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TMI Blog2018 (2) TMI 1110X X X X Extracts X X X X X X X X Extracts X X X X ..... re of 1437782400 pouches of Gutkha for the period from December, 2006 to August, 2007 alleged in the said show cause notice. Central Excise duty is on manufacture - In the present case the burden to prove that above stated quantity of pouches were manufactured by M/s.Som Aromatics was on Revenue. Revenue could not establish manufacture of above stated quantities of pouches of Gutkha during above stated period. The SCN is presumptive - appeal allowed - decided in favor of appellant. - E/4052/2012, E/4053/2012, E/4054/2012, E/4055/2012 AND E/55092/2013 EX(DB) - FINAL ORDER NO. 70327-70331/2018 - Dated:- 12-2-2018 - Shri Ashok Jindal, Hon ble Member (Judicial) And Shri Anil G. Shakkarwar, Hon ble Member (Technical) Dr.Seema Jain (Advocate) Shri Abhishek Srivastava (Advocate) for the Appellant (s) AND Shri Rejeev Ranjan (Jt.Commr.)(AR) Shri Pawan Kumar Singh (Supdt.)(AR) for the Revenue Shri Rejeev Ranjan (Jt.Commr.)(AR) Shri Pawan Kumar Singh (Supdt.)(AR) for the Revenue AND Dr.Seema Jain (Advocate) Shri Abhishek Srivastava (Advocate) for the Respondent ORDER Per Shri Anil G. Shakkarwar The above-stated 5(five) appeals are arising out of common imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he DG Set installed in the factory and taking into account the per hour consumption of HSD as 26.25 liters per hour in respect of two D.G. Sets of 380 KVA, which are of higher KVA rating vis-`-vis single D.G Set of 275 KVA (ostensibly kept and installed for use as stand by arrangement), the consequential quantum of production of finished goods for period December, 2006 to August, 2007 have been arrived at as per details shown in annexure A to this notice. Further it has been stated in para 7.2 as follows:- 7.2 Shri Nissar Hussain, the partner of the firm in his statement dated 27.09.07 has stated that 66 packing machines were installed during October and November 2006. He has further confirmed in his subsequent statement dated 14.11.07 (RUD-18) that entire machines installed at different times in factory was operational in one shift of nine hours. Taking the above disclosure of Sh. Nissar Hussain as true and correct admission of the facts, the consequential manufacturing of goods during the period from October 06 to November 2006 is arrived at as per details shown in Annexure- B to this notice. For the sake of ready reference Annexure A B are as follows:- ANNEXU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jun 07 81 8400 26.25 320 4800 124416000 62208000 41057280 1231718.4 42288998.4 8 Jul 07 81 14000 26.25 533 4800 207230400 103815200 68386032 2051580.96 70437612.96 9 Aug 07 81 15000 26.25 571 4800 222004800 111002400 73261584 2197847.52 75459431.52 Totol 729 97100 3698 43200 1437782400 718891200 474468192 14234045.8 488702237.8 Totol Duty Payable 488702238 Duty Already (To Be Paid Appropriated) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e investigation in the case did not substantiate any corroborative evidence to show that raw materials were procured for the quantity of goods alleged to have been clandestinely removed in respect of which said demand was raised. He has further recorded that Revenue relied upon the diary resumed from M/s.Montage Enterprises, Noida, in which an amount of ₹ 18,30,000/- has been shown to be reflected against the name of Shri Nissar Hussain. However, Revenue did not carry out any investigation at the premises of M/s.Montage Enterprises. Further ld.original authority has recorded that the contents of the said show cause notice dated 21.01.2008 nowhere revealed that the investigation was made in respect of locations in the factory premises where M/s.Som Aromatics stored the raw materials and the space occupied by M/s.Som Aromatics was sufficient for storage of such huge quantities of raw materials. He has also recorded that neither the documents in the form of private records, nor deficiency during the stock challenges was noticed by the officers to the effect that M/s. Som Aromatics had purchased the raw materials in excess of recorded balances. Therefore he has come to the conclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of Rule 26 of the Central Excise Rules, 2002 for contravention of Central Excise Act, 1944 and rules made there-under; 5. I Impose penalty of ₹ 10,00,000/- (Rs.Ten Lakhs only) on Sh.V.K.Bansal under the provisions of Rule 26 of the Central Excise Rules, 2002 for contravention of Central Excise Act, 1944 and rules made there-under. 6. I impose penalty of ₹ 10,00,000/- (Rs.Ten Lakhs only) on Sh. Nissar Hussain under the provisions of Rule 26 of the Central Excise Rules, 2002 for contravention of Central Excise Act, 1944 and rules made there-under. 4. Aggrieved by the order dropping the demand amounting ot ₹ 52,14,80,837/- Revenue has preferred appeal before this Tribunal, which is bearing No.E/55092/2013. Aggrieved by confirmation of demand of ₹ 61,63,517/- and imposition of penalties M/s.Som Aromatics, Shri Atul Agarwal, Shri V.K.Bansal and Shri Nissar Hussain have filed present appeals. 5. The grounds of appeal filed by Revenue are as follows:- (i) The case of the department was already established on the basis of the statements and records. However, if the adjudicating authority were to give opportunity of cross examination to the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hed on the basis of statements made earlier and the records. Even after cross examination the position remained the same. The affidavits and retraction of a general nature cannot be accepted. He thus, wrongly accepted the belated and retracted plea put forth by Shri Sharma of Sharma Filling Station during the course of cross examination made after over 4 years that the sale of the entire quantity of diesel was shown in the accounts in the name of 2-3 persons only at the end of the day because it was not possible for him to show it in the name of all the small customers. Documentary evidence cannot be rebutted by a general oral statement when the existence and preparation of the document has been admitted by the same person in the course of sale of HSD to M/s.Som Aromatics who were admittedly their customer. (vi) Based on the belated retraction and afterthought the adjudicating authority did not accept all the above facts put forward by the department and accepted the retracted statement of Shri Sharma despite the fact he had earlier stated categorically that Som Aromatics was one of the few parties who purchased HSD in bulk on credit and which was substantiated and corroborat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier occasion been made to this party (Som Aromatics) who had seen that entry and had admitted them. Further, rebuttal of presumption under Section 114 (g) of the Indian Evidence Act cannot be arbitrary but has to be proved in accordance with the illustrations given therein. The retraction statement made by Mr.Sharma does not meet the requirement of rebuttal and thereby cannot be taken on record as having evidentiary value. As per law of the Section 114(g) of the Indian Evidence Act, the adjudicating authority ought to have ignored the belated and bare statement of Mr.Sharma, which was bereft of any basis. (vii) In order to quantify the production of Gutkha vis a vis procurement and average consumption of HSD the factory premises of the party was visited by the officers of Central Excise and the consumption of diesel required to run the DG set of 380 KVA was verified in the presence of Shri V.K.Bansal, Manager and two independent witnesses and the per hour consumption was found to be 26.25 Lts. Per Hr. The proceedings were duly recorded under panchnama dated 31.10.2007. Similarly the consumption of HSD in 275 KVA DG set was verified on 02.11.2007 and was found to be 39.34 Ltr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em aside. (ix) Further, the judgements cited by the adjudicating authority in favour of the party are not relevant because in the instant case a huge quantity of clandestine removal has been proved beyond doubt and the party had deposited the applicable Central Excise duty on the said manufactured and clandestinely cleared goods. (x) In this connection it is very much relevant to mention that Hon ble Tribunal in their F.No.198-201/10-Ex. Dated 07.04.2010 while remanding the matter to the Commissioner (which resulted into the impugned Order) have observed at para 9 as under- Undoubtedly, the analysis of the evidence of the record disclose that apart from the statement of the Shri Shama and the ledger book, there are also other materials which are sought to be analysed to arrive at the finding of the liability for payment of duty quantified under the impugned order. 6. Heard Shri Rajeev Ranjan (Joint commissioner)(AR) AND Shri Pawan Kumar Singh (Supdt.)(AR) on behalf of the Revenue, who has presented the said grounds as scripted above. He has also submitted that the period of show cause notice is prior to the issue of Notification under section 3A of Central Excise Act, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved. She has further submitted that consumption of Diesel @ 26.25 per litre per hour presumed by Revenue for calculation of said demand in the said Annexure A was contrary to the technical literature which indicated that 79.5 litre of high speed diesel is required to run the generator per hour. She further submitted that the presumption that 81 (eighty one) machines were working all throughout was also not correct because Shri Atul Agarwal, partner in his statement informed that generally 25 to 30 machines used to work at a time. She has further submitted that statement is on record which indicates that for running two machines, three workers are required. Statement is also on record which states that at any point of time around 30 workers were working which indicates that around twenty machines were working and no more than 20 machines could be working at any point of time. Further to run 80 machines 120 labourers were required and Revenue has not brought any evidence to show deployment of 120 labourers. She further submitted that there were no documents of transportation in respect of such huge quantity of HSD to the premises of M/s.Som Aromatics and that there was no evidence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count of transactions of various parties. Also statement refers to Som Aromatics as the party whereas ledger is titled Dial Bagh Som which is again suspicious. 3. M/s.Sharma Filling station was visited on 29.10.2007. The resumed ledger maintained by Sharma Filling station shows sale till 16.10.2007. * The Ledger of M/s.Som shows purchase of 3000 litres of HSD on 22.10.2007 vide bill dated 22.10.2007. The said bill was not entered in the Ledger of Sharma filling station which questions the entries in the ledger. 4. The Ledger was never shown to Sh Atul Agarwal, partner, who was the person placing order for HSD. 5. The ledger was not shown to Nissar Hussain who was partner. 6. The ledger was shown only to Sh shrivastava, Manager (Admn) who neither ordered the HSD, nor had any knowledge of the consumption of HSD. 7. The other grounds on which the Commissioner dropped the demand have not been contested. 8. Diary of M/s.Montage Enterprises, Noida without statement of any person from M/s.Montage Enterpries, Noida explaining the entries is only an assumption that lamination was purchased clandestinely. 9. In respect of grounds of appeal on the basis of para 9 of Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of India reported at 2016 (340) ELT 67 (P H). 10. We have carefully gone through the case records and submissions made before us. We are in full agreement with the ld.Counsel for M/s.Som Aromatics that the said Annexure A which quantified the demand was based on various presumptions including the quantity of HSD required for running for one hour, the number of pouches that can be manufactured per hour from each machine and that 81 machines were running all throughout. Further the evidence of consumption of HSD was based on the record collected by Revenue from fuel stations and the same record was not confronted before the partner of the appellant M/s.Som Aromatics and therefore the said evidence became third party evidence in view of the pronouncement of the Hon ble High Court of Delhi in the said case of L.K. Advani (supra), and therefore, such third party evidence is not admissible. It was held in para 97 of the said ruling as follows:- 97. In the present case there is no evidence against the petitioners except the diaries, note books and the loose sheet with regard to the alleged payments (vide Mr Nos.68/91, 72/91 and 73/91). The said evidence is of such a nature which c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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