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TMI Blog2017 (3) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... s found three pouch making machines and, Laxmi brand tobacco pouches and other materials. Further investigations were conducted and proceedings were initiated against the appellant. The case of the Revenue is that the main appellant produced and cleared tobacco pouches without accounting and payment of duty using the packing machines found in the premises of M/s. Rajesh Tobacco Co. The Original Authority upon adjudication of the case, concluded that in terms of the Chewing Tobacco and Unmanufactured Tobacco, Packing Machine (Capacity Determination and Collection of Duty ) Rules, 2010, the appellant are liable to pay central excise duty of Rs. 3,17,14,935/- for the period March, 2010 to Jan. 2011. The duty calculation has been made on prorata basis for the month of March, 2010 and Jan. 2011 and on the basis of number of machines and capacity for the remaining period. He also imposed penalty of equivalent amount on the main appellant and Rs. 50 Lakhs on Shri Rajesh Goyal, Director of the main appellant (second appellant). Confiscation of the unmanufactured tobacco and seized machines were also ordered with an option to redeem the same on payment of fines. 3. Ld. Counsel for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant is on the basis of the availability of three machines in the premises verified by the Central Excise Officers. The demand was confirmed by considering these machines as having been used for illicit packing of excisable goods which were later cleared resulting in non-payment of duty. Admittedly, no other corroborative evidence has either been collected or presented by the officers in confirmation of such demand. In such situation, the actual condition of the machine at the time of detention of the said machines has become crucial. We note that the appellant on various occasion (25/02/2011, 18/03/2011, 19/05/2011, 4/7/2011, 8/7/2011, 14/7/2011) repeatedly requested for examination of the machines by the experts. The same was not accepted by the Department. We are not able to understand as to why such a vital aspect of investigation, that too on repeated requests of the appellant, was not accepted by the Revenue. Apparently, such examination by experts would have clearly brought out the exact status of the machines, the possibility of such machines having been put to use for clandestine manufacture etc. The inference by the Commissioner that the machines were plugged in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, then the duty liability of such unit shall be determined on the basis of number of packing machines found available in the premises of the unit, unless evidence to the contrary is provided to the satisfaction of the central excise officers, such machine shall be determined to have been in operation. Keeping in view the above provisions of the Rules, we find that the non-functional scrap condition of the machines have been repeatedly asserted by the appellants on many occasions during the course of investigations. No. verification or technical examination of the machines have been carried out by the department to establish the functional capability of the machines. Since the machines were detained and were under custody of the department, the repeated prayer of the appellant for technical examination is the only rebuttal the appellant could make in terms of Rule 18(2). Admittedly, the machines were not in operation at the time of the visit by the officers and were not having many essential parts including motors. This has been recorded in the impugned order. However, the Original Authority inferred that the machines can be made operational easily and the appellant failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ma. Shri Rajesh Goyal retracted his statement immediately at the earliest possible occasion. Though the other persons did not retract their statements, their cross examination was sought by the appellant, which was not allowed by the Adjudicating Authority. However, reliance was placed on these statements as a corroborative evidence to conclude that these machines were infact used for packing dutiable items. As such, in terms of 2010 Rules, duty liability was determined. In this connection, we note that denial of cross examination and relying on the statements, put the impugned order in legal jeopardy. The provisions of Section 9 D of the Central Excise Act, 1944 is very clear. By now, it is well settled legal position that the Adjudicating Authority, if he intends to rely on the contents of any statement recorded under the Central Excise Act, 1944, then the procedure, as prescribed under Section 9 D, has to be followed scrupulously. In fact, in a recent decision, the Hon'ble Punjab & Haryana High Court in the case of Jindal Drugs Pvt. Ltd. - 2016 (340) ELT 67 (P&H) held that a Adjudicating Authority cannot straightaway rely upon the statement recorded during the investigation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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