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TMI Blog2017 (2) TMI 1028X X X X Extracts X X X X X X X X Extracts X X X X ..... der the compounded levy scheme as per Masala Packing Machines (Capacity Determination & Collection of Duty) Rules, 2008 or not? - Held that: - As the Pan Masala Packing Machines (Capacity Determination & Collection of Duty) Rules, 2008 were not in existence during the relevant time. Moreover, these rules have not been made effective retrospectively, in that circumstance, the duty cannot be demanded under Pan Masala Packing Machines (Capacity Determination & Collection of Duty) Rules, 2008 - method of calculation of demand set aside. Whether the documents resumed from the residence of Sh. Manoj Rajouria can be relied upon to demand duty from M/s. Som? - Whether in the absence of any evidence on record except the documents record from the residence of Sh. Manoj Rajouria, the duty can be demanded or not? - Held that: - the department has clubbed together several railway receipts, sometimes of different dates to correspond with the quantity of Gutkha shown as transported in the resumed documents. It is not correct that there are several gutkha manufacturers in and around Delhi who transported their goods through railways but no efforts have been made to ascertain whether the gutkha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulfilled by them. (v) I impose penalty under Rule 26(1) of the Central Excise Rules, 2002 as under:- Sh. Satish Seth, Director ₹ 1 Crore (Rupees One Crore) Sh. Ashok Nahata, Director ₹ 25 laksh (Rupees Twenty Five Lakhs) Sh. R.R. Jaggi, Production Supervisor ₹ 5 Lakhs (Rupees Five Lakhs) Sh. Gyan Chand Sharma Authorised Signatory, Rs. 5 Lakhs (Rupees Five Lakhs) Sh. Manoj Rajouria ₹ 10 Lakhs (Ten Lakhs) 2. The facts of the case are that an intelligence was received that M/s. Som Sugandh Industries Ltd. (hereinafter referred to as M/s. Som) was evading Central Excise duty by way of suppression of production and clandestine removal of their finished goods. The information also indicated that the documents evidencing suppressed production and clandestine clearances ware secreted at the residence of one Shri Manoj Rajouria located at 525, village, Kundli, Sonepat. Searches were conducted simultaneously at the factory premises of M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Duty) Rules, 2008. Accordingly, he confirmed demand the demand of duty of ₹ 8,25,00,000/- against M/s. Som which was to be paid alongwith interest and imposed penalty of ₹ 8,28,45,474/- under Rule 25 and various penalties on the co-appellants. Aggrieved with the said order, M/s. Som and its directors and authorized signatory are in appeal. The Revenue has challenged the said order on the ground that the adjudicating authority fell in error by doing best judgement assessment. 3. Learned Counsel appearing on behalf of M/s. Som and co-appellants and submits that the order passed by the adjudicating authority is beyond the allegation made in the show cause notice. In fact, in the impugned order, the duty has been demanded under compounded levy scheme whereas there was no such proposal in the show cause notice. Moreover, Pan Masala Packing Machines (Capacity Determination Collection of Duty) Rules, 2008 were not in existence during the relevant time. Therefore, the impugned order is to be set aside as the adjudicating authority cannot go beyond the allegation made in the show cause notice. To support her contention, she relied on the decision of Hon'ble Apex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he was given ₹ 10,000/- per month to keep GR account has not been corroborated by any evidence. Records resumed from third party premises cannot be relied upon without independent corroboration. She submits that visit was on the basis of intelligence that the documents evidencing suppressed production and clandestine clearances were secreted at the residence of Sh. Manoj Rajouri. Such explicit information itself speaks of the malafide intention of the informer to implicate the M/s. Som. 7. It is her submission that, Shri R.k. Jaggi, production supervisor author of some of the seized documents in cross examination admitted that no production/dispatch slips used to be officially prepared and that he had given the production documents to Shri Manoja Rajouria on friendship basis to assist him in getting revenge with Sh. Satish Seth and Sh. Ashok Nahata, directors and these documents were prepared on the basis of actual production and dispatches through some of the figures could be fabricated. He also stated that he did not prepare the dispatch slips. 8. It is her submission that, Shri Manoja Rajouria in his cross examination stated that as he had enmity with Sh. Satish Seth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e transporters shown to have transported the goods of M/s. Som in the seized documents was M/s Transolutions Pvt. Ltd. The department visited premises of M/s. Transolutions Pvt. Ltd. and procured the consignment notes of M/s. Transolutions Pvt. Ltd. in respect of gutkha booked by it. The names of the various traders appear as consignors in the consignment notes, neither the name of the M/s. Som nor the brand name appear on the consignment notes. Not a single bill book of the various traders was found in the premises of M/s. Som or for that matter in the premises of Sh. Manoj Rajouria also. The department has added together several consignments in order to tally the dispatch as mentioned in the seized documents. Therefore, there is no evidence that gutkha transported through M/s Transolutions Pvt. Ltd. was of M/s. Som. There is no corroboration between the GR account maintained by Sh. Manoj Rajouria in his hand writing with the dispatch details from his premises. 13. It is her submissions that M/s. Som has no capacity to manufacture goods as per seized documents. The departmental officers ascertained the speed of machines at the time of visit as recorded in the panchnama. Even if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tish Seth the speed of the machines could have been altered and after alteration, the machine could have produced such huge quantity of 50.89 crores pouches. Therefore, the demand is to be confirmed on the basis of documents resumed from the premises of Sh. Manoj Rajouria. 18. Heard the parties and considered the submissions. 19. On careful consideration of the rival submissions of both sides, the following issues has emerged: (1) Whether the Commissioner is correct in demanding duty on the basis of production capacity which is not alleged in the show cause notice. (2) Whether the Commissioner is correct in demanding duty under the compounded levy scheme as per Masala Packing Machines (Capacity Determination Collection of Duty) Rules, 2008 or not (3) Whether the documents resumed from the residence of Sh. Manoj Rajouria can be relied upon to demand duty from M/s. Som. 4. Whether in the absence of any evidence on record except the documents record from the residence of Sh. Manoj Rajouria, the duty can be demanded or not? Issue No-I 20. Admittedly in the show cause notice, the demand has been proposed on the basis of the documents resumed from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or not. We have seen that in this case, Sh. Manoja Rajouria is the third party who was the director in 2005 and he was made to resign from the directorship when M/s. Som was formed and was not taken as director or employee and had no role in the working of M/s. Som, these facts have not been denied by the Revenue. With regard to the records recovered from the premises of Shri Manoj Rajouria, in his cross examination, Shri Manoj Rajouria categorically stated that he had enmity with the other directors and wanted to take revenge. He was helped to collect the incriminating documents and prepared these in the form of these documents recovered from the premises. These documents were prepared on the basis of production information prepared by Sh. R.k. Jaggi, production supervisor of M/s. Som. With regard to the despatch slips, in his cross examination, he categorically stated that he got the dispatch slips prepared by a person known to him on the basis of information given by Sh. R.k. Jaggi. The cross examination of the Shri R.k. Jaggi revealed that the documents prepared on the basis of actual production and stated that some of the figures could be fabricated. 25. The documents recov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecords, loose slips showing raw materials for manufacturing gutkha/pan masala/khaini, date wise production, dispatch, consignment notes, central excise invoices etc. The corroborative / evidentiary value of these are to be appreciated in proper perspective. c) The allegation in the notice was that during the relevant period, M/s Som manufactured /cleared 50.89 crore pouches, involving duty of ₹ 15.15 crores whereas quantification of duty has been made based on best judgement method, following the norms of Panmasala Rules, 2008. These Rules which were of later origin perse cannot be made applicable to the impugned period. Though it can be argued for Revenue that the provisions were considered as bench mark only and not as applied law, the dispute still remains regarding correct quantification duty demandable from M/s. Som. d) the reliance on various railway receipts requires re-examination. All such receipts cannot be clubbed for the reasons already discussed above. e) Similarly, consignment notes and other private records are treated in a summary manner while arriving at conclusion. f) M/s. Som paid ₹ 8 crores towards admitted duty liability and appl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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