9911796707
TMI Blog2018 (6) TMI 642X X X X Extracts X X X X X X X X Extracts X X X X ..... to arrived at actual quantity of catechu used by the appellant for manufacture of their final product. Hon‘ble High Court of Allahabad in the relied upon case of M/s Continental Cement Company [] has held that clandestine removal is a serious charge against the manufacture and the same is required to be discharged by revenue by production of sufficient and tangible evidence -It further pointed out that revenue is required to prove about the excess raw material purchased, dispatch particulars from the regular transporters, realization of sale proceeds of finished products, and to find out receipt of finished products by the buyers. In the whole proceedings, there is no evidence produced by revenue in respect of procurement of other raw materials which were required for manufacture of alleged quantity of final products in addition to one single raw material i.e. catechu discussed throughout the proceeding - there is also no evidence in respect of dispatch of finished goods, realization of sale proceeds and receipt of the alleged finished goods by the purchasers. The conclusion drawn by original authority that alleged quantity of final products were manufactured on the basis of calcul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mechanism. Therefore, question of any evasion did not arise at the threshold and entire show cause notice was based on assumption and presumption. Further, the appellant filed an application for settlement admitting an alleged excess quantity of 2000 Kg. of Kattha on the ground that a particular figure was not reconciled properly as the author of the document (Late S.N. Gupta), 106 pages recovered from whose residence had subsequently died. Settlement Commission settled the issue which was challenged before Hon'ble Delhi High Court which remanded the matter to the adjudicating Authority. In an appeal by appellant before Supreme Court, Hon'ble Supreme Court set aside the order of Settlement Commission and order passed by Delhi High Court and remanded the matter back to the Settlement Commission which through a subsequent motion, the order was further clarified that the matter was remanded to the Adjudicating Authority. Proceedings before the Learned Commissioner at Noida were accordingly held and cross examination of 18 suppliers was allowed, out of which 12 appeared for cross examination, one supplier sent his written submissions and the remaining 5 suppliers did not appear at all. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been alleged as excess purchase and calculated a duty demand of ₹ 56,70,31,839.00 (Rs. 29,99,61,722.00 as per data in para 5.6 of SCN and ₹ 26,70,70,117.00 as per data in para 6 of SCN). Infact data of catechu supply as provided by suppliers to the investigative officers has been compared with both the records of the appellant and wherever it appears excess, demand has been raised, whereas where it appears negative or short supply it has been totally ignored. Details of explanations supported with the related documents, with regard to excess receipt of catechu was ignored while passing the impugned order, which is as follows- a. that DSL received unaccounted quantity of 1,36,430 kg of catechu from 18 catechu suppliers, the details of which are given in the table in para-3.3 of the SCN. The difference is allegedly based on comparision of the figures which have been supplied by DSL as per books of accounts and by the respective suppliers. b. Excess receipt of 48,700 kg of catechu, as per details given in the table in para-5.6 of the SCN, which is alleged to have been calculated on the basis of quantity shown in 166 loose papers recovered during search but not shown by 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner has gone tangentially on factors like delaying tactics, which is factually improper. Appellant always filed their replies etc in time. They requested for cross examination which is a statutory right under the provisions of the Act and which the Adjudicating Authority had granted. After cross examination, replies have been filed in time and there is no delay on the part of the appellant. Rather, the appellant itself got the case file prepared in the office of the adjudicating authority by re-submitting its earlier replies, additional replies and other documents as the adjudicating authority was not having any record of the case. Even the adjudicating authority took 11 months to inform the appellant regarding his appointment as a common adjudicating authority in the present case. 3.6 The Order-In-Original is based on a wrong premise that raw catechu is used as such in the manufacture of final products, whereas processed catechu is used in production of finished goods. - The impugned Order proceeds on a wrong premise that raw catechu purchased by DSL from its catechu suppliers is used as such in the manufacture of final products, namely, pan masala, gutkha and mouth freshener. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gnored by the adjudicating authority. vi. The Show cause notice has been issued on the sole basis of purchase and consumption of catechu, without any investigation whatsoever in to other ingredients of the different final products, manufactured by DSL. vii. That there is moisture loss, (ranging from 9-11%) in conversion of catechu/kattha in powder form. viii. That while working out the receipt of catechu/kattha, reliance has been placed on documents without accounting for the full details. For example, return of certain quantities of raw materials (Catechu/Kattha) becomes inevitable on account of the fact that such goods are not in conformity with the quality of goods required and/or used in manufacture of final products. ix. It is an admitted position that each of the manufacturers of Pan Masala or Gutkah or Mouth freshener, has their own speciality (quality, taste)of the final branded products, which is distinguishable from the products made by other manufacturers, on account of differences in fragrances and taste etc. Therefore, wherever raw catechu/Kattha is not up to the mark, the same is returned to the suppliers. This happens in a few cases and even on date, there ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been erroneously shifted to the appellant. The tenor of the entire order runs with the presumption that everything has to be proved by the appellant, whereas it is a settled law that for proving a case of clandestine removal, department must prove its case beyond doubt. 3.11 Order-in-Original is bad in law as it holds that there is no need to go into merits of the case. Ld. Commissioner have observed in Order-In-Original, that as the present case has already been investigated by DGCEI, hence there is no need to go into the merits of the case, is unreasonable and beyond the legal procedure and juris prudence. 3.12 Contemporaneous record produced by the appellant has been completely ignored without any basis or contra evidence on record.- That during the entire investigation, officers of DGCEI did not visit the factory/factories of the appellant even once to ascertain the facts. When the appellant produced material evidences from contemporaneous statutory records, like statement of accounts, record/ registers maintained, Balance Sheets, even these evidences have been ignored by learned Commissioner, while passing the order, thus vitiating the order. 3.13 Entire demand is primaril ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nputs, other than catechu. (ii) That no excess or shortage was found in the stocks of any of the raw materials during physical verification. (iii) That the allegation is not supported by any statement either of production or of dispatch staff of the appellant. (iv) That no extra consumption of electricity and other raw materials was noted by the officers during their investigation. (v) That during investigation no evidence was found from the transporters or the drivers hinting towards any clandestine removal. (vi) That the seized documents too, do not give any indication of clandestine manufacture. Legal requirement of evidence of procurement of raw materials, labour employed, electricity consumed, transport of such goods to their dealers/buyers and collection of payments and flow of funds relating to such transactions not met and hence allegation of clandestine manufacture and sale of goods is unsustainable.- Ld. Adjudicating Authority failed to appreciate the clear principle of law laid down by different Courts in the matter of proof for clandestine manufacture and removal. Therefore all the allegations contained in the show cause notice, relating to clandestine manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.800 6. Tobacco 2,58,296.730 7. Quiwam 11,611.540 8. Ghan NES 00 1,41,097.590 9. Ghan 00 1,31,701.920 10. Ghan zarda 000 royal 1,555.160 11. Ghan betel nut royal gold 2,768.090 12. Baba zarda 276.810 13. Sugar 24,794.370 14. Fennel 49,035.450 15. Dry dates 1,02,277.750 16. Melan seed 3,032.700 17. Herbal extract 19,712.530 18. Packaging material 11,59,000/- Total (Kg.) 65,69,626.630 He submitted that revenue has not undertaken any investigation to establish procurement of above stated quantities of other raw materials required for manufacture of quantity of final products which were alleged to have been manufactured and cleared clandestinely. He has further submitted that Central Excise Duty is not on procurement of raw material but Central Excise duty is on manufacture and manufacture cannot take place with the help of only on raw material in the absence of other raw materials. The absence of any evidence to establish procurement of other raw materials required for manufacture of alleged quantity of final products does not establish manufacture of alleged quantity of final product. Therefore, the demand of duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Civil) Nos. CC 1209-1224/2011 which was dismissed by Hon'ble Supreme Court. 4. Learned A.R. for revenue submits as follows:- 4.1 The persons claiming 'sales return' couldn't provide evidences of sales return. Even the term 'sales return' came in picture in seventh year of the case history and clearly an 'after-thought'. 4.2 On exemption in North East Region:………. 'the amount which party have become entitled to by way of refund had to be invested in the north eastern states only with the approval of competent authority. In the event of full production in the books of accounts, the resultant refund of excise duty will have to be invested in that region only. In case of clandestine manufacture and removal of final products, the sale proceeds thereof were at the disposal of M/s DSL and they could have enjoyed the money with full liberty and impunity. 4.3 The demand of duty has been worked out on the basis of information provided by the suppliers of catechu, the figures of catechu, appearing on documents recovered from the address. 4.4 The huge quantity of raw material i.e. caechu procured by M/s DSL was being used for manufacture of finished products and the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnish the purchase details from these suppliers along with all bills and ledgers. However, he never submitted and required details. Shri Ajay Kumar Gupta undertook thrice to produce the elusive suppliers but never kept his words. In fact, Shri Ajay Kumar Gupta never made any sincere effort to contact the suppliers; rather his and his company's interest was better served if these suppliers did not turn up. Further, Shri Ajay Kumar Gupta in his statement dated 09.06.2009 also confirmed that he alongwith his father looked after the purchase of catechu and supari of M/s DSL. The unaccounted purchase of catechu was eventually used in clandestine removal from the premises of M/s DSL Group Companies. Thus, Shri Ajay Gupta was key man behind all the illegal activities carried out by M/s DSL. 4.12 Shri Subhash Chand Gupta, Shri Puesh Kumar Gupta & Shri Vipul Gupta all directors of M/s DSL were involved and closely associated with the business activities of M/s DSL and working under the guidance and supervision of Shri Ajay Kumar Gupta and helped him in running the illegal business of clandestine manufacture and removal of finished goods without payment of duty. 4.13 All the four person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oughout the proceeding. We also did not come across any evidence in respect of dispatch of finished goods, realization of sale proceeds and receipt of the alleged finished goods by the purchasers. We further note that Hon'ble Allahabad High Court in the case of M/s R.A. Castings (supra) has delt upon provision under Rule 173E of erstwhile Central Excise Rules, 1944. The said rule provided for identification of principal raw material and on the basis of such principle raw material there was provision for arriving at normal production. During the material period catechu was not notified to be principle raw material for manufacture of pan masala, pan masala containing tobacco, mouth freshener and meethy mazza. Therefore, relying on the ruling by Hon'ble High Court of Allahabad in the case of M/s R.A. Castings (supra) we find that the conclusion drawn by original authority that alleged quantity of final products were manufactured on the basis of calculation of one single raw material i.e. catechu, is not sustainable. 6. We, therefore, set aside the impugned order and allow the appeal. The appellant shall be entitled for consequential relief, as per law. Miscellaneous Application No.E/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
