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TMI Blog2014 (3) TMI 201X X X X Extracts X X X X X X X X Extracts X X X X ..... Vimal gutka seized from Shri Lakshmi Prakash Gupta, Seoni, interst thereon and penalty under Section 11 AC is set aside. The penalty under Rule 26 of Central Excise Rules on Shri H. Sunder is reduced to ₹ 5,00,000/- (Rupees Five Lakh only). Penalty under Rule 26 of Central Excise Rules on M/s.GG Carriers, M/s. Delhi Indore Transport Company, M/s. Singhal Transport Company, Shri Paramjit Singh Kakkar, Prop., M/s. Singhal Transport Company, M/s. Harsh Transport Co. and M/s. Gopi Road Lines is set aside and the appeals filed by them and Shri Paramjit Singh, Prop., M/s. Singhal Transport Company are allowed. - Decided partly in favor of assessee. - Appeal Nos. 3018 to 3029 of 2005, Appeal Nos. 589 to 595 of 2006, Appeal No. 2700 of 2006 - Final Orders Nos 58037-58056/ 2013 - Dated:- 21-10-2013 - Smt. Archana Wadhwa and Shri Rakesh Kumar, JJ. For the Appellant : Shri Asshraf Hiddayatulla, Sr. Advocate , Ms. Seema Jain Ms. T. Mishra, Advocates For the Respondent : Sh. Sanjay Jain Sh. R.K. Verma, DRs JUDGEMENT Per Rakesh Kumar: Two sets of appeals from Sr. Nos. 1 to 12 and Sr. Nos.13 to 19 filed by the appellants and one filed by the Revenue are being d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to freight charges received for transport of pan masala, one loading register showing challan numbers, private markings, some telephone numbers, etc. were also recovered and seized. 3.2 As the officers entertained a view that the entries made in the said seized documents relate to the transportation of the products of M/s. Vishnu Company booked by them, they made further investigations and recorded the statements of various persons. Shri Harjinder Singh, employee of the said transport company in his statement recorded on 10.11.2003 deposed that Shri Naresh Kumar was the booking clerk of the transport company upto 1.7.2003, who left the job and thereafter one, Shri Vishnu started looking after the job of booking clerk of transport company. He further explained that City brand gutka and Vimal brand gutka manufacturers were their customers and whatever is mentioned on the bills, same is reflected on the GRs issued by the transporter and 013, UMS, GRK, etc. could be the private markings of the parties. He further clarified that the goods are received by them with plain paper slips having details like private markings, number of bags and word sweet supari. One person of the factory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the name and telephone numbers of the parties booking the goods. The same revealed that the telephone numbers appearing in the said seized documents were of the factory of M/s. Vishnu Company as also three supervisors working in the factory of M/s. Vishnu Company. One of the telephone numbers appearing in the said books was of one Tulsi, who was the nephew of Leela Ram Makhija of M/s. Leel Ram Gobind Ram, Kota. Shri Leela Ram Makhija, however, expressed his ignorance as to how the name and mobile number of his nephew appeared against the GRK in the books of the transporter. 3.5 During the course of further investigation, statement of one Shri Duli Chand Makhija, Manager of Gobind Store, Jaipur was also recorded on 6.7.2003 wherein he deposed that he was looking after two shops viz. M/s. Gobind Store, Japur, owned by his nephew Nasal Lal and M/s. Kamal Store, owned by his son, Kamal M. He clarified that Gobind Store and Kamal Gateway Store, are the only dealers of Vimal gutka. He could not produce any invoice showing receipt of vimal gutka after the invoice dated 27.06.2003. He, however, denied to have received any consignment of VIMAL gutka from VCPL through M/s.GG Carrier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d a view that the entries found in the records of M/s. Gopi Road Lines related to clandestine transportation of the gutka manufactured by Vishnu Company evading duty of Rs.1,96,04,300/-. 5. M/s. Singhal Transport Company 5.1 The searches were also conducted at the premises of the said transporter on 5.7.2003. At that time, a truck No.HR 380 4117 loaded with 40 bags of gutka was found parked at the godown and 170 bags of vimal gutka were lying in the godown and another truck DL 1LA6232 was also parked outside the godown. As there were no duty paying documents in respect of the said goods, the same were seized by the officers. Searches were conducted in Delhi Head Office of the transporter resulting in seizure of 2 GR books and 17 nos. of truck guidance notes. The scrutiny of the said document revealed that the consignments were booked under the name of M/s. Gupta Chemical Works for Hubly and the consignee was shown as self. 5.2 Statement of Shri Paramjeet Singh, Proprietor of Singhal Transport Company was recorded wherein he deposed that he was transporting the goods of Vishnu Company in bags, which were delivered to them in their own trucks. He however, submitted that he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor of the said transporter company also submitted 90 GR books and 30 challan books on 7.7.2003 during recording of his statement. Scrutiny of the said documents revealed that during the period from 10.10.2002 to 5.7.2003 the transport company booked and transported 93 consignments of gutka covering 1828 bags. The same were booked from Delhi, unloaded at Bhopal and was further transshipped to Chindwara under new challans but carrying the same GRs. Shri Ravi Bhandari in his first statement recorded on 5.7.2003 revealed that the gutka transported by their company was of vimal brand and Mr. Dubey of Vishnu Company used to book the said consignments and also sometimes accompanied the goods upto their transport companys office and made payment for the same. The said consignment were covered under the invoices issued in the names of some trading firms and they never verified the veracity of the consignee or consignor. The said consignments were delivered to M/s. Santosh Tobacco, Chindwara, whose telephone number he disclosed. He also deposed that all the consignments were booked and transported by them under the cover of proper GRs and challans. As regards the bill book of certain trad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered. Statement of Shri Vijay Singh, Booking Clerk was recorded, wherein he deposed that the names of Vimal/Gopal, Rajesh, Dubey, etc., with their telephone number and addresses pertained to the persons working in the factory of Vishnu Company and their transport company was engaged only in transportation of Vimal brand gutka. He also, in an answer to a query clarified that entries like V/40K pertained to booking of Vimal brand gutka whereas V represents Vimal brand, 40 represents 40 bags, 1200 represents total weight of these 40 bags. Further, statement of Shri Vijay Singh was recorded on 18.09.2003 wherein he reiterated his statement made earlier and he further clarified that he inter-acts with the officers of Vishnu Company as regards the booking of the goods in the night. 7.2 Further statement of Shri Ravinder Saxena, Booking Clerk of Delhi/Indore Transport Company was recorded on 1.10.2003, wherein he also stated that most of the entries in the records maintained by them pertained to the transportation of the Vimal brand gutka. He also deposed that most of the time tempo driver comes to their premises for booking of the goods and provides sale bills for the same and GRs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that transportations are always arranged either by him or by Shri Prakashji, Shri Dubey or Shri Dinesh Khilnani, Supervisor and the goods are transported through mini trucks usually called as tempos, which are supplied by Shir Kayum Khan, who owns 4 vehicles of Tata 407 Make. He further deposed that in addition to railways, the goods are booked through Jaipur Gold transport, Prakash Road Lines, Gopi Road Lines, Bajaj Golden, Harsh Transporters, Delhi/Indore Transporters, etc and the goods booked through Harsh Transporters, Delhi/Indore Transporter or Gopi Transporters are generally those which are sold against cash payments by the companies. 8.4 Statement of another supervisor of M/s. Vishnu Company i.e. Shri Dinesh Khilnani was also recorded wherein he deposed that he receives invoices for dispatch of gutka on plain paper slips, which are called factory gate pass from the other supervisors. He stated that the said slips do not carry any brand name of the goods and it is only the other details,like the date, name of the transporter company and number of gutka bags, are mentioned in the said slips. He also submitted that on some occasions, when much more product is available in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vas bags cleared from M/s.Ram Lal Ram Chandra and the canvas bags shown to have been received by Vishnu Company as reflected in their records and found that there was a huge difference of the canvas bags supplied to VCPL as per the records of M/s.RLRC were much more than the canvas bags whose consumption was shown by VCPL in their factory during the same period. 11. The officers also found that there was excess numbers of pouch sealing machines available in the factory of Vishnu Company than the numbers which were declared in the declarations made by the said company. The excess number of pouch packing machines were to the tune of 55. The inquiries conducted from another Gutka manufacturer, M/s.Shyam Traders, Lucknow as regards the per machine production revealed that the appellant was capable of manufacturing much more gutka pouches than what was reflected in their records. 11.1 There is also dispute about the use of quantum of menthol in the manufacture of the appellants final product. As per the Revenue, on the date of visit of the officers, no menthol was found in the factory premises whereas as per accounts maintained by them, there was purchase of menthol to the exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onfirms the duty demand of duty of Rs.2,75,15,400/- along with interest and imposition of penalties of the identical amounts against VCPL. In addition, penalties stand imposed on the other appellants M/s. Laxmi Freight Carriers, Gopal Krishan Prashar, M/s.Gopi Road Lines, Shri Paramjeet Singh Kakkar, Shri H. Sunder and Shri R.K. Ripathi. who are Executive Director and Supervisor and transporter, etc. 15. We have heard both the sides duly represented by Shri Ashraf Hiddayatulla and Ms. Seema Jain, Advocates and Shri R.K. Verma and Shri Sanjay Jain, Departmental Representatives. As both the sets of appeals arise from different orders-in-original, we proposed to deal with the said two sets of appeals separately. 16. Order-in-Original No.141/05 dated 9.6.2005 16. In terms of the said order-in-original, duty demand of Rs.12,85,58,100/- stands confirmed against M/s.Vishnu Company. Ld. Sr. Advocate, Shri Arshad Hidaytullah appearing for M/s. Vishnu Company along with Ms. Seema Jain, ld. Advocate, submitted that the entire case of the Revenue is based upon the documents recovered from the premises of various transporters and the statements of employees of the transporters. The co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that the said Harjinder Singh was re-examined by the adjudicating officer, after completion of cross-examination and a specific question was put to him that when in his statement, he has referred to the consignments booked by the transport company as part of Vimal brand gutka, how he is now denying the fact of knowledge, he replied that he did not have any knowledge of Vimal brand gutka and he is repeatedly being asked questions, which he is not aware of. 19. As such, submits the ld. Advocate that the fact that Shri Harjinder Singh was not authorized person of GG Carriers concerned with the booking of the consignments read with the outcome of his cross examination, reveals that his evidence is not worth-relying. She also submits that Shri Harjinder Singh in his statement has disclosed the names of booking clerk of the said transport company as Shri Naresh upto 1.7.2003 and thereafter Shri Vishnu but the Revenue did not deem it fit to question the said booking clerks, who were actually the responsible persons for booking the consignments. She has also referred to the statements of the dealers at Kota as also at Jaipur and submits that inasmuch as the said statements are excu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amination. 23. She also submits that the truck notes as also the GR issued by the transporter clearly mentioned the name of the consignor as Gupta Chemical Works. The Revenue has been able to find out the said M/s.Gupta Chemical Works and as also raided their premises. In spite of that no statement of the representative of M/s. Gupta Chemical Works was recorded by the officers and he was never questioned about the booking of the said consignments by him. It is their contention that such non-action on the part of the Revenue was intentional with a view to make out a case against M/s.Vishnu Company. In such a scenario, Revenues stand that the goods booked under the name Gupta Chemical Works were in fact booked by M/s. Vishnu Company cannot be appreciated. 24. As regards the documents recovered from the premises of Harsh Transporter and the statement of Shri Ravi Bhandari, Managing Director, ld. Advocate submits that Revenues reliance on the 5 blank bill books of other companies like Vikas Plastic, M/s. Prakash Sales Store, M/s. National Trading, M/s. Himanshu Auto, etc., she submits that as is clear from the copies of the said bill books produced on record, the same belonged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said trading units were trading in goods other than gutka. She further submits that though the address of the said trading firms are mentioned on the bill books but Revenue never made any efforts to conduct any investigations from them. Had it been done, the entire facts would have been made clear. This fact according to the ld. Advocate causes prejudice to the Revenues stand and in the absence of such investigations, Revenues endevour to relate the transportation under the cover of the said bills to the appellant, cannot be appreciated. She also submits that the invoices of Sudha Sales Agency showing transportation of 9 bags, which were recovered and seized by the Department at Bhopal, is also alleged to have been issued by them without making any investigation at the end of Sudha Sales Agency. As such, the Revenues stand that whatever goods were transported through the said transporter relates to the clandestine clearance to M/s. Vishnu Company is without any valid and legal evidence. 26. Similarly, in respect of Gopi Road Links, she submits that the demand is based upon the loading challans recovered from the said transporters, wherein the names of the consignor as also t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were being handed over to them in gunny bags, which were not having any markings and in the absence of any authorization to open the said gunny bags, it was not possible for the transporter to find out the exact brand name of gutka. Revenues action and proposal to link all such transportation to the appellant (VCPL) is neither in accordance with the settled principles of law nor just and fair. As regards the statement of some of the employees showing that Shri Dubey used to accompany the consignments, she clarifies that Vishnu Company are also selling the goods against cash at their factory gate. Shri Dubey was only helping those buyers in getting their consignments booked through these transporters in his personal capacity. She submits that they have sales at the factory gate against cash, to the tune of around Rs.9.12 crores, on which the appropriate duty stands discharged by them. Such cash sales at the factory gate might have been booked by the transporters either from the buyers, who purchased the same or through various trading firms or may be through Shri Dubey, who might be acting in personal capacity so as to earn some commission from the transport companies. She clarif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d statement is, on the face of it, contrary to the statement of all the transporters, wherein they have deposed that the goods always come to them under the cover of invoices wherein the name and address of trading firms, etc. is written. His further statement that all the mini trucks were parked in the compound of the factory of VCPL is contrary to the statement of the driver, wherein he has clearly deposed that the mini trucks, after being used, were parked at Motinagar stand. The said statement of Shri Kayum Khan stands admittedly written by Shri Riyaz Khan without giving any reasons as to why the same could not be written by Shri Mohd. Kayum Khan. She submits that such statements are not worthy of reliance. Neither Shri Kayum Khan nor Shri Riyaz Khan nor the driver of the said mini truck were tendered for cross-examination in spite of a request made to that effect. However, they submitted an affidavit clarifying the entire state of affairs. 30.1 As regards, the evidence of suppliers of raw materials /packing materials, etc. she submits that Revenue relies on the gate register of M/s. Ram Lal Ram Chandra, who was manufacturing canvas bags for the appellant, but the same cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submits that their factory consists of 3 floors and the Revenue has not made any efforts to find out the correct position of balance of such jute bags which might be lying scattered in their factory. Similar is the position in respect of menthol. She submits that if the said vital raw materials as also the packaging materials were to be nil in the appellants factory, which were actually lying at the time of visit of the officers, it was not possible for them to function without the same. This fact itself reveals that the stock taking was not conducted by the department properly and reflects upon wrong facts and factual position. 32. As regards the Revenues allegation that though the appellant had declared only 65 packing machines whereas 120 such machines were found to be installed in their premises, she submits that all these machines were old machines and though they were found to be 120 in number, all of them were not in working condition. Admittedly, the visiting officers found only 65 packing machines working at the time of their visit, she clarifies that the excess machines are kept in the factory so as not to hamper the continuous production in case of any of the machines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue by giving an explanation of every charge. As such, submits the ld. Advocate that third party documents, which do not reveal either the appellants name or brand name read with the retraction of the statement either by way of affidavit or by way of cross examination, read with the fact that there are many units located in the same vicinity, which are manufacturing gutka and read with the fact that some of them are using the brand name starting with the initial V, read with the fact that FIR unauthorises use of their brand name by other smaller manufacturers of gutka was lodged by them well in advance of the start of investigation by the Revenue and the fact that such FIR resulted in seizure of the spuriously manufactured goods thus establishing the existence of other manufacturers using their brand name and lack of proper investigation by Revenue and absence of positive evidence to show clandestine removal by M/s.Vishnu Co., she submits that allegations and findings of the clandestine removal cannot be upheld against them. She accordingly prayed for setting aside confirmation of demand and imposition of penalties on M/s. Vishnu Company. 35. On the same ground, she subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alid documents showing payment of duty These clandestinely removed goods were transported to godowns of several transport companies for transportation to their dealers located in various States/cities of the country. These transporters mis-declared these goods in the transport documents. Transporters were provided trading invoices issued in the name of fictitious trading firms. The names of consignors and consignees declared in these invoices were fictitious to avoid detection and subsequent investigations against them. The appellant had contended that these are the cash sales at the factory gate on which the excise duty had already been paid. The Department has put forward a large body of evidences in support of these allegations to rebut their argument. 2. Background 210 bags of their finished product were seized on 5.7.03 by the officers from a transport company. Neither the production of these goods nor the clearance thereof find mention in the stock register. Thereafter searches were conducted at the premises of M/s. VCPL resulted in revelations of many discrepancies with respect to inputs, packing material and finished goods. The details of inputs found excess showi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... livered to VCPL. In the records resumed by the department from RLRC, name of the notice as well as the brand name Vimal is prominently reflected in the relevant entries corroborated by the categorical statements of Sh Rajiv Gupta and the security guard of RLRC. The sworn affidavit from Shri Rajiv Gupta which was given after more than one year of recording his statement stating that he was selling bags to unauthorized manufacturers of Vimal Gutkha also, against cash payment is clearly an afterthought. He has neither named nor identified any such manufacturer. The notice are charged with clandestine removal of 27396 bags of Gutkha during the period from 1.4.03 to 5.7.03 which would have required 109584 canvass bags. This compares well with the unaccounted for receipt of 1,14,488 bags during this period from M/s. RLRC. This leads to irrefutable confirmation of allegation of the department that all these canvass bags printed with the company logo and picture of their product, purchased without maintain an account of their purchase, were consumed in unrecorded production. (ii) Laminated films used for production of sachets not accounted. Unaccounted stocks of flexible laminated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Supari in the total wt of the product, the book entries are made to show exaggerated consumption of 87-88% of Supari. There was an excess stock of 9356 Kgs of Supari against the recorded balance. M/s VCPL, in para 4.2 of their reply, have tried to explain this excess by claiming that another consignment of 9600 Kgs purchased under invoice no 18446 dt 25.5.03 was not entered in the stock register. Neither on the day of the search nor for next 18 months did they inform the investigating officers about this invoice, thus denying the investigators an opportunity to conduct appropriate investigations as to the authenticity of this invoice. 5. Production Capacity. The officers found 120 machines in the factory on the day of the search and the same has been recorded in the panchnama. The noticee had declared to the jurisdictional Range officer that they are working on 65 machines. The point of dispute is the availability of another 55 machines in the factory. While it is fairly acceptable that some machines may be kept in a standby mode to meet the exigencies of breakdowns, perhaps 5-7 additional machines could be reasonably kept to meet the act as stand by for 65 machines; it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed through M/s Jaipur Golden Transport as mentioned on the invoices as well as the copies of GRs submitted by the transport company. Several invoices have been issued showing cash sales, where complete addresses of the buyers are not given. Name of the city against all such buyers has been mentioned as N Delhi. Deliveries against these cash sales have been made directly to the parties, as mentioned at the bottom of each invoice. Evidently, the Mini trucks deployed in the factory have not been used for these deliveries. Booking clerks of the transport company have clearly identified mini trucks of M/s VCPL as the vehicles which brought the goods to their godown from the factory. It is, therefore, clear that all the consignments booked from M/s Delhi Indore Transport Company are different from those sold against cash payment in their invoices. In absence of any invoices in their records, it is apparent that all the consignment booked by M/s VCPL have been cleared without payment of duty. (b) M/s G.G. Carrier (Annexure A1). Statement of Sh Harjinder Singh was recorded who explained the resumed records and their entries. The pan masala was being cleared as sweet supari as evident f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he address mentions Delhi as the location of the buyer meaning there by that the said transporter cannot be used for movement of goods shown to be cleared against those cash sales. (d) Harsh transport (Annexure A4) The noticees have clearly owned up all the consignments mentioned in Annexure A-2 and A-4, at least to the extent that these goods originated from their factory. The Director/ staff of Harsh transport have rightly identified all such consignments as of Vimal Gutkha originating from M/s VCPL. Sh. Ravi Bhandari, MD of M/s Harsh transport, has mentioned Mr Dube, employee of the noticee as the person who used to come to their transport company for booking of Gutkha. Statement of Sh. Santosh Kumar Mishra, Booking Clerk of the Harsh transport company was recorded on 5.7.03 in which he stated, that all the consignment of Gutkha booked from their company were of Vimal brand Gutka and these consignments were always booked by Sh. Dube. Statement of Sh. Kamal Panjwani, Partner of M/s Harsh Transport (P) Ltd., Bhopal was recorded on 7.7.03 in which he stated, that in none of the previous consignments of Vimal brand Gutkha received at Bhopal from his Delhi office, any duty pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... VCPL. Goods were dispatched from Singhal Transport on 3.7.03 and 4.7.03 while there are no invoices for anyone from the invoice book after 1.7.03. 7. Evidence of employees contractor of M/s VCPL given in statements- (a) Sh S K Dubey, an employee of the noticee is the common link between all the 5 transport companies and the operations in the factory of the Noticee. Booking clerks on all the 5 transport companies have mentioned Sh Dubey as the person who used to interact with them regarding consignments identified by them from their records as Vimal Gutkha. Either the name of Sh Dubey, or his mobile phone number, admittedly provided by the factory or his name along with telephone nos of the factory, have been noticed in the telephone diaries resumed from these transport companies. Sh. Dubey, in his statement has also admitted that he used to visit these five transport companies in connection with the booking of Vimal Gutkha from these transporters. Even the noticee themselves do not dispute the fact that Sh Dubey used to go to these transporters for booking Vimal brand Gutkha. (b) In his statement Sh Kayum Khan, an independent transporter used by the Noticee for transporting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re A-I to A-5 of the SCN were of Vimal brand Gutkha and had originated from the factory of the Noticee. 8. Admission of the fact of clandestine clearances by notice. 210 bags of their finished product were seized on 5.7.03 by the officers from a transport company. Neither the production of these goods nor the clearance thereof find mention in the stock register. Consumption of nearly 1.35 lakh canvass bags certifies production of over 33000 bags between the period from 1.4.03 to 4.7.03. The account shows production of only 5087 bags. Sh H Sunder, Director M/s. VCPL has on more than one occasion admitted that finished goods were being removed from the factory without payment of duty. While in his letter offering Rs two crore as voluntary deposit, and as pointed out by the notice in their written reply, he mentioned that the deposit was toward demands which are anticipated, in the PLA, while debiting Rs 66 lakhs on 5.7.03 it was categorically mentioned as Voluntary payment of C. Ex. Duty towards clandestine removal of Vimalbrand Gutkha manufactured in our factory as detected by the officers of DGCEI on 5.7.03. In his statements dt. 5.7.03 and 17.12.03, he has admitted that on occ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound that statements given by persons to officers is false and that the evidence of that is in sworn affidavits. Instead of appearing for cross examination several persons chose to provide sworn affidavits to the noticee alleging high handed methods of the investigating officers. One of the Witnesses Sh M.R.Sehgal of M/s Gopi Roadlines appeared on second opportunity, but his cross examination was declined by the Ld. Advocate of the appellants. Almost all those who did not attend, provided affidavits. The investigations were completed in December, 2003 and their statements had been recorded much earlier; most of these being in July, 2003. Yet, the affidavits were given only in December, 2004 and January 2005 and even afterwards. The time lapse in filing the affidavit is sufficient evidence to show that these affidavits are just after thoughts. A close scrutiny of the affidavits show that at least five of these, namely those of Mohdliyas, Vijai Singh, S.K.Dubey, Ravinder Kumar and Sushil Kumar were given before the same Notary Public, namely Sh Surendra Kumar. All these were drafted by the same person namely ShD. D. Harsinghani, whose identity and relationship with all these wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mention in the stock register. 2) As per these records, even in a short period of 3 months between 1.4.03 to 4.7.03 they purchased 1,40,488 bags while the account books show payments for only 26,000 bags. The notice are charged with clandestine removal of 27396 bags of Gutkha during the period from 1.4.03 to 5.7.03 which would have required 109584 canvass bags. This compares well with the unaccounted receipt of 1,14,488 bags during this period from M/s. RLRC. 3) Unaccounted stocks of flexible laminated films bearing Vimal brand were seized from two of the suppliers namely M/s. Pragati International, Najafgarh, Delhi and M/s. Lalwani Convertors, Rama Road Delhi. 4) As per their own calculations given in para 17.3 of their reply, M/s VCPL should have had a stock of 6413 jute bags in the factory on the date of search. However the panchnama shows no stock of jute bags on the date of search. 5) Huge quantities of Menthol were consumed in the factory in production of the goods that were not accounted for by falsely showing that the inputs were used in the manufacture of duty paid goods by using a formula that exaggerates the quantity of menthol used in manufacture. During last 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis. one of the TATA-407 tempos, seized on 5.7.03 for having transported goods without valid documents, also belonged to him. All aforementioned documentary evidences have been corroborated by statements of around 20 persons comprising of noticee himself, noticees employees, transporters its employees, raw material suppliers, packing material suppliers and local TATA 407 vehicles contractor. None of these statements were ever retracted. A 18 months delayed futile attempt to obtain sworn affidavits from few instead of cross-examining them has been explained above. The lack of transparency in conduct of business operations of the appellants, which facilitates clandestine removal of goods produced by them, is in piece with the past record of the appellants wherein they have faced 9 investigations within a span of 2 years from the C.Ex. Deptt. alone out of which, by their own admission 5 were not appealed against and for one they were turned back by the Settlement Commission. All these 6 cases pertained to the charge of clandestine removal. The ground taken by them that the goods removed may have been removed by some unnamed persons who purchased on cash basis is merely a conje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sunder was wrong. 38.3 Further statement was recorded on 8.10.03 wherein he again reiterated that the freight for transportation of gutkawas always fixed by Shri Gopal Parashar, Director. He further clarified that Shri R K Tripathi of Vishnu and Company sometimes spoke to him for availability of the space. He clarified that Vimal brand gutka was not written on the GRs on the instruction of VCPL. He also gave the telephone number of VCPL on which he used to talk. His statement was recorded on 16.4.04 wherein he stated that 30 bags were received by them on 2.9.03 at 8.00 PM on the bill of Vikram Sales Agency and 10 bags were received in the import on 3.9.03 on the bill of Vikram Sales Agency. Said 140 bags were seized by the officers on 3.9.03. 38.4 During further investigation statement of one Shri M L Sharma loading incharge of M/s. Laxmi Freight Carrier were recorded on 22.9.03 and 8.10.03. He also deposed that they used to receive Vimal Brand gutka in the tempos and that they have never transported gutka of any other brand except of Vimal brand. Shri R K Tripathi of M/s. Vishnu used to speak to him. Statement of Shri Gopal K Parashar, Director of Laxmi Freight Carrier was al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ier were found to be zero prior to the date of search and 3 after the date of search. 38.9 The searches conducted in the factory premises of VCPL on 03.09.03 resulted in alleged excess stock of supari and tobacco. Similarly it was found that though there was lamination stock available in the factory, no records were being maintained by them. 38.10 In addition to the seizure made at the premises of Laxmi Freight carriers, there was also seizure of 160 bags of Vimal Brand Gutka found at the godown of M/s. Singhal Transport. On the above basis, revenue entertained a view that the GRs issued by M/s. Laxmi Freight Carriers showing transport of gutka in the names of various trading units, was actually clandestine clearance of gutka by M/s. Vishnu and Co. and as such, based upon the same demand was raised against the appellant. In addition to 160 bags found at M/s. Singhal Transport and 140 bags found at the premises of Laxmi Freight Carrier, 25 boxes of sweet supari were seized from M/s. Gopi Road Lines were also proposed to be confiscated. The said show cause notice stand adjudicated by the Commissioner confirming demand and imposing penalties as mentioned in para 14 above. 39. Ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s recording the correct factual position when he was taken to a next room and was shown the statement of his employees and was pressurized to accept the same. 39.2 Similarly by referring to the statements of R K Tripathi, she submits that said statements are exculpatory as he, in his statements has clarified that they also sell the goods in cash and the consignment booked at Laxmi Freight Carrier might have been by the buyers who purchased the goods against cash at the factory gate. As regards the excess found raw materials, she submits that there are marginal difference in the quantum of material which may vary from the entries made in the form IV register on the date of visit of the officers. The said raw materials had not been utilized by the time of visit of the officers and as such were lying on the factory floor. The same were taken into consideration while arriving at the excess of the same. 39.3 In view of the above, learned advocate submits that there is virtually no evidence of illegal purchase of any of the raw material and payments made for the same to the supplier. There is no identification of any supplier of the raw materials neither is there any identification o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of further investigation and all the statement so recorded by the Revenue are pointing only towards one fact that gutka booked through them was the product of VCPL. These statements were never retracted earlier and it is only during the course of cross examination that the said two deponents clarified that they never opened the boras as they were not authorised to open the same and it was only when the present consignment was found to be of Vimal brand gutka they assumed the earlier consignment to be of Vimal brand gutka. The contention of the learned DR is that such disclosure for the first time by the said deponents during the course of cross examination cannot be held to be correct reflection of the truth and the due importance should be given to the first statements recorded by the Revenue. As regards the contradictions pointed out by learned counsel for the appellant in the statement of said two deponents, learned DR submits that Shrishri kant and Shri Sharma have disclosed even the number of tempos which were used to bring the goods to their premises. The fact that the owner of the said tempos has denied having brought the goods to Laxmi Freight Carrier cannot be pressed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were received by them from M/s. Vishnu and Company. 41. In her rejoinder learned Seema Jain, submits that result of cross examination requires to be accepted otherwise the same would loose its purpose. As the said deponent clearly stated that consignment were never opened by them, the said statements have to be accepted. She also reiterated her defence submissions made in the first case. As regards the use of vehicles, she clarified that admittedly the vehicle numbers disclosed by Shri Khan were being used by VCPL, but the question is whether the same are used for Laxmi Freight Carrier. Shri Sunder has denied the said fact. 42. Learned DR also stated that initial statement given by the transporter and their employees have to be accepted as the correct reflection of the factual position and as such admissible as evidence in support of allegation of duty evasion against VCPL. Further elaborating his arguments, he submits that there was no immediate retraction to the said statements and the denial at the time of cross examination which was done almost after two years is, on the face of it at the behest of the manufacturer, as the transporter have to get their business from the man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rer of the same - M/s.Lalwani Convertors and kimam and raw tobacco seized from the premises of M/s.Ashok Tobacco, he submits that the said goods were meant for onward transportation to M/s. Vishnu and Co. who would have used the same for clandestine use and manufacture of final products. He submits that two said units have not maintaining any records of the goods manufactured by them and that they were working in small scale exemption. He submits that there is no exemption from the maintenance of records and it is absolutely necessary to maintain such records so as to find out as to at which date and point of time they crossed the SSI limit. As such, he prays that the impugned part of the order passed by Commissioner be set aside and Revenues appeal be allowed. 43.5 Learned advocate Ms. Seema Jain reiterates the finding of the Commissioner and submits that the Commissioner has rightly concluded that there is no provision of law providing seizure or confiscation of the raw and the exempted units M/s.Lalwani Convertors and M/s. Ashok Tobacco were not required to maintain records in respect of goods manufactured or produced by them as they were availing full duty exemption under SSI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ployees/ Directors of the Transport companies implicating VCPL; (b) statement of Sh. H. Sunder, Director, VCPL, Sh. Dinesh Khilnani, Sh. Ramakant Tripathi, Supervisors, VCPL and Sh. Shiv Kumar Dubey, Supervisor, VCPL; (c) Statements of Shri Kayum Khan, owner of four Tata 407 vehicles; Shri Sita Ram, Driver of Truck No.HR-38D/4117 of M/s. Singhal Transport Company from which 40 bags of VIMAL gutka were seized on 5.7.2003 when it was parked just outside the premises of Singhal Transport Company and of Shri Mohhmed Illias, Driver of the truck no.DL-1L A6232 of Shri Mohd. Kayum Khan which were found parked outside the premises of M/s.Singhal Transport Company on 5.7.2003. (d) Test report dated 28.08.2003 of Shriram Institute for Industrial Research in respect of a sample of VIMAL brand gutka seized from the premises of M/s. Singhal Transport according to which the percentage of Supari, Lime, tobacco, katha and Menthol in the sample of vimal gutka is 68%, 2.2%, 5%, 15.5% and 0.013% respectively as against VCPLs claim of percentage of supari, tobacco, katha and menthol as 86%, 6%, 5% and 0.47% respectively. (e)(i) Gate register maintained at the factory gate of the factory of M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Gopi Road Lines without any invoice. 46. Ld. Departmental Representative pleads that while the duty demands in both sets of appeals have been calculated on the basis of entries in the registers/challans/GRs recovered from the transportersoffices read with the statements of the Directors/employees of the transport companies, the evidences as mentioned in para 45.3(d) to 45.3 (g) above further support the departments allegations, as these evidences clearly indicate that VCPL were grossly under-reporting the manufacture of gutka by adopting various modus operandi i.e showing inflated consumption of supari, tobacco and menthol and under reporting the receipt and consumption of canvas bags and the number of pouch packing machines installed and their failure to account for the consumption of jute bags and menthol,which they had purchased under invoices recovered from their premises also indicates that the missing jute bags and menthol had been used for manufacture and packing of unaccounted gutka. On the other hand, the plea of Ms. Seema Jain, the ld.Counsel for the appellants is that there is no unaccounted consumption of jute bags and menthol,that the departments contentions that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that while the main ingredients of gutka are supari, lime, tobacco, katha and menthol and other ingredients are negligible, the total percentage of supari, lime, tobacco, katha and menthol in the test report of Shri Ram Institute for Industrial Research adds up to 90% only, that this itself shows that there is something wrong in the test report and same is not reliable, more so, as the percentage of katha reported in the test report is 15.5% as against declared content of 5%, that menthol is a volatile substance and hence, the content of menthol in the samples is not indicative of the actual quantity of menthol used in the manufacture of gutka, that gutka being a heterogeneous mixture mixed manually, test of a small samples of 1.8 gms. cannot determine correct content of its ingredients, that on the basis of test report of SIIR, the Income Tax Authorities had reopened the assessment of VCPL for the assessment year 2001-2002 and had demanded income tax of Rs. 79,40,757/- vide assessment order dated 29.03.2004 passed by ACIT, Central Circle III, but on appeal filed to the CIT (Appeals) against this order, the CIT (Appeals) vide order-in-appeal dated 6.8.2004, after discussing test r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than 99%, is only about 90%. Moreover, we also find merit in the appellants contention that gutka is a heterogeneous mixture mixed manually and not a homogenous mixture and, therefore, testing of a small quantity of gutka 1.8 gms in this case, cannot give correct results, more so, in case of a volatile substance like menthol, which evaporates over a period of time. For these reasons only, the Commissioner of Income Tax (Appeals) in his order-in-appeal dated 6.8.2004 has not relied upon this report and has set aside the assessment order of the ACIT. In view of this, there is no justification for relying upon this report for the purposes of these proceedings. 46.3 As regards excess consumption of unaccounted receipt of canvas bags to the tune of 510650 during the period from April, 2002 to 4.7.2003 from RLRC, we find that according to the appellant during this period, they had received only 105000 canvass bags and the allegation of excess receipt to the tune of about 510650 canvass bags is based on the entries in the gate register maintained by gate officers at the factory of RLRC. Though the gate entries are backed by delivery challans, those delivery challans nowhere indicate th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd to be nil. Their plea is that these items were available in the factory and that even the panchnama of search of the factory is silent on this issue. We find merit in this contention of the appellant, as the panchnama does not record any unexplained shortage of jute bags and menthol. Therefore, it cannot be alleged that there was unexplained shortage of jute bags and menthol indicating use of these items in unaccounted manufacture of gutka cleared clandestinely. 46.4 While at the time of the officersvisit to the factory, there were 120 machines installed as against the declared number of 65 machines, it is not the allegation that more than 65 machines were being operated. The number of machines being operated at that time was only 65. Therefore, the excess number of machines by itself cannot be treated as evidence of unaccounted manufacture and clearance of gutka by the appellant. The presence of 120 machines against the declared number of 65 machines can be the supporting evidence if there is other cogent evidence of unaccounted manufacture and clearance of gutka by VCPL. It may not be out of place to mention here that the period involved in the present appeals is prior to co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce in respect of those consignments, there were no corresponding invoices on the record of VCPL, these consignments have been treated as clandestine clearances without payment of duty by VCPL. In this regard, on inquiry it was found that VCPL did have dealings with M/s. Leela Ram Gobind Ram, Kota, whose proprietor is Shri Leela Ram Makhija and according to the department, the abbreviation GRKmeans M/s. Leela Ram Gobind Ram Makhija. However, Shri Leela Ram Makhija in his statement dated 16.07.2003 while admitting that he was dealing in Gutka, pan masala and zarda for the last 22 to 25 years and that he was dealing in vimal brand gutka which they purchased directly from VCPL, stated that all the consignments of vimal brand gutka were received from VCPL only through Jaipur Golden Transport Company and they have never received any consignment of vimal brand gutka through GG Carriers. In the records of GG Carriers, at one page GRK Mr. Tulsi 9829035060was mentioned which indicated that there is one Mr. Tulsi connected with GRK and 9829035060 appeared to be the mobile number of Mr. Tulsi. When Shri Leela Ram Makhija was questioned about Mr. Tulsi he stated that he is his nephew working in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than the statement of Shri Harjinder Singh which is of no evidentiary value, there is absolutely no evidence that the consignment mentioned as booked in the names - GRK, GOB, Kaku, UMS, 013, 017, etc. are the consignment of vimal brand gutka booked by VCPL to their various outstation customers. 48.3 Ld. Departmental Representative, on the other hand, reiterating the findings of the adjudicating authority in the impugned order has emphasized that Shri Harjinder Singhs statement is correct, that the retraction of his statement in course of his cross-examination has no meaning and that from the statement of Shri Harjinder Singh, it is clear that the consignments booked in the name of GRK, GOB, UMS, Kaku, etc. were the consignments booked by VCPL to their outstation customers. He also points out to the words, GRK, Mr. Tulsi 9829035060 written in a paper recovered from the premises of GG Carriers and also the telephone numbers of the factory premises of VCPL and of the VCPLs employees, Shri Tripathi, Shri Dinesh of VCPL found written in a diary recovered from the premises of GG Carriers. 48.4 We have considered the submissions from both the sides. The main evidence which links VCPL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of VIMAL gutka through GG Carriers. No document in support of this allegation has been recovered from their premises. Though from the premises of M/s. Gobind Stores, 19 packets of VIMAL gutka containing 950 retail pouches of batch no.VG 07 packed on 07/2003 were recovered while last invoice issued by VCPL to M/s. Gobind Stores, Jaipur was No.161 dated 27.6.2003, which could not cover the 19 packets of VIMAL gutka packed in July, 2003, on this basis, it cannot be concluded that M/s. Gobind Stores, Jaipur were receiving clandestinely cleared consignments of gutka from VCPL through GG Carriers, as even as per the Department, no consignment of Vimal gutka has been booked through GG Carriers during 1st July, 2003 to 5th July, 2003 period and, therefore, these 950 retail pouches can not be linked to GG Carriers. 48.5 Similarly, no documents have been recovered from the premises of VCPL indicating that they had booked any consignment of VIMAL brand gutka through M/s. GG Carriers to Rajasthan. Though a number of entries in the loading register with code names like GRK, GOB, Kaku, etc. have truck no. also, we do not find any inquiry having been done with the drivers of these trucks t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n transporting vimal brand gutka for the last two months, that all the GRs issued by him in respect of gutka pertain to vimal brand gutka only and that the description of the goods and name of the consignor in the GRs had been shown different as per the advice of the VCPL. This statement of Shri Paramjit Singh was shown to Shri H. Sunder, Director of VCPL who in his statement dated 5.7.2003 stated that the same is correct. Accordingly, all the GRs with M/s. Gupta Chemical Works as the consignor have been treated as the GRs in respect of the consignments of vimal brand gutka cleared clandestinely by VCPL without payment of duty. In all, there are four such GRs showing M/s. Gupta Chemical Works as consignor and covered a total of 230 bags, which according to the statement of Shri Paramjit Kakkar and confirmed by the statement of Shri S.Sunder were the consignment of vimal brand gutka. Besides this, there were 17 truck guidance notes issued during the period from 19.05.2003 to 3.7.2003, which are in respect of 1710 bags of gutka. These truck guidance notes are for transportation of Gutka consignments but the same do not mention the name of the consignor or the name of the consignee. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty demand on the remaining bags is based on 17 truck guidance notes showing transportation of gutka to Gujarat, that neither any brand name of gutka is mentioned in these truck guidance notes nor there is any name of the consignor, that these truck guidance notes cannot be linked to VCPL and no duty can be demanded from VCPL on the goods covered under these truck guidance notes and, therefore, the duty demand based on these truck guidance notes is also without any basis. She however accepted the duty demand of about Rs.6.93 lakhs in respect of 210 bags seized from the transport godown which had been found to be containing vimal brand gutka. 49.3 As regards the duty demand of Rs.6,93,000/- on 210 bags which were found to be containing vimal brand gutka the same is not contested and as such, it is accepted that these bags containing vimal brand gutka had come from the factory premises of VCPL without payment of duty. 49.3.1 The confiscation of these 210 bags of gutka and imposition of redemption fine in lieu of confiscation is also upheld. As regards the confiscation of M/s. Singhal Transport Companys truck no.HR 38D-41/7 from which 40 bags had been seized and Tata 407 Truck N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of gutka being that of vimal brand. The duty liability, therefore, cannot be fixed upon VCPL on the basis of GRs issued in the name of M/s. Gupta Chemical Works without putting the admitted consignors to any investigation. Therefore, the confirmation of the demand of duty in respect of the said four GRs relating to 230 bags issued in the name of M/s.Gupta Chemical Works, is not sustainable. 49.4 As regards the duty demand in respect of the remaining bags covered under 17 truck guidance notes, ongoing through these truck guidance notes, we find that while these truck guidance notes are in respect of transportation of the consignments of gutka to Gujarat, there is nothing in these truck guidance notes, from which it can be ascertained as to who were the consignors and who were the consignees and as to whether the consignees were the persons having dealings with VCPL. In view of this, we hold that the duty demand based on 17 truck guidance notes is not sustainable. 49.5 Thus the duty demand of Rs.6,93,000/- on 210 bags of VIMAL brand gutka seized from the godown of M/s. Singhal Transport and Truck No.HR-38 D4117 is upheld, the duty demand based on the documents recovered from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty of Rs.2,77,39,800/- has been demanded on this basis. 50.2 While the ld. Departmental Representative defends the impugned order confirming this duty demand based on the records of the Delhi Indore Transport Company, Ms. Seema Jain, ld. Counsel for the appellants, pleads that absolutely no documents were recovered showing that VCPL had booked any consignments of Vimal brand gutka through Delhi Indore Transport, that the only basis of the departments allegation of booking of the clandestinely cleared consignments of gutka by VCPL through this transport company is the entries like V/40, V/10, V/5, etc. in the loading register/day register of the transport company, which according to the statements of the booking clerks, represent the consignments of Vimal brand gutka, that no credibility can be attached to the statements of Shri Vijay Singh and Shri Ravinder Singh, as they have not been made available for cross examination and have tendered affidavits stating that entries like V/40, V/10, V/5 etc. in the register do not represent the consignment of Vimal brand gutka, that the loading register does not even mention the description of the goods and that just on the basis of such c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e brand name vimal brand was not mentioned on any GR and instead, the description of the goods was simply mentioned as gutka and that Vimal brand gutka was being booked for transport to the Jalgaon. A total of 5971 bags were found to have been booked under various challans and where the description of the goods was mentioned as gutka and in respect of which Shri Sushil Kumar had stated that the same is vimal brand gutka and all these consignments had been booked for transportation to Jalgaon. The department being of the view that these consignments have been clandestinely cleared by VCPL without payment of duty inasmuch as on the dates of bookings, no invoices covering these goods had been issued, has demanded duty of Rs.1,97,04,300/-. 51.2 While ld. DR defended the impugned order confirming this demand on the basis of the evidence as discussed above and also pointed out that a diary was found in which telephone numbers of employees of VCPL had been written, Ms. Seema Jain, ld. Counsel for the appellant pleaded that the statement of Shri Sushil Kumar is not reliable as he subsequently filed an affidavit that he never checked the brand name of gutka and no brand name was mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... From the premises of M/s. Harsh Transport Co. Pvt. Ltd., Delhi while there was no seizure of any consignment of gutka, 90 GR books and 30 challan books were submitted by Shri Ravi Bhandari, Managing Director and the same were resumed by the investigation officers. Besides this, there were five blank bill books of Vikas Plastics, Himanshu Auto, Prakash Sales Store and National Trading, etc. Challans showed despatch of a number of consignments of gutka a total of 2267 bags to various locations with the different parties as consignors. Shri Ravi Bhandari, Managing Director of the Transport Company in his statement stated that these consignments were of vimal brand gutka, which had been transported to Chindwara, even though the GRs mentioned destinations other than Chindwara, that these consignments had been transported to Bhopal from where the same had been delivered to M/s. Santosh Tobacco, Chindwara through M/s. Indian Goods Transport, that wherever the term gutkais mentioned in the challans or GRs, it pertains to vimal brand gutka, as they have not transported any other brand of gutka, that though the consignments of Vimal brand gutka were meant for transportation to Chindwara, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. DR supports the impugned order confirming this duty demand emphasizing on the evidence on record as mentioned above and pleaded that in all the consignments booked by this transport company where the description of the goods was mentioned as gutka, the consignors were found to be fictitious and all these consignments were of VIMAL brand gutka which were delivered to Santosh Tobaco, Chindwara and same had been cleared clandestinely without payment of duty. 52.2 Ms. Seema Jain, ld. Counsel for the appellant pleaded that five blank bill books of Vikas Plastics, Himanshu Auto, Prakash Sales Store and National Trading were not of the VCPL and no bill books of the said companies had been resumed from the premises of VCPL, that the documents on the basis of which the demand has been raised have not been supplied despite request, that cross examination of Shir Ravi Bhandari had been allowed, that in course of his cross examination, he stated that the invoices accompanying the goods did not mention the brand of the goods as Vimal brand gutka, that Shri Kamal Panjwani in course of his cross examination has denied having knowledge of the brand name of the gutka, that the consignment of 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra, there is no other evidence to link these GRs with VCPL. Shri Ravi Bhandari in course of his cross examination has stated that he was not aware of the brand name of gutka booked under the GRs in question. Shri Santosh Kdumar Mishra has retracted his statement implicating Shri Dubey of VCPL by filing an affidavit, but still his cross-examination, even though requested, was not allowed. Though there is a letter dated 18.11.2003 of Shri Panjwani of M/s. Harsh Transport to 510, DGCEI mentioning delivery of consignments of VIMAL gutka booked by VCPL to M/s.Santosh Tobacco, Chindwara, neither any inquiry has been conducted with M/s. Santosh Tobacco to confirm the averment of Shri Panjwani nor it is known as to whether the premises of M/s.Santosh Tobacco at Chindewara were searched and if so what was the result. In view of this, neither the duty demand based on the basis of the GRs issued with M/s. Sadhana Sales Agency as consignor including the duty demand on 9 bags under seizure is sustainable nor the 9 bags seized are liable for confiscation nor penalty under Rule 26 of Central Excise Rules, 2002 is imposable on M/s.Santosh Tobacco. 52.4 As regards the GRs with persons other than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aside. 53.3 As regards duty on 950 gutka pouches recovered from M/s. Gobind Stores, since as per the batch number printed on them, the same were packed in July, 2003, the claim of VCPL that the same were part of the goods sold to M/s.Gobind Stores under the invoice no.161 dated 27.06.2003 is not acceptable and these goods have to be treated as cleared by VCPL without payment of duty. Therefore, duty demand of Rs.285/- from VCPL on these pouches along with interest under Section 11AB, penalty on VCPL under Section 11 AC and their confiscatioin has to be upheld. 54. Confiscation of 941.8 kgs. of printed plastic laminates for packing of VIMALbrand gutka and 26.95 kgs. of printed plastic laminates for packing of Keemtibrand gutka, seized from the factory premises of M/s. Pragati International, Delhi and imposition of penalty on him. 54.1 The above stock of printed plastic laminates had been seized from the factory premises of M/s. Pragati International, Delhi, which had central excise registration. Since the above stock of printed plastic laminates was not accounted for in RG-1 register, the same has been correctly confiscated under Rule 25 (1) of Central Excise Rules, 2001/2002 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by VCPL without payment of duty and without issue of invoice, (b) 950 VIMAL gutka pouches seized from M/s. Gobind Stores, Jaipur; and (c) confiscation of printed plastic laminates seized from the premises of M/s. Pragati International, Delhi; and imposition of redemption fine and penalty on this count on VCPL/M/s. Pragati International is to be upheld, confiscation of 9 bags of VIMAL gutka seized from Bhopal office of M/s. Harsh Transport Company and confiscation of 30518 VIMAL gutka pouches from Shri Lakshmi Prakash Gupta, Seoni and penalty is not sustainable. 55.6 Duty demand from VCPL on 9 bags of VIMAL gutka seized from Bhopal office of M/s. Harsh Transport Co. and on 30518 VIMAL gutka pouches seized from Shri Lakshmi Prakash Gupta of Seoni is not sustainable. However, duty demand of Rs.285/- from VCPL on 950 VIMAL gutka pouches seized from M/s. Gobind Stores, Jaipur is sustainable. 55.7 Neither the Truck No.HR-38 D-4117 of M/s. Singhal Transport Co. nor the Tata 407 tempo no.DL-1L A6232 of Shri Mohd. Kayum Khan is laible for confiscation nor any penalty is imposable on Shri Mohd. Kayum Khan under Rule 26 of the Central Excise Rules, 2001/2002, Rule 209 A of the Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PL also used to speak to him for availability of space and that brand name of vimal was not written on the GRs on the instructions of VCPL. He also gave the telephone number of VCPL on which he used to talk. Statements of Shri M.L. Sharma, Loading Incharge of Laxmi Freight Carriers were recorded on 22.09.2010 and 8.10.2003, wherein he stated that they used to receive vimal brand gutka in tempos and that Shri R.K. Tripathi of VCPL used to speak to him. But Shri R.K. Tripathi of VCPL and Shri H. Sunder, Director, VCPL in their statements denied having booked any consignment of gutka through Laxmi Freight Carriers. Shri Miraz Khan, driver of the tempo and Shri Moh. Kayum Khan, owner of the tempo also in their statements stated that they have never transported any consignment of gutka from the factory of VCPL to Laxmi Freight Carriers. However, notwithstanding the denial by H. Sunder, Managing Director, VCPL, other employees in VCPL and of Shri Mohd. Kayum Khan, the officers were of the view that all the consignment of gutka booked in the name of Vikram Sales Agency, National Trading Company, etc. are the consignments of Vimal brand gutka booked by VCPL and the same have been cleared c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngements for transport and, therefore, any consignment of gutka found to have been booked by some traders cannot be presumed to have been booked by VCPL. 56.3 We have considered the submissions from both the sides. The duty demand is in respect of the consignments booked by Laxmi Freight under the bills of Vikram Sales Agency, A.M. Agency, National Trading Co., Goyal Trading Co., etc. A consignment of 140 bags booked under the bills of M/s Vikram Sales Agency was found to be containing vimal brand gutka. The departments contention is that all these consignments covered under the bills of Vikram Sales Agency, National Trading, Goyal Trading, etc. are of Vimal brand gutka which had been booked by VCPL who had cleared the same clandestinely without payment of duty and in this regard, reliance is placed on the statements of Shri Srikant and M.L. Sharma and also on the record of telephone calls of the phone of Shri R.K. Tripathi of VCPL. Shri H. Sunder, Director, VCPL, Shri R.K. Tripathi and other employees of VCPL have denied having booked any consignment of gutka through Laxmi Freight Carriers. Though according to Shri Srikant, the consignments of gutka were being brought in tempo, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rietor of M/s. Singhal Transport, wherein he agreed with the statement of Shri Puran Singh; and (c) call records of the mobile phone of Shri R.K. Tripathi of VCPL showing telephone contacts between him and Shri Paramjeet Singh during period from 1.7.2003 to 10.10.2003. 57.1 Shri H.Sunder of VCPL has denied having booked any consignment cleared by them through Singhal Transport during the period of dispute. Shri R.K. Tripathi of VCPL has also taken the same stand and stated that sometimes he arranged for transportation of the consignments of gutka for the buyers who had purchased the same at the factory gate in cash. 57.2 In this case, even if the Vimal brand gutka packed in 160 bags seized from the godown of M/s.Singhal Transport is assumed to be that manufactured by VCPL, the same cannot be treated as proved to have been cleared by VCPL without payment of duty, as other than the statements of Shri Puran Singh and Shri Paramjit Singh Kakkar and the telephone calls between Shri R.K. Tripathi of VCPL and Shri Paramjit Singh, there is no other evidence in support of the Departments allegation and this evidence is not sufficient to prove the allegation as -- (i) Shri H. Sunder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same would be liable for confiscation and VCPL would be liable for penalty on this count under Rule 25 (1) of the Central Excise Rules, 2002 which has to be upheld, even if there was confusion about duty liability as there is no explanation for clearance of the goods without any invoice. Accordingly, the confiscation of the seized sweet supari and imposition of redemption fine on VCPL under Rule 25(1) readwith Section 34 of Central Excise Act, 1944 on this count is upheld. 58.2 As regards imposition of penalty under Rule 26 of the Central Excise Rules, 2002 on M/s. Gopi Road Lines, penalty under this rule is imposable on a transporter only when there is evidence on record indicating that the transporter was involved in transportation of excisable goods with knowledge that the goods are liable for confiscation. In this case from the statement of Shri Rajveer Sharma of M/s. Gopi Road Lines, it is clear that while the goods were received on 1.9.2003, the same were not transported as he was told that the Manager, VCPL would come with the bill and the goods were not transported as he was still waiting for the bill. There is no evidence to disprove this statement of Shri Rajveer Shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or confiscation and as such, there is not infirmity in the impugned order on this point. 60. Though we have dealt with the individual evidence available and relied upon by the Revenue in respect of each transport company but before parting, we would like to deal with the general arguments advanced by the appellant, which are common to all the transport agencies. First of all ld. Advocate has strongly argued that they are not the only one engaged in the manufacture of gutka under the brand name of Vimal which starts with the English letter V. There are other manufacturing units located in the vicinity which are also manufacturing gutka and pan masala under different brand names, which start with the letter V. Ld. Advocate has disclosed that the other gutka manufacturers located in the same area are M/s.Prem Vijay Chemicals, M/s. Kuber Tobacco, M/s. Ashish Company, M/s. Vishal Company, etc. , who manufacture gutka under the brand name of Virat, Vishal, etc. The said manufacturers also use the services of the said transporters in question. As such, we note that to confirm the demand against M/s.VCPL on the basis of the records of the transporters, who may also be engaged in tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PL as contended before us, as M/s. VCPL was also selling gutka against cash at the factory gate. Such huge cash sales by the customers are admittedly required to be transported to their final destinations for which the said customers need the transport agencies. Shri Dubey may be only helping these customers in getting their goods booked through these transport agencies. In absence of recovery of any GRs issued by the six transport companies involved in this case from the premises of VCPL, the said fact cannot be considered to be a clinching evidence so as to reflect upon the clandestine activities of VCPL. 62. We also take into consideration the submission of the ld. Advocate that as their brand Vimal was a very popular and famous brand name, the other spurious manufacturers were taking the benefit of the same and were engaged in the manufacture of gutka by using their brand name. For the said proposition, they had also lodged a FIR much prior to the date of visit of the officers or initiation of the present proceedings. As regards the FIR, the same has been proved to be correct inasmuch as the Police Authorities recovered 480 bags of gutka manufactured by those spurious manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the time of cross examination during the course of adjudication. Otherwise also, we have also observed that it was not possible for the employees of the transport company to find out the brand name of gutka contained in the gunny bags inasmuch as no such brand name is admittedly written on the outer surface of the said gunny bags. Further, ld. Advocate appearing for the appellants have been able to demonstrate some of the statements as being contrary to the records. 64. The Tribunal in the case of Kothari Pouches Ltd. Vs. Commissioner of Central Excise, New Delhi reported in 2001 (135) ELT 531 (Tribunal-Delhi) has held that the charges of clandestine removal cannot be upheld on the basis of the documents of transporters relied on by the department without any independent corroborative evidences. Further, the Tribunal in the case of Commissioner of Central Excise, Chennai Vs. R.B. Steels Pvt. Ltd. reported in 2009 (243) ELT 316 (Tribunal-Chennai) has held that merely on the basis of the account and the records maintained by the transporters, in the absence of the identification of the persons, who maintained them and their cross examination, clandestine removal cannot be upheld in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... procurement of such huge raw materials neither source of the same has been identified by Revenue. Similarly, we find that the Revenue has not bothered to record the statements of the workers of the appellant, who are engaged in the actual manufacture and packing of the gutka/pan masala. In most of the cases, no buyers stand identified and where the buyers were identified either no inquiry was conducted with them (the cases of M/s. Santosh Tobacco and M/s. Gupta Chemical Works) or if inquiry was conducted, they have denied having received the consignments of gutka through the transporters mentioned above. As such, we are of the view that confirmation of demand of duty based upon the half written ambiguous records of the third party is neither justified nor warranted nor is in accordance with law. 62. In view of the foregoing, we dispose of the appeals as under:- 62.1 Appeals filed against Order-in-Original No.141/05 dated 9.6.2005. 62.1.1 In respect of appeals filed by VCPL and its Director, Shri H. Sunder, only duty demand of Rs.6,93,285/- along with interest under Section 11 AB and penalty of equal amount under Section 11 AC is upheld. The remaining duty demand against VCPL ..... X X X X Extracts X X X X X X X X Extracts X X X X
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