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TMI Blog2017 (2) TMI 573X X X X Extracts X X X X X X X X Extracts X X X X ..... knowledge of the Revenue that the goods manufactured by the appellants was branded Chewing Tobacco. If on the basis of test report submitted by the Shriram Institute for Industrial Research, Delhi, Revenue had a reason to believe that the goods manufactured by appellants were Gutkha/Pan Masala, then under Law it was necessary for Revenue to issue SCN to the appellant calling upon them to show cause as to why the goods manufactured by them should not be treated as Gutkha/Pan Masala classifiable under Tariff Item No. 2403 9990. Instead Revenue unilaterally concluded that the goods manufactured by appellants were Gutkha/Pan Masala. Therefore, there has been violation of principle of natural justice and said SCN indicates the pre judging of the issue by the framers of the charge in the SCN - there has been miscarriage of justice. Appeal allowed - decided in favor of appellant. X X X X Extracts X X X X X X X X Extracts X X X X ..... Jawahar Lal Modi was recorded on 27.02.2010, who had deposed that Shri Rajesh Nikhara was accountant of the party. The residential premises of Shri Rajesh Nakhara was searched on 27.02.2010, and some documents CPU/Pend Drive & CDs were resumed from his residence. On 27.02.2010 statement of Shri Rajesh Nakhara was recorded who deposed before the Central Excise Officers that he was an accountant by profession and that he maintained the accounts of people in the Computer and files and that the businessmen got their accounts prepared by visiting him personally and that he completed their work while staying at home and that he looked after the work of M/s Milan Products, M/s Milan & Sons and M/s Madhur & Co., and that all said three companies manufactured Maa , Hathi , Tota & Shree brand of Chewing Tobacco. Shri Jawahar Lal Modi in his statement dated 27.02.2010 deposed before the Office of Central Excise that he looked after work of M/s Milan & sons and M/s Madhur and Co. Mauranipur and that M/s Milan Products, M/s Milan & Sons and M/s Madhur & Co. manufactured Tota , Maa and Hathi brand Chewing Tobacco. At the factory premises of M/s Milan & Sons 2275 pouches of different brand Chewin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilan & Sons on 25.08.2010 and collected samples of Haathi Chhap 8 No. tobacco through Panchnama dated 25.08.2010 from the goods seized referred to earlier. The Officers of DGCEI visited factory premises of M/s Milan Products on 25.08.2010 and drawn written sample of Maa Chhap 8 no. tobacco through Panchnama from the goods seized referred to earlier. The Officers of DGCEI visited the factory premises of M/s Madhur and Company and collected written sample of Tota Chhap 8 No. Tobacco and Shree Chhap 8 No. Tobacco under panchnama from the goods seized referred to earlier. Samples of branded Chewing Tobacco were got tested through Shri Ram Institute for Industrial Research, Delhi. All test report dated 19.10.2010 in respect of samples drawn from M/s Milan Products, M/s Madhur & Company and M/s Milan & Sons certified presence of betel nut, Lime & Katha in the samples tested by them. On the basis of data recovered from electronic devices and on the basis of test report once again statements of various persons associated were recorded. On the basis of above stated investigations, it appeared to Revenue that the products manufactured by M/s Milan & Company, Mayank & Company, M/s Madhur & Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty days (30) days of the receipt of this notice as to why: (i) Central Excise duty amounting to ₹ 7,51,14,382/- and ₹ 1,50,00,000/- on M/s Milan & Co., Mauranipur, District-Jhansi, Rs/1,62,50,000/- on M/s Mayank & Company, Mauranipur, District-Jhansi, ₹ 3,37,50,000/- on M/s Madhur & Company Mauranipur, District-Jhansi, ₹ 5,62,50,000/- on M/s Milan & Sons, Mauranipur, District-Jhansi and ₹ 2,25,00,000/- on M/s Milan Products, Mauranipur, District-Jhansi (as detailed in table No.32 & 33 shown in para 48 & 48(iii) respectively) not paid by them should not be demanded and recovered from them separately under the proviso to Sub-Section (1) of Section 11A of the Act ibid. (ii) penalty should not be imposed under Rule 25 of the Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944 upon M/s Milan & Co., Mauranipur, District-Jhansi, upon central Excise duty evasion for the period 01.12.2006 to 30.06.2008. (iii) Penalty should not be imposed under Rule 17 of Pan Masala Packing Machine Rule 2003, read with Section 11AC of the Central Excise Act, 1944 upon M/s Milan & Co., M/s Mayank & Company, M/s Madhur & Company, M/s Milan & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the jurisdictional range Superintendent vide their letter dated 01.08.2006 that they were undertaking the manufacture of different brands of Tobacco and each 7.5gm pouch would contain 4gms of perfumed No.8 Tobacco along with 3gms. Supari Powder and their manufacturing unit was verified on 13.10.2006 by Central Excise Officers and again on 08.11.2006, who verified their RG-I Register and made an endorsement in the said register and did not find any discrepancy as compelled to the declaration about the goods being manufactured by them submitted to Range Superintendent. Further, at the time of introduction of said Pan Masala Packing Machines Rules, 2008, they through letter dated 11.07.2007 had informed the range Superintendent that they were not using Katha and Lime in their product and their product was not "Pan Masala or Gutkha and further that they wound up their manufacturing activities on 05.04.2009 and surrendered Central Excise registration on 28.05.2009. They further contended that on the basis of result of incomparable products of other assessees, the goods manufactured by them which have stopped production by the time raid was conducted were alleged to be Pan Masala or Gut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d none of them in their statement dated 27.02.2010 stated that M/s Madhur & Company was engaged in the manufacture of Pan Masala or Gutkha . On the contrary, all of them categorically, unambiguously, consistently and repeatedly clarified that M/s Madhur & Co. were engaged in the manufacture of branded Tobacco products. They Further stated that Shri Jawahar Lal Modi in his statement dated 27.02.2010 stated that M/s Madhur & Company was engaged in the manufacture of Chewing Tobacco. They further contended that in their show cause notice No.DZU/INV./66/D/C.Ex./2010 dated 20.06.2010, it was proposed to confiscate branded tobacco detained and seized from their premises and the said show-cause-notice did not described the said goods proposed to be confiscated as Pan Masala or Gutkha . They contended that in view of the said show cause notice issued by them, they contended that they did not manufacture Pan Masala or Gutkha and, therefore, duty in respect of Pan Masala or Gutkha was not payable by them. 7. M/s Milan & Sons vide their defence reply reiterated the facts similar to the facts as put forth by M/s Madhur and Company and contended that they never manufactured Gutkha and demand C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Machine (Capacity determination and Collection of Duty) Rules, 2008, also read with Section 11AC of Central Excise Act, 1944 . (Vii) I confirm the demand of duty of ₹ 3,37,50,000/- made against M/s Madhur & Company, Mauranipur, District-Jhansi (noticee No.3), and order for its recovery under Section 11A of Central Excise Act, 1944. (viii) I also confirm the demand of interest, on the above duty amount of ₹ 3,37,50,000/-, under Section 11AA (erstwhile Section 11AB) of Central Excise Act, 1944. (ix) I also impose a penalty of ₹ 3,37,50,000/- on M/s Madhur & Company, Mauranipur, District-Jhansi (noticee No.3), under Rule 17 of Pan Masala Packing Machine (Capacity determination and Collection of Duty) Rules, 2008, read with Section 11AC of Central Excise Act, 1944. (x) I confirm the demand of duty of ₹ 5,62,50,000/- made against M/s Milan & Sons, Mauranipur, District-Jhansi (noticee No.4), and order for its recovery under Section 11A of Central Excise Act, 1944. (xi) I also confirm the demand of interest, on the above duty amount of ₹ 5,62,50,000/-, under Section 11AA (erstwhile Section 11AB) of Central Excise Act, 1944. (xii) I also im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regularly supplied to the computer in the ordinary course of the said activities was not fulfilled in the present case, since the computer from which data was retrieved was neither used by them nor belonged to them. They further contended that the documents stated to have been used in making entries in the Laptop neither were produced nor relied upon for issue of show cause notice. They further contended that the computer printouts relied upon by Revenue for issue of show cause notice to them also contained entries during the period when their factory was closed i.e. from 21.08.2007 to 05.10.2007. He further contended that the computer printouts were required to be taken out in presence of the noticee but it was taken out in the absence of noticee and no Panchanama was drawn for retrieval of printouts. They further contested the finding by the Original Authority that they had purchased raw materials and packing materials and the purchase was by payment through cash and the same were not entered into the statutory records. They contended that there was no evidence available on record for Commissioner i.e. Original Authority to come to such conclusion and such conclusion was only a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... samples were got tested through Shriram Institute for Industrial Research, Delhi when department had its own laboratory and under what authority such test can be relied on was not specified in the said show cause notice. He further contended that the test reports received from Shriram Institute for Industrial Research, Delhi show presence of Lime and Kattha and there is no mention of Tobacco in the said reports. He had contended that the reliability of test report given by Shriram Institute for Industrial Research, Delhi is doubtful and when they got one set of sample drawn on 25.08.2010 tested through Laboratory of State Government of Uttar Pradesh, the test report indicated that the samples did not contain Lime and Kattha. He further relied on the argument put forth in respect of Milan and Company in respect of computer printouts. He further contended that statements of various persons are recorded on 27.02.2010 and all of them stating that they were manufacturing branded Chewing Tobacco and nowhere it was stated that they were manufacturing Gutkha Pan Masala. He further contended that Sitaram Billaiya reiterated his statement dated 26.09.2011 vide his letter dated 05.10.2011 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the said show caused notice and therefore, Revenue did not find any goods liable for confiscation, and therefore, no person is liable to be imposed with penalty under Rule 26 of Central Excise Rules, 2002. 15. During the hearing on 08.07.2016, this Tribunal issued following Misc. Interim Order which is reproduced below: "We direct Revenue to file the following information/documents (i) Result of the samples forwarded through Ref. No.DZU/INV/65/D/C.CX/2010/4298 dated 01.09.2010 addressed to the Chemical Examiner, Shriram Institute for Industrial Research, Delhi by Capt. Kapil Choudhary, Dy. Director, Directorate General of Central Excise Intelligence, Delhi Zonal Unit; (ii) Copy of letter, Ref.No.DZU/INV/65/D/C.CX/2010/5440 dated 01.10.2010, in response to which test Certificate dated 19.10.2010, referred to in the SCN as RUG 53 was issued; (iii) Copy of letter, Ref. No.DZU/INV/65/D/C.CX/2010/5438 5439 dated 01.10.2010; (iv) Reasons available on record, if available, for not accepting the test report received in respect of samples forwarded through reference at (i) above; (v) The Dept. of Revenue s order through which, Shriram Institute for Industrial Research, De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eliable, therefore, the data revealed by said printouts is not reliable to confirm the demands. They have further argued that in the response submitted by Revenue for compliance of said Interim Order dated 08.07.2016, Revenue is silent on the reason as to why they have not submitted any order of the Department of Revenue through which Shriram Institute for Industrial Research, Delhi was recognized as laboratory for testing of samples in place of Central Revenue Control Laboratory, New Delhi. Therefore, the reliability of the test results given by Shriram Institute for Industrial Research, Delhi is not reliable for confirmation of demand. 18. Shri K.M. Mondal State counsel for Revenue, he has taken us through the order of the Original Authority and also relied on provisions of Para 8.11 of CBEC s supplementary instructions 2005. He further argued that the appellants had no right under the said para of supplementary instructions to get the set of samples in their possession tested in a laboratory of their choice ignoring the provisions of earlier paragraphs such as para 8.9 & 8.10 of the said instructions. He further contended that computer printouts were admissible as evidence. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o them by Department of Revenue to forward such samples for testing to Shriram Institute for Industrial Research, Delhi in place of Central Revenue Control Laboratory, New Delhi. The contention of the counsel for the appellant that they got one set of samples with them tested through laboratory belonging to Government of Uttar Pradesh which has given a test report indicating that there was no presence of Lime and Kattha in the said samples cannot be ignored. We further find that though there were weak evidences with Revenue it was unilaterally concluded in their show cause notice that the goods manufactured by the appellants were Pan Masala/Gutkha classifiable under Tariff Item No.2404 9990. We find that the show cause notice at the beginning discusses about the branded Chewing Tobacco being manufactured by the appellants and suddenly the said show cause notice started making allegations that the goods manufactured by appellants were Gutkha/Pan Masala. The show cause notice indicates that it was within the knowledge of the Revenue that the goods manufactured by the appellants was branded Chewing Tobacco. If on the basis of test report submitted by the Shriram Institute for Industri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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