/Tobacco for the last 10 years and that he was buying Pan King brand Gutkha for the last 5 years, stated that he has seen the statements dated 18/11/98, 19/11/98 and 22/11/98 of Shri Tripawan Kumar Ram Prasad Sandhir and he agrees with the contents of the same. He also stated that in respect of the consignments of Pan King Gutkha received from MRS/MRT, there were no excise invoices and the payments for the same had been made in cash. 1.5 From the Delhi office of M/s Pawan Carriers, a number of GRs with M/s Malhotra Trading Co. as consignor for transportation of consignments to 'self' in Ahmedabad and with codes '072', or '104', or '123' written on them were recovered which appeared to be for consignments of Gutkha booked by MRS/MRT. On scrutiny of these GRs recovered from the office of the Pawan Carriers, Delhi, it appeared that during the period from 26/6/98 to 16/11/98 were 3014 boras containing 12056 bags ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evealed that substantial quantity of plastic lamination rolls for manufacture of Pan King brand Gutkha retail pouches were also being procured by MRS/MRT from M/s FIL, Noida also. These supplies from M/s FIL, Noida were in the name of M/s Chandra Packers, Delhi, M/s Karan Packers, Delhi and M/s Vikram Packers, Delhi which on inquiry were found to be fictitious. 1.7.1 Shri Chander Kumar Gupta, in his statement dated 17/11/98 stated that the plastic laminations received from M/s FIL, Noida under the bills in the names of M/s Karan Packers, M/s Vikram Packers and M/s Chandra Packers had been received in his factory at Samaypur, Badli and the same were used in the manufacture of Pan King brand Gutkha and that Shri Sonik Sharma his accountant had signed the challan No. 1853 dated 30/12/96 in respect of printed plastic laminate sent by FIL in the name of M/s Karan Packers and which had been received in his factory at Samaypur, Badli, Delhi. In his further statement dated 21/4/99 he confirmed the correctness of his statement dated 17/11/98. He also confirmed that the plastic laminate received by MRS/MRT in the name of M/s Karan Packers and M/s Vikram Packers, M/s Chandra Packers were not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kumar Ram Prasad Sandhir and Shri Krishan Gopal, Ram Prasad Sandhir, Partners of M/s Pawan Carrier. 1.10 Show cause notice dated 4/1/2000 sought recovery of allegedly short paid duty amounting to Rs. 4,57,23,510/- (Rs. 2,46,33,700 + Rs. 1,73,58,810 + Rs. 37,31,000/-) in respect of consignments of Gutkha alleged to have been cleared without payment of duty during December 1994, during 1996, 1997 and from 31/8/94 to 07/9/95 alongwith interest under Section 11AB and also for imposition of penalty on MRS/MRT under Section 11AC. This show cause notice also sought imposition of penalty on MRS/MRT under Rule 52A, 173Q and 226 of Central Excise Rules 1994 and Shri Chander Kumar Gupta, Director MRS/MRT under Rule 209A of Central Excise Rules. 1.11 The third show cause notice dated 30/1/2000 sought recovery of Central Excise duty amounting to Rs. 79,17,360/- in respect of the consignments of Gutkha cleared by MRS/MRT without payment of duty to M/s Ram Prasad Sushil Kumar, Ahmedabad during the period from 26/6/98 to 16/11/98 alongwith interest on it under Section 11AB and also for imposition of penalty on them under Section 11AC. This show cause notice also sought imposition of penalty on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Shri Bipin Garg, Advocate, the learned Counsel for the appellants MRS/MRT and Shri Chander Kumar Gupta :- (1) Though the Commissioner made a finding that all the documents were supplied to the appellant under acknowledgement receipts dated 05/6/2000, the un-relied upon document were not supplied at all and certain relied upon documents were also not supplied. Moreover the order was passed by the Commissioner without waiting for the appellants final reply to the show cause notice resulting in, denial of natural justice to the appellant ; (2) Cross examination of some persons whose statements have been and are relied upon by the department, although was sought, that was not allowed, which is contrary to the judgment of Hon'ble Kerala High Court in the case of Karan Vir Mehta vs. CC, Cochin reported in 1998 (97) E.L.T. 42 (Ker.), the judgment of Hon'ble Andhra Pradesh High Court in the case of Sunder Ispat Ltd. vs. CCE, Hyderabad reported in 2002 (141) E.L.T. 24 (A.P.) and also the judgment of Hon'ble Allahabad High Court in the case of CCE, Meerut - I vs. Parmarth Iron Pvt. Ltd. reported in 2010 (260) E.L.T. 514 (All.). (3) The duty demand of Rs. 37,31,000/- against MRS/MRT ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Ltd., Noida in the name of these three firms had actually been received by the appellant company. In this regard, the main evidence relied upon by the Department is the statement of Shri Chander Kumar Gupta, Director of the appellant company. But this statement had been retracted by Shri Chander Kumar as the same had been obtained by threat and coercion. The Commissioner in the impugned order has failed to consider the retraction made by Shri Chander Kumar in respect of his statement dated 17/11/98 which had been made at the earliest available opportunity on 18/11/98. (6) The duty demand of Rs. 79,56,960/- is based on the lorry receipts seized from the premises of M/s Pawan Carriers, New Delhi, but there is no evidence to prove that under those lorry receipts, the consignments of Pan King brand Gutkha booked by MRS/MRT had been transported from Delhi to Ahmedabad. In this regard, the statement of Shri Tripawan Kumar Ram Prasad Sandhir is wholly incorrect and arbitrary, in as much as while Shri Sandhir has stated in his statement, that the LRs were prepared in the name of 'self' and the same were destroyed after delivery of the goods, but if this is so, it is not understood as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . But Shri Than Singh has not been examined. (2) M/s Pawan Carriers had booked the consignments brought by M/s Malhotra Trading Co., Delhi and even if those consignments contained Pan King brand Gutkha cleared clandestinely by the appellant company, there is no evidence on record to prove that M/s Pawan Carriers or its partners had knowledge about the same. In view of this, no penalty can be imposed on M/s Pawan Carriers and its partners. (3) 182 bags of Gutkha seized at the premises of M/s Pawan Carriers, Ahmedabad had been booked by M/s Malhotra Trading Co. under their proper invoices. There is no evidence to prove that M/s Malhotra Trading Co. is a non-existent entity. Otherwise also, transporter is not required to verify the existence or non-existence of the consigner. Therefore, imposition of penalty on M/s Pawan Carriers and their partners under Rule 209A is totally incorrect. Moreover, in view of judgment of the Tribunal in the case of Steel Tubes of India Ltd. vs. CCE, Indore reported in 2007 (83) R.L.T. 378 (CESTAT LB), penalty under Rule 209 of Central Excise Rules, 1944/Rule 26 of the Central Excise Rules, 2001 is not imposable on a partnership firm as this Rule is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the person placing the order is the brand name owner or his representative. The statement of Shri A.P. Singh, thus, corroborates the statement of Shri Chander Kumar Gupta. The retraction of his statement by Shri Chander Kumar Gupta, therefore, has no meaning. 4.2 As regards, the duty demand of Rs. 1,73,58,810/-, the same is based on the records of M/s Gupta Trading Co., Gwalior which show that during the period from 31/8/94 to 7/9/95, 49,596.4 kg. of printed plastic laminate described in code as GTC 010 and GTC 020 had been supplied to M/s Arora & Co., Delhi. Shri Arvind Kumar Gupta, Prop. M/s GTC in his statements dated 23/2/98, 2/3/98, 17/11/98 and 24/3/99 has stated that code No. GTC 010 and GTC 020 are for the printed laminate meant for Pan King brand Gutkha, that it is only on the instructions of Shri Chander Kumar Gupta of MRS/MRT that they had raised the bills in respect of supply of printed laminate for Pan King brand Gutkha in the name of M/s Arora & Co., Delhi and, as such, he was not aware as to whether this company is existing or not, that in respect of supplies of printed laminate made in the name of M/s Arora & Co., the payment had been received in cash from MR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 9/12/94 of Honble Allahabad High Court, Honble Court has observed that the Tribunal found that MR Sales Corporation, Delhi and Arora & Co., Delhi an inter-connected firms. All these evidences clearly show that all the consignments of printed plastic laminate consigned to M/s Arora & Co., Delhi had actually been ordered by MRS/MRT, and had been received in the factory of MRS/MRT at Samaypur, Badli and used in the unaccounted manufacture of Gutkha which had been cleared clandestinely without payment of duty. Thus, the duty demand of Rs. 1,73,58,810/- is on sound footing. Not only this, the duty demand of Rs. 37,31,000/- based on the use of 419 packages of plastic laminate which had initially been seized by the Sales Tax authorities and subsequently had been delivered to the factory of MRS/MRT is also on sound footing. 4.4 As regards, the duty demand of Rs. 5,20,520/- on 182 bags of Pan King brand Gutkha seized from three trucks No. HR-29/C 0139, GJ-IT/ T 7303 and DL-1G/A 1436, parked outside the premises of M/s Pawan Carriers at Sarkhej, Ahmedabad on 22/11/98 and the duty demand of Rs. 79,56,960/- on 1,16,455 kg. of Pan King brand Gutkha alleged to have been clandestinely clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rival of the consignments of Gutkha at Ahmedabad, a representative of the consignee used to approach them, that if nobody approached them at Ahmedabad, they use to call Shri Ram Prasad, the dealer of MRS/MRT at Ahmedabad having Phone No. 214417 after which he himself or his representative used to come and collect the goods, and that though the goods were coming from the factory of MRS/MRT at Samaypur, Badli, Delhi, the GRs were mentioning the consignors name as M/s Malhotra Trading Co. Shri Ram Prasad Kedar Nath Halwai in his statement dated 24/11/98 stated that he has seen various statements of Shri Tripawan Kumar Ram Prasad Sandhir and he agrees with the contents of the same. From this it is clear that the 182 bags containing Pan King brand Gutkha seized from the three trucks parked outside the premises of M/s Pawan Carriers at Ahmedabad and which were covered by the GRs mentioning the above-mentioned code numbers, with M/s Malhotra Trading Co. as consignor, had actually being cleared by MRS/MRT without payment of duty and booked for transport to Ahmedabad. From the premises of M/s Pawan Carriers at Delhi, GRs bearing code No. 104 or 072 or 123 were recovered which showed that d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above goods were transported were issued by the consignor M/s Malhotra Trading Co., New Delhi to M/s Shyam Trading Co., Ahmedabad, and M/s Patel Pan House, Ahmedabad, which were found to be fictitious entities. Not only this, M/s Malhotra Trading Co., Delhi has also been found to be a non-existent entity, as all the summons issued to M/s Malhotra Trading Co., Delhi were returned undelivered. 7.3 While the invoices issued by M/s Malhotra Trading Co. were to M/s Shyam Treading Co. and M/s Patel Pan House, the GRs under which the consignments of 182 bags had been booked with M/s Malhotra Trading Co., Delhi, as consignor were showing the consignee as 'self'. Shri Tripawan Kumar Ram Prasad Sandhir in respect of this consignment of 182 bags of Gutkha has stated that the same belongs to their regular client Shri Ram Prasad Kedar Nath Halwai, Prop. M/s Ram Prasad Sushil Kumar. Though Shri Ram Prasad Kedar Nath Halwai in his statement dated 24/11/98 had denied to have known any company named M/s Malhotra Trading Co., Delhi under whose bills the seized goods had been transported. 7.4 Shri Madan Lal, Manager, M/s Pawan Carriers in his statements dated 17/11/98 and 27/11/98 has stated that c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andhir, were the code numbers assigned for Pan King brand Gutkha. 8.2 As mentioned above, from statements of Shri Madan Lal, it is clear that the consignments of Gutkha cleared by MRS/MRT from their factory at Samaypur, Badli, Delhi were being brought to their office by a driver Shri Than Singh in his tempo and as per the instructions of MRS/MRT, the same were being booked by mentioning the name of M/s Malhotra Trading Co. as consignor. 8.3 The sending of consignments of Gutkha to the office of M/s Pawan Carriers through Shri Than Singh in his tempo is also confirmed by Shri Mahesh Haryana in his statement dated 17/11/98 and 18/1/99. Thus it is clear that all the GRs issued by M/s Pawan Carrier for transportation to Ahmedabad with M/s Malhotra Trading Co., Delhi consignor and with code No. 104 or 072 or 123 written on them were in respect of consignments of Gutkha cleared from the factory of MRS/MRT at Samaypur, Badli, Delhi which had been brought to the office of M/s Pawan Carriers through Shri Than Singh. Since no Central Excise invoices has been issued in respect of these consignments of Gutkha and the total quantity of 1,16,455 kg. of Gutkha has been transported under these G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adlines, Agra. Shri Kamal Singh, Manager, M/s Saini Roadlines in his statement dated 22/11/97 stated that the consignment of 419 packages of plastic material had been delivered at the factory premises of MRS/MRT at Samaypur, Badli, Delhi, although in the invoice, the consignee was shown as M/s Arora & Co., Delhi. 9.1.3 The statement of Shri Kamal Singh regarding the actual place of delivery of the consignment of 419 packages of printed plastic laminate is also corroborated by the statements dated 9/1/98 and 21/1/98 of Shri Praveen Kumar Gureja, Partner of M/s Navin Roadlines by which this consignment of plastic laminate had initially been booked for transport to Delhi in September 1994 by M/s Gupta Trading Co. In these statements Shri Praveen Kumar Gureja has stated that at that time as per the delivery instructions mentioned in the GR and the dispatch memo, the goods were to be delivered at the factory premises of MRS/MRT at Samaypur, Badli, Delhi and that the goods could not be delivered at that time as the consignment was detained at the Sainya Check Post, Agra. 9.1.4 As mentioned in para 1.2 above, while the transporter's copy of the GR mentioned 'door delivery at Pan King', ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur in the name of MRS on a telephone message from Arora & Co., Delhi, and that consignee M/s Arora & Co., Delhi is alleged to have nexus with MRS, Mainpuri, which is claimed to be a branch of MRS, Delhi. (e) Judgment dated 9/12/94 of Hon'ble Allahabad High Court also mentions that the Tribunal found Arora & Co., Delhi and MRS, Delhi to be inter-connected firms. 9.1.6 In view of the above fact and also in view of the fact that M/s Arora & Co., Delhi has been found to be a non-existent entity, it is clear that all the consignment sent by M/s Gupta Trading Co., Gwalior to M/s Arora & Co., Delhi have in fact been received by MRS/MRT at their factory at Samaypur, Badli, Delhi. 9.2 From the above evidence on record, it is clear that the consignment of 419 packages of printed plastic laminate dispatched by M/s Gupta Trading Co. under their invoice No. 49/94-95 dated 29/9/94 after release from the Sales Tax authorities of U.P. had actually been delivered at the factory premises of MRS/MRT at Samaypur, Badli, Delhi. Therefore, the duty demand of Rs. 37,31,000/- based on the receipt of 419 packages of printed plastic laminate has to be upheld. 9.3 As regards the duty demand of Rs. 1,73,5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement of Shri Anil Lamba corroborates the statement of Shri Arvind Gupta and also the statement of Shri Kamal Singh, Manager M/s Saini Roadlines, wherein it had been stated that the consignments whose consignee was mentioned as M/s Arora & Co., Delhi had actually been delivered at the factory of M/s Pan King at Samaypur, Badli, Delhi. The evidence discussed in para 9.1.1 to 9.1.3 above also supports the inference that all the consignments mentioned in the invoices of M/s Gupta Trading Co as being sold to M/s Arora & Co., Delhi, with description of goods as 'printed plastic packaging material -GTC 010 or 'GTC 020' had been delivered at the factory of MRS/MRT at Samaypur, Badli, Delhi. 9.3.5 In view of the above evidence on record, the duty demand of Rs. 1,73,58,810/- based on receipt of 49596.4 kg. of printed plastic laminate received from M/s Gupta Trading Co., Gwalior during period from 31/8/94 to 07/9/95 is upheld. 9.4 The duty demand of Rs. 2,46,33,700/- is based on the records regarding supply of printed plastic laminate during 1996 and 1997 recovered from the office of M/s Flex Industries Ltd., Noida. The records recovered from the office premises of M/s Flex Industries Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aypur, Badli, Delhi and used in the manufacture of Pan King brand Gutkha pouches which had been cleared without payment of duty. Therefore, the duty demand based on the receipt of the plastic laminate in the name of Chandra Packers, has to be upheld. We order accordingly. 10. It has been pleaded that merely on the basis of evidence of receipt of printed plastic laminate by MRS/MRT, the duty demand against them cannot be confirmed in absence of evidence of purchase of other raw materials like Supari, Tobacco, Katha, Menthol etc. 10.1 In our view, for manufacture of Gutkha packed in retail plastic pouches, the printed plastic laminate is also a principal raw material and on the basis of the evidence of huge quantity of unaccounted receipt of such plastic laminate by MRS/MRT, added to preponderance of probability, presumption can also be made under Section 114 of the Indian Evidence Act that this unaccounted plastic laminate has been used for unaccounted manufacture of Gutkha cleared by them clandestinely without payment of duty and the burden of proving that there was no unaccounted manufacture and clearance of Gutkha would be on the appellant MRS/MRT. Since MRS/MRT have not produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ountant, MRS/MRT and Shri Madan Lal, Manager, M/s Pawan Carriers had been allowed and therefore on this count the appellant cannot have any grievance. As regards cross examination of other witnesses Arvind Gupta, since his statements implicating MRS/MRT are corroborated by other independent evidence on record, there was no denial of natural justice of not permitting cross examination. 12. In view of the above discussion, we uphold the duty demands of Rs. 5,20,520/-, Rs. 79,17,360/-, Rs. 1,73,58,810/-, Rs. 37,31,000/- and Rs. 2,47,33,700/-. As all these demands are in respect of the goods cleared clandestinely without payment of duty, the extended period under proviso to Section 11A (1) has correctly been invoked in view of the fraud committed against Revenue with intent to evade the duty and penalty on MRS/MRT under Section 11AC of Central Excise Act, 1944 for the period w.e.f. 28/9/96 and under Rule 173Q (1) (d) of the Central Excise Rules, 1944 for period prior to 28/9/96 has been correctly imposed. In other words, imposition of penalty on MRS/MRT equal to the duty demand confirmed against them is upheld. 13. As regards interest on duty under Section 11AB, since this Section ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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