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TMI Blog2016 (2) TMI 330X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Revenue that M/s. Sharp has mis declared the goods. We find that M/s. Sharp has declared residue / terpene and as per the report of IIT, these goods they were found rejects. The Adjudicating authority failed to answer the questions what is the difference between residue and reject and have not analyzed the same. In these circumstances, we hold that charge of mis declaration is not sustainable. Consequently, allegation of mis declaration of goods is set aside. - Appeal No. E/1492 & 1946/2008-EX(DB) - FINAL ORDER NO. 53285-53286/2015-EX(DB) - Dated:- 29-10-2015 - SHRI ASHOK JINDAL, MEMBER (JUDICIAL) AND SHRI B. RAVICHANDRAN, MEMBER (TECHNICAL) For the Petitioner : Shri C. Harishankaran Shri S. Sunil, Advocate for M/s. Sharp For the Respondent : Shri Govind Dixit, DR ORDER Per Ashok Jindal: M/s. Sharp Menthol India Ltd. ( in short Sharp) has filed an appeal against the following order-in-original dated 15.5.2008 of Commissioner of Central Excise, New Delhi. The operative portion of the impugned order reads as under: i) I order confiscation of finished excisable goods of 2486 drums containing 447840 kgs. Valued at ₹ 3,75,53,400/- and as d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile the same were being shown in their records received from J K Unit. They are claiming rebate of duty on export of goods manufactured from these non-duty paid inputs which were being received by them directly from these tiny manufactures / traders located in UP. While in records, inputs like menthol, DMO, etc., were shown to have been procured from J K Unit. In this background, a search were conducted by DGCEI at the factory premises in Jammu Kathua, traders / suppliers of unprocessed menthol oil and piperita oil in UP, transporters in Jammu, Delhi and UP unit, premises of Sharp Menthol India Ltd. and Sharp Aromatics India (P) ltd. Bhiwadi and their registered offices as well as residential premises of the officials of Sharp group. On investigation, it revealed that a huge quantity of unaccounted menthol and its derivatives were kept in the godown of M/s. Sharp at Khasra No. 644-645, opposite G.M. Public School, Jeewan Park Extension, Siraspur Village, Delhi. The said premises were searched on 18.07.2006. At the time of search, Shri Kamal Kumar, Head Quality Control and Shri Balwant Singh Rana, accountant of M/s. Sharp were present. Two godowns marked 1 and 16 were containi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the said goods have been derived upon fractionation of crude mentha oil which is manufactured in the factory of M/s. Sharp. In these set of facts Central Excise duty was proposed to be demanded on these goods along with interest and proposal for imposing penalty was also made. The matter was adjudicated. The Adjudicating authority dropped the demand with regard to Sample No.1A, 16D 16E found to be containing menthol piperita oil as declared and also dropped the demand for sample No. 2-F and 2-G found to be spearmint oil as declared on the ground that these are being inputs procured by M/s. Sharp from UP traders for processing their final product for export. For rest of the goods, the demand of duty were confirmed along with interest and penalty on M/s. Sharp was also imposed. Aggrieved from the said order, M/s. Sharp has filed appeal for confirming duty demand along with interest and imposing penalty and Revenue is in appeal against the order dropping demand for samples no. 1A, 16D, 16F, 2F and 2G. 7. Shri C. Harishankar Sr. Advocate, Ld. Counsel for M/s. Sharp appeared before us and submitted that the manner in which the department has proceeded to segregate the contents of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice alleged that M/s. Sharp has mis-declared the contents of drums at Sl. No. 8-19 in the table above by declaring them to terpene or residue whereas the drum at sl. No. 8, 11, 13 to 19 were found to be contained terponoidal rejects and drums at Sl. No. 9, 10 12 were found to contain material containing L-menthol in various percentages. However, the show cause notice while pointing out this difference in terminology and nomenclature does not explain how in fact the items were different. There is nothing in show cause notice which explains how terponoidal rejects could not come within the ambit of the expression residue or even terpene or for that matter, why terpene or residue could not contain L-menthol. No such clarification was sought from the IIT Delhi, neither was any expert opinion sought in this regard. Therefore, onus of proof of such mis-declaration on the part of M/s. Sharp as alleged is squarely on the Revenue who has failed to discharge the same. The allegation of the Department that M/s. Sharp has mis-declared the contents of drum Sl. No. 8-19 is not supported by any sufficient or credible material. The copies of the test report were made available to M/s. Sharp o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t intended for sale. But the adjudicating authority has rejected the contention of M/s. Sharp on the ground that M/s. Sharp has shifted its stand in as much as it is initially contended that said goods were mentha piperita oil and spearmint oil and there was no evidence of removal of the goods in the year 1999 prior to obtaining Central excise registration by M/s. Sharp. These findings of the Adjudicating authority are without merits, as M/s. Sharp has never contended it at any point of time that goods at Sl. No. 8-19 were mentha piperita oil or spearmint oil. So there is no shift in stand. Further, the onus is on the Revenue to prove clandestine removal. The said onus has not been discharged in this case in the light of the decision of the Hon ble High Court of Delhi in the case of Flevel International in Central Excise Appeal in Civil No. 6/2003 dated 17.09.2015. In the impugned order the Adjudicating Authority refers to un-retracted statements to support the case of revenue without identifying said statement or the makers thereof. In fact, none of the statement is inculcatory statement. So therefore, the question of retraction of the same does not arise. 7.4 He further submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p is liable to pay duty. 10. In these circumstances, he submits that adjudicating authority has rightly demanded duty and held liable for confiscation the goods. Interest and penalty is rightly been imposed. For the rest of the part of the order he reiterated the findings of the impugned order. Therefore, he submits that the Revenue s appeal be allowed and M/s. Sharp s appeal be dismissed. 11. Heard the parties. Noted the submission. 12. After hearing both the sides, we frame the following issues: a) Whether the method adopted for taking samples from the godown No. 1, 16 2 is correct or not. b) Whether the ld. Commissioner was correct in holding that the goods mentioned as Sample No. 1A, 16D, 16E, 2F 2G are input and have been procured by the appellant from the traders for further processing the same or not ? If not, then the liability of goods for confiscation and the consequences thereof. c) Whether the Ld. Commissioner is correct to demand duty on the goods contained in samples in Sl. No. 1B, 1C 2H to 2S helding that goods are found to be mis-declared by the M/s. Sharp . Consequently, these goods are liable for confiscation and consequence the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nothing in record to show that representatives samples were drawn. 13.2) Therefore, we answer the question in favour of M/s. Sharp to hold that the segregation of drums into different groups is totally illogical and allegation of mis declaration stands disproved. Accordingly on the ground of mis declaration duty cannot be demanded from M/s. Sharp. 13.3) Therefore, we hold that the demands on the ground of mis-declaration is not sustainable as the method of drawing the samples is not correct. Issue No. b) 14. We find that the adjudicating authority has dropped the demand against M/s. Sharp on the basis of test report of IIT Delhi for the goods contained in group of sample No. 1A, 16D, 16E, 2F 2G on the ground that these are inputs procured by M/s. Sharp and found to be as declared. The Adjudicating Authority has rightly held that these are mentha piperita oil which are the input and on inputs duty cannot be demanded from M/s. Sharp as duty is to be demanded on manufactured goods. The case of the Revenue is that as per the statement of M/s. Vishal Chemicals and M/s. Krishna Flavour these goods have not been purchased from them by M/s. Sharp but the contention of M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Adjudicating authority failed to answer the questions what is the difference between residue and reject and have not analyzed the same. In these circumstances, we hold that charge of mis declaration is not sustainable. Consequently, allegation of mis declaration of goods is set aside. Issue No. d) 16. The last issue to be dealt is whether M/s. Sharp has clandestinely removed the goods contained in the drums representing samples 2H-2S or not. 16.1 It is an admitted fact that during the course of investigation, these goods were found to be processed goods and on processed goods, the assessee is required to pay duty. The claim of M/s. Sharp is that these are waste / residue and having no value and the Adjudicating authority has adopted the method of valuation to derive the assessable value as per the value of similar goods without identifying from where he have taken the value of similar goods and why those values have been adopted, therefore, the value adopted by the adjudicating authority is held to be not correct. 16.2 Moreover, the claim of M/s. Sharp is that these goods were manufactured by them during the period 1998 before obtaining Central Excise Registration ..... X X X X Extracts X X X X X X X X Extracts X X X X
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