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2018 (5) TMI 658

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..... . Such evidence have not been found to be untrue and the learned Commissioner have erred in rejecting the evidence without any proper enquiry and oppertunity of hearing. The appellant is liable to Central Excise duty under Section 3A of the Act read with the PMPM Rules for the period 02/09/2012 to 06/09/2012 - the appellant is liable to penalty equal to the amount of duty - appeal allowed in part. - E/54002/2017-EX[BD] - A/70722/2018-EX[BD] - Dated:- 4-4-2018 - Mr. Anil Choudhary , Member (Judicial) And Mr. Anil G. Shakkarwar, Member (Technical) Shri M.B. Mathur, Advocate Shri Vinod Kumar Baranawal, Advocate, for Appellant Shri Rajeev Ralljan. Joint Commissioner (AR), for Respondent Per: Anil Choudhary The present appeal is arising out of Order-in-Original No. 15/COMMR./MRT-1/2014 dated 30/03/2014 passed by Commissioner of Central Excise Customs, Meerut-l. 2. The issue in this appeal is whether the appellant have been rightly imposed with Central Excise duty of ₹ 2,51,94,517/- for the period from 01/04/2011 to 06/09/2012 under the provisions of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 (for shor .....

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..... 0 packets, each containing 60 pouches of Gutkha. The word 'DOON GUTKHA' was printed upon each packet along with a list of the ingredients contained in the packed Gutkha. These ingredients were listed as Betel Nut, Tobacco, Catechu, Lime, Menthol, Spices and Fragrance. The name of the manufacturer was printed on these packets as 'M/S S.S. Packers, Sonipat, (H.R.)'. The number of pouches contained in each packet was printed as 60, the MRP of each pouch, as ₹ 1 and the net weight of Gutkha in each pouch as 2 gms. On opening of one such packet, it was found that it contained 60 pouches of the brand of 'Doon Gutkha' printed with MRP of ₹ 1 and the name of the manufacturer as M/S S.S. Packers, Sonipat, (HR). One bag filled with prepared Gutkha Mixture was also found in the room, which was weighed and found to contain 92.36 Kg of Gutkha mixture. In addition, 9 rolls of Gutkha pouches were also found, the total weight of which upon weighment came to 54.66 Kg. In the other room, which was adjacent to the first room, the following goods were found: - (i) Raw Material S.No. Material Qty .....

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..... e admitted that the officers found pouches of Doon Gutkha and machines for making Gutkha in his factory premises, during search on 07/09/20120 The name of his factory was M/S S.S. Packers, of which he was the proprietor. He further stated that in his factory there was a Supari Cutter, a 12 tray dryer and a 6 tray dryer in the veranda, that a single track FFS machine was installed in a room in the factory premises on which he used to pack Gutkha pouches and approximately 90 pouches were packed in a minute. He further stated that the FFS machine was purchased by him from Mayapuri Kabari market and there was no serial number on the machine, an electronic weighment machine was installed in the second room of the fact01Y premises which was used for weighment oi raw material and Gutkha. all the machines installed in the factory were operated through the generator installed of Mahindra Brand having 15 KVA Capacity, which was also purchased from Mayapuri Kabari Market. He did not have any bill of the machine and the generator and the same was purchased on cash payment in February, 2012. He had taken on rent of ₹ 6,000/- per month, 2 rooms and veranda on the ground floor in the house .....

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..... n 07 09 '2012 was not out of free will, the same was a dictated one. He was made to write the statement, as dictated by the officers. Originally, he had intended to manufacture Sweet Supari which was produced up to July, 2012, after which packing machine was purchased from scrap dealer, as he planned for production of Gutkha. However, immediately after installation of the packing machine, the officers of Central Excise visited on 07/09/2012. The copies of recovery memo/ panchnama and his statement were not given to him, although, he was forced to acknowledge in that he had received copies of the same. Further, he stated that his original driving license and registration certificate of his car no. DC 1 CJ-5769 were taken away by the officers in original. Further, he was forced to handover 2 separate letters both dated 07/09/2012 wherein he was made to write that he was enclosing the cheque of ICICI Bank and another cheque of PNB Baghpat Road, Meerut. Both the cheques were made to handover in blank and undated condition, but signed by him under duress. The appellant further retracted to the effect that he was forced to write down that he had made sale of Gutkha whereas he wanted .....

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..... the motor. This machine was got repaired, and roll of Doon Gutkha pouches were loaded on the machine. The unpacked Gutkha mixture was prepared on his direction by Rakesh for verifying the process. All these activities were done in order to start the business of Gutkha manufacturer. The Gutkha mixture prepared was not of the right quality. As soon as the repair z-as completed and the manufacturing processes started, premises were visited by the Central Excise Officers, therefore, he could not inform the Department. The raw materials, pouch rolls and cartons were purchased through an agent. There were no documents related to purchase transportation and payment of packing material. The packing materials were procured between 1st and 5th September, after repairing of the pouch packing machine. it was operated for the first time on September. 2012. The Pouch Packing Machine was purchased whose name and address is unknown. The agent purchased the machine on his behalf. For repair of machine one electric motor of 1 HP was purchased, the invoice of which was enclosed. On the same date i.e. 26/11/2012 Shri Abhishek Jain also furnished the documents namely invoice no. 828 dated 20/08/2012 o .....

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..... f for appearance on 10 th September, 2012 but he requested for time on health ground and did not make any retraction vide his hand written letter dated September, 2012, which was his first communication after search. Shri Jain had handed over the two cheques for ₹ 10 lakhs each towards his Central Excise duty liability. Firstly the retraction is not supported any evidence and secondly, even if it is correct that he gave the 'Clank cheques, the gravity of such an act is even greater, than that of giving cheques of a different amount. Shri Jain had sent a letter by Speed Post booked at Haridwar on 14 th September, 2012 and received by revenue on 17 September, 2012 which besides containing his aforementioned retraction, also stated that the two blank cheques were got signed and taken away from him forcibly by the officers. Although the appellant had several opportunities to retract and/or bring the highhandedness of the officers, in the knowledge of senior officers after 7 th September, 2012, but he failed to do so and the said retraction was sent only on 14 th September, 2012, i.e. after a week from the date of search. Thus, the retraction of appellant appeared an aft .....

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..... st by the officers. The officers had seized only one Carton of 110 packets containing 6600 pouches in total of the Gutkha and 92.360Kg of semi finished goods valued at ₹ 46,500/- and in the Supurdnama it was mentioned that the duty involved on the seized goods is about ₹ 95 lakhs. Further, the statement recorded on 07/09/2012 was a dictated one and the same was retracted soon thereafter. In support of the same appellant also filed joint affidavit of the two panch witnesses dated 04/10/2012, as well as affidavit of Shri Leelu Pahalwan, who was present during the search operation. It was further alleged that from the perusal of the affidavit, it is evident that the appellant was compelled to write the statement, as dictated by the officers and also the officers took two blank cheques, signed by the appellant. The obtaining of blank cheques under duress from the appellant does not amount to admission of duty liability. The giving of cheques by the appellant under duress is also evident from the fact that he was just forced to sign the checks without filling the amount tendered, as well as authority to which cheque is issued, That there was no correlation between the signed .....

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..... mercial production. Rule 6 (1) proviso of PMPM Rules provides that a new manufacturer shall file such declaration at least 7 days, prior to the commencement of commercial production of notified goods in his factory. Reliance was placed on the ruling of Hon'ble Gauhati High Court in the case of M/S Rail Track Concrete Production (p) Ltd. Vs Commissioner of Customs Central Excise, Guwahati reported at 2012 (286) ELT 30 (Gau.) wherein it have been held that for commercial production-both manufacture and sale is essential. Admittedly, officers did not find the packing machine in operation on 07/09/2012 and admittedly, the officers seized the packing machine on the date of inspection and thus, no production could take place on or after 07/09/2012. In absence of commercial production the appellant was not required to file the requisite declaration under Rule 6(1) of the PMPM Rules and accordingly, have not violated the provisions of the Central Excise Act read with the PM PM Rules. There is no investigation at the end, of the supplier of the pouch packing machine or the supplier of raw materials, Specific request to cross-examine the officers namely Shri Srinivas S/ o Shri Ranvir P .....

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..... e appellant at the residence, the same was returned and executed. It was further observed that in view of the documentary evidence the statements are only way of corroboration and according there. no need allow cross-examination. 12. As regards, the demand of duty, it was observed that it is evident that the appellant was engaged in manufacture of excisable goods namely Gutkha without obtaining Central Excise registration. During the search, a generator set with electricity distribution point, one betel nut cutting machine, one drying machine consisting of several drying plates, one single track pouch packing machine, etc. was found installed there. Further. these machines were containing cut betel nut. various inputs, pouch roll, Gutkha mixture, etc. in condition therein evidencing that the manufacturing activity was going on and these machines were in working condition Further, at the time of search, finished stock of Gutkha was 110x66=6600 pouches having weight 2 grams each having MRP of ₹ 1 only, bearing a brand name and the name of the manufacturer-M/S S.S. Packers, Sonipat, (H.R.) was found. As per list of ingredients, it was mentioned that it contains Betelnut, Toba .....

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..... 3. So far the obtaining of bank cheques from the appellant in support of the contention of duress and pressure, the learned Commissioner have observed that Shri Abhishek Jain had admitted in his statement that he was not holding Central Excise registration to manufacture the excisable goods and accordingly, he provided the said cheques with view to discharge his duty liability, accruing as Section 3A of the Act which provides for compounded levy on notified goods-Gutkha. Further, Shri Abhishek Jain also promised to apply for registration by 10/09/2012. It was further observed that in the retraction letter received on 17/09/2012 there is no reference of alleged forcible submission of cheques. Thus, the allegation of forcible collection of cheques was only by way of afterthought. It was also observed that from perusal of the cheques it is noticed that they are not blank they have been drawn for ₹ 10 lakhs each in favour of Chief Accounts Officer, Central Excise, Meerut-l. So far the non presentation of the cheques for collection by the Department and the consequent submission of the appellant, that the Department did not send the cheques for collection, as they were guilty of c .....

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..... The single track F FS machine was found loaded with Gutkha mixture and pouch roll for packing of Gutkha was found, Loose packing material for Gutkha and different quantities of various materials for manufacture of Gutkha was found. Further, in the 1 st statement of Shri Abhishek Jain, had stated that he commenced Gutkha manufacturer in March, 2012 which continued for 3 months. It was further observed that the appellant is the proprietor of M/S S.S. Packers, as he introduced himself on 07/09/2012 to the officers as proprietor of M/S S.S. Packers. Further, he signed the letter dated 17 th September, 2012, as proprietor of M/S S.S. Packers and in the letter dated 10 th October, 2012 requesting for photocopy of the panchnama and statement, had signed the letter as Abhishek Jain, S.S. Packers, Village-Bawli Road, Distt. -Baghpat (UP), Further, the appellant had led evidence of procuring of F FS Machine vide Invoice No.828 dated 20/08/2012 from M/S Shree Jee Enterprises, East Moti Bagh, Sarai Rohilla, Delhi for one Pouch Packing Machine purchased in cash for ₹ 17,500/ and also invoice nos. 1011 1012 both dated 1 st September, 2012 of M/S Star Trading Company, Delhi for 30 Kg .....

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..... t the said document appears to be fictitious. So far the calculation of duty liability, the learned Commissioner observed that Sub-rule (2) of Rule 17 of PMPM Rules provides that if it is found that goods has been manufactured in or cleared from a unit which is not registered with the jurisdictional Central Excise Office, 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 and the retail price of the pouches manufactured with the aid of packing machines and unless evidence to the contrary is provided or led to the satisfaction of the Central Excise Officer, such machines shall be deemed to have been in operation since 1 st April of the financial year in which unit was found to be not registered and shall be construed as operating packing machine for the purposes of Rule and dealt with accordingly. Further. observed that as it is found that the appellant had taken the premises on rent in February, 2012 and installed the Pouch Packing Machine and other machine, since then he remained in manufacture of Gutkha, notified goods since February. 2012 and accordingly, he is liable to duty for the pe .....

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..... llected two blank cheques. The leaned Counsel states that the learned Commissioner was required to cross-examine to the panch witnesses and Mr. leelu, who had given affidavit in support of the appellant. The learned Counsel have also relied on the ruling of Hon ble supreme Court in the case of M/ s Parle Beverages PIZ. Ltd. Vs CCE. Bombay reported at 1998 (98) ELT (SC) wherein it was held that affidavit is not to be brushed aside solely on the ground of delay. Affidavit in the said case was filed after lapse of two years with invoices. The Tribunal erred in refusing to consider affidavits. Delay may be a factor with some relevance as to the probative value of the statement made in the affidavit, but it cannot be totally brushed aside without going into the genuineness of the invoices. In case of doubt Tribunal could have called the Deponent for cross- examination or allowed the cross-examination by the Department. The learned Counsel further stated that this Tribunal also in the case of Kulbhushan Jain Vs CC, Delhi reported at 1999 (111) ELT 906 (Tribunal) have held that affidavit by way of evidence is not dismissible straightaway as an afterthought without proper enquiry and exami .....

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..... dress is the same as given on the invoice. Similarly, the downloaded report with respect to M/S Star Trading Company and M/S Nikhil Trading Company states all of them are active dealer as on 13 th of March 2013, have also been filed in the appeal paper book. The fact of purchase of ingredients for manufacturing of Gutkha on 01/09/2012, purchase of motor on 1 st September, 2012 for repair of the Pouch Packing Machine are reliable piece of evidence and have been wrongly rejected by the learned Commissioner, vitiating the impugned order. 19. In view of the errors committed by the learned Commissioner, it may be held that the appellant is liable to pay Central Excise duty under the compounded levy scheme only for the period from 02/09/2012 to 06/09/2012, as admittedly the packing machine was sealed in the morning of 07/09/2012, by the officers of the Department. The learned counsel further states that under the facts and circumstances that the appellant was not doing commercial production and was doing only the process of testing the machine and the finished product in the market, the duty liability is fit to be set aside. Accordingly, the learned counsel prays for setting aside t .....

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