9911796707
TMI Blog2017 (7) TMI 476X X X X Extracts X X X X X X X X Extracts X X X X ..... no exception. There is no redetermination and or challenge by Revenue to the orders determining duty payable under Rule 6 of the Pan Masala Packaging Rules, 2008. The confiscation of the gutkha available in the factory is also wrong as such finished products were found inside the factory and there is no allegation that the same were being attempted to be removed in a clandestine way. Further from the photographs which are relied upon by the Revenue it is evident that the machines have been kept in a small place and placed very close to each other, there being hardly any space to operate and/or space for workers to operate the said machines. It appears like, in a tightly packed elevator people are doing aerobics, as per allegation in the Show Cause Notice. Further from examination of the so called invoices of the machine manufacturer which have been relied upon in the show cause notice, we find that the format of the said invoices is very different from the earlier invoices issued a few months back for purchase of packing machine, Supari cutting machine etc., from the same manufacturer/supplier - Further as stated by the said manufacturer- Lalit Kumar Singh, who has stated that he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the 'brand name Ronak'. 2.2 The appellant set up this unit for manufacture of the aforesaid products in December, 2007. The appellant was initially paying duty based on the value of the goods cleared in terms of the provisions of Section 3 of the Central Excise Act, 1944. 2.3 Consequent to introduction of the compounded levy scheme for the Pan Masala containing tobacco (Gutkha) under Section 3A read with the notifications issued there under, with effect from 1st July, 2008, the appellant opted for payment of duty based under the Compounded levy scheme under Section 3A of the Act. 2.4 The appellant filed a declaration dated 7.7.2008 declaring the various details required in terms of this scheme, indicating therein that the appellant had one pouch making machine. Based on this, single pouch making machine which was installed and being used by the appellant in their factory, the appellant determined the duty liability under the Compounded levy scheme as ₹ 12.50 lakhs per month. In terms of the notification, the appellant discharged their duty liability for the month of July, 2008 onwards @ ₹ 12.50 lakhs per month. Based on this declaration, after causi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant on 22.8.2008 and conducted investigations regarding the installation of the plant and machinery in terms of the declarations filed by the appellant under the compounded levy scheme. The DGCEI authorities drew a Panchnama dated 22.8.2008 pertaining to the factory premises of the appellant. The Panch witnesses were the various persons who are not residents within the local jurisdiction of the Department nor the residents in vicinity of appellant s factory and were in fact brought by the DGCEI along with them. The fact regarding the Panch witnesses not being the persons of the appellant s locality, is also evident from the Panchnama wherein the addresses of the Panch witnesses were given as Lucknow and Fatehpur respectively. During the visit, the departmental authorities also resumed various documents from the premises of the appellant and undertook physical stock taking of the various goods lying in the factory premises of the appellant. 2.9 During the visit by the departmental authorities, even though the DGCEI authorities found only one pouch making machine installed and being used in the factory premises of the appellant, they forcibly brought seven other pouch maki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s alleged by the department or only 1 pouch packing machine was there as claimed by M/s Wizard. The learned Commissioner took note of the visit note/confidential report of Shri Ranveer Singh, Joint Commissioner dated 4th October, 2008 which was submitted to the Chief Commissioner as there were complaints by the appellants - M/s Wizard that actually they were having only one packing machine on the date of visit and the other seven machines were brought by the inspection team with them and they got the said seven machines inside the factory of the appellant with the assistance of the workers of the appellant and thereafter photographed the same and have made a false and fabricated case of evasion against them. The said inspection note, has been quoted in the order, in respect of inspection and the visit note dated 4th October, 2008 have been reproduced in the order which is reproduced herein for ready reference as follows:- Visit Note:- Dated 04.10.2008 "In accordance with the instruction received from the Chief Commissioner, telephonically on 03.10.2008, I had visited Gorakhpur Division in connection with the case booked by DGCEI in relation to unauthorized manufacture of Gutka by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany. On being asked to furnish invoices pertaining to purchase of these machines, Shri Tiwari informed that all the documents had been seized & taken over by the DGCEI Officers, statement of Shri Narendra Tiwari is enclosed as per which only one machine was in operation before the search conducted by DGCEI i.e. 22nd August, 2008. In this regard, I have issued a letter to DGCEI calling for respective copies of the statements, Panchnama and invoices pertaining to the seized machines. In addition the DGCEI has also been requested to kindly inform as to whether in the course of their investigation they have come across any evidence indicating connivance of any officer. This was considered essential as the first hand investigation was done by them and their investigation will be crucial from vigilance angle. The concerned Superintendent was directed to furnish the Ground Plan of the factory showing the details of the place where they intended to install the packing machines. Details of the working hour of the company were also taken from the concerned Superintendent. Details as regard No. of machines installed in the factory premises were taken and are also enclosed herewith. On con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otographs of these premises were also taken and enclosed herewith. Thereafter we proceeded to the divisional office for further enquiry on the following lines. "1. On perusal of the newspaper report, given by the Hindi local paper "Dainik Jagran" on 23rd August, 2008 a request letter was sent by me to the office of Dainik Jagran, requesting to inform the basis on which the incident was reported and whether the concerned reporter was himself present at the location i.e., the Petrol Pump premises. 2. The Divisional Assistant Commissioner was directed to provide attested copies of the XT-I Diary reports of all the concerned Superintendents and Sector Officers. 3. Copies of the Electricity Bills of M/s Wizard Fragrances which can give a comparative idea of the power consumption before and after the introduction of the compounded levy scheme. 4. Vide the letter dated 2nd July, 2008, M/s Wizard Fragrances, GIDA, Gorakhpur, had informed that two pouch machines purchased by them vide Invoice No. 328 dated 8th March, 2008 and Invoice No. 01/004 dated 10th May, 2008, have been sold back to the manufacturer M/s Kapoor engineering Works, Kanpur, vide their Invoice No.126 dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eported to have 15 KW electric supply with power back up of 3 generators, one of 5 KVA and two other of 20 KVA each. It is worth to note here that M/s Wizard in their interim defence dated 04.08.2009 and also dated 14.11.2009, pleaded that they have only 15KW electricity connection and one 5 KVA DG Set, not sufficient for running more than one machine. The facts revealed on 04.10.2008 goes contrary to the claim of M/s Wizard. I do not find any explanation from M/s Wizard how 6 pouch packing machines were running on 04.10.2008 with the same 15 KW connection. I also note that except for a passing reference to the statement of Sh. Narendra Tiwari, to the effect that only one machine was in operation before the search by DGCEI on 22.08.2008 visit note has not given any finding that only one machine was available on 22.08.2008. Hence reliance of M/s Wizard on Visit Note dated 04.10.2008 of Sh. Ranbir singh, Joint Commissioner, Central Excise, Allahabad is not going to help them to prove their contention of one machine theory. Rather, it is suggestive of the fact that power connection plus power back up was sufficient to run 8 (6+2) machines at a time." 5. Further the learned Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lsiyan - Proprietor in his statement dated 22nd August, 2008 admitted that at the time of visit eight pouch packing machines were engaged in the manufacturing of gutkha. Shri Sudhir Verma field officer of Wizard admitted the availability of eight machines, one declared and seven undeclared. Shri Kamal Shukla - Guard of Wizard in his statement on 22nd August, 2008 confirmed at the time of entry of officers, all the 8 packing machines were already installed. Further Shri Lalit Kumar Singh partner of M/s Kapoor Engineering Works, Kanpur, whose name was disclosed by Mr. Amar Tulsiyan himself on 22nd August, 2008, as a supplier of pouch packing machines in statement dated 25th August 2008 gave bill wise details of pouch packing machines sold to M/s Wizard and confirmed that total 10 machines were sold to M/s Wizard and out of which two are returned by them and as per his calculation, M/s Wizards must have eight pouch packing machines. It is further observed that in his further statement dated 28th August, 2008, M/s Tulsiyan proprietor, expressed his agreement with the contents of statement of Shri Lalit Kumar Singh (the Authorised person of M/s Kapoor Engineering Works, Kanpur) dated 25 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s us to the following documents in support of his contention that only one machine was available, installed and working there, in factory of the appellant. He first refers to the visit note by Joint Commissioner (Preventive). The said note have been taken note of, hereinabove. The said note exclusively shows that the departmental authorities themselves know, the visit of DGCEI Officers and Panchnama drawn was not in accordance with law and was clearly malicious and arbitrary. In para 3 of the note it has been clearly indicated that Shri Narendra Tiwari employee have stated that only one machine was installed and in operation before and at the time and search. Further, the Jurisdictional Superintendent had also been directed to give records regarding ground plan of the factory, details of the place where the machines were installed, details of machines installed in the factory premises and details of duty payment before and after compounded levy schemes. The said note further refers that information was called from the news paper reporters, from the Divisional Assistant Commissioner regarding the XT-1, daily reports of all the concerned Superintendent, Sector Officials, copies of el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , etc., as well as the make of the motor and its number. In response thereto by order dated 4th September 2008. The Assistant Commissioner, after verification have determined, that there are four single track packing machines in the factory and taking into account other factors determined the monthly duty liability at ₹ 12.50 lakhs per machine or ₹ 50,00,000/- per month. Thereafter by another order dated 3rd October, 2008 the Assistant Commissioner in terms of Rules 6 of the Pan Masala packing Rules, 2008, taking notice of the fresh application dated 30th September, 2008 for adding two more packing machines to the existing four machines, after verification by his officers have determined monthly duty liability at the rate of ₹ 12.50 lakhs per machine, and for 6 machines ₹ 75,00,000/- per month. The learned counsel further submits that had there been any misdeclarations and or clandestine activity on the part of the appellants, the same would have been found out or revealed at least in one of the visits by the Department. But never any discrepancy and or illegality was found save and except as alleged on 22nd August, 2008. The learned Counsel further points o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s dated 22nd August, 2008 were doubtful and appear to be illusory and unbelievable. The report categorically refers to the visits by the Departmental Officer of the Range and Officers of Preventive section, on various dates and states that nothing adverse came to their notice at any point of time nor they had any intelligence or information of any clandestine activity on the part of the appellant M/s Wizard Fragrances. 11. The next point raised by learned counsel is that the Pan Masala Packing Machines (Capacity Determination & Collection of duty) Rules, 2008 is a complete code in itself and it excludes the normal adjudication under Section 11A of the Central Excise Act, 1944. For this purpose the learned counsel have relied on the ruling of the Hon'ble Supreme Court in the case of Hans Steel Rolling Mill Versus Commissioner of Central Excise, Chandigarh reported at 2011 (265) E.L.T. 321 (S.C.) wherein the Apex Court considering the issue whether the provisions of time limit that are contained in Section 11A of the Central Excise Act, 1944 are applicable to the recovery of amount dues under the compound levy scheme for Hot Rerolling Mills & Annual Capacity Determination Rules, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at impugned order is bad and unsustainable on the following scores/grounds:- (i) The order is wholly without jurisdiction being under Section 11 A of the Act in view of the ruling of Hon'ble Supreme Court in the case of Hans Steel Rerolling Mills (supra). (ii) There is no redetermination and or challenge by Revenue to the orders determining duty payable under Rule 6 of the Pan Masala Packaging Rules, 2008. (iii) The order of learned Commissioner is factually wrong and vague wherein he observes that it was possible for the appellant to run eight packaging machines with sanctioned load of 15 KVA from the Electricity Department and availability of Generator having capacity of 5 KVA. Further the observations of the learned Joint Commissioner, who was appointed by the Chief Commissioner of Central Excise, Lucknow to enquire into the matter of irregularities in the Panchnama proceedings by DGCEI and had observed in his report and had taken notice of the facts detailed hereinafter. That seven packaging machines were brought by the officers of DGCEI Kanpur, from outside and installed in the factory premises on 22 August 2008 which was based on enquiries made from various persons inc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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