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TMI Blog2018 (11) TMI 289X X X X Extracts X X X X X X X X Extracts X X X X ..... n which demand of about ₹ 39 crores was raised - appeal allowed - decided in favor of appellant. - APPEAL Nos. E/70725-70727/2018-EX[DB] - A/72392-72394/2018-EX[DB] - Dated:- 18-9-2018 - Mr. Anil Choudhary, Member (Judicial) And Mr. Anil G. Shakkarwar, Member (Technical) Shri Anurag Mishra Pragya Pandey, Advocates for Appellant Shri Rajeev Ranjan, Additional Commissioner (AR), for Respondent ORDER Per: Anil G. Shakkarwar Above stated three appeals are arising out of common impugned Order-in-Original No. AGA-EXCUS-000-COM-0015-16-17 dated 28.07.2016 passed by Central Excise Commissionerate, Agra, therefore, they are taken together for decision. 2. M/s Pelican Tobacco (India) Pvt. Ltd. is a manufacturer and shall be called appellant in the subsequent paragraphs. The other two appellants are directors on whom personal penalties have been imposed. 3. Brief facts of the case are that the appellant were engaged in the manufacture of various brands of Cigarettes falling under Tariff Item No. 24039920 such as Clock , Clock-100 , Fighter , Pelican , Venus , Vintage , etc. Officers of Central Excise Intelligence conducted simultaneous sear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterials of M/s PTC Faridabad. Since no invoice or bill or any other document was produced by the Noticee in respect of the said unaccounted for stock of cigarettes, it appears that the Noticee was engaged in clandestine removal of such cigarettes without payment of duty. Further, unaccounted raw materials were also found stored therein. It shows that the party was engaged in procurement of unaccounted raw materials for use in unaccounted manufacture of cigarettes. (iv) During search of M/s Rashi Tobacco Co. Pvt. Ltd., D-18, UPSIDC Industrial Area, Kosi, unaccounted for stock of raw materials was found. The same was detained by the officers. Later, the stock of Raw Tobacco (800 Kg), unprocessed tobacoo (1,700 Kg.) and chemicals (91800 Ltr) combinedly valued at ₹ 7,77,000/-, were found in excess of the recorded balance. Accordingly, the same were seized. M/s Rashi Tobacco are supplier of tobacco to M/s PTI and both the units are situated adjacent to each other. Further both the Directors (Mrs Pranjala Singh and Mrs Vandana Singh) of M/s Rashi Tobacco were engaged in suppression of production of cut tobacco and supplying the said cut tobacco to M/s PTI and the said cut to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unted 1460 sticks of cigarettes were found stored. On being asked, the party could not produce any supporting purchase invoice or bill etc. Accordingly, it appears that the said stock of unaccounted cigarettes were clandestinely removed from M/s PTI, Kosi without payment of duty. (x) During search at the premises of M/s Zarda House, 52/43, Nayi Dal Mandi, Naya Ganj, Kanpur, unaccounted 3000 sticks of cigarettes manufactured by M/s PTI kosi kalan was found stored. In being asked, the party could not produce any supporting purchase invoice or bill etc. Accordingly, it appears that the said stock of unaccounted cigarettes was clandestinely removed from M/s PTI, Kosi without payment of duty. (xi) During search at the premises of M/s Ajay Zarda, 78/268, Latouche Road, Pan Dariba, Kanpur, unaccounted 41250 sticks of cigarettes manufactured by M/s PTI kosikalan were found stored. On being asked the party could not produce any supporting purchases invoice or bill etc. Accordingly, it appears that the said stock of unaccounted cigarettes was clandestinely removed from M/s PTI, Kosi without payment of duty. (xii) The search was conducted at the premises of Shri Pawan Gupta, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he charges of clandestine removal of cigarettes without payment of duty. The party deposited duty involved in the case along with 25% of the duty as a penalty total amounting to ₹ 20,66,747/-. It shows that the Noticee is habitual offender of evasion of duty. (xviii) A team of the officers of C. Excise visited the factory premises of M/s PTI, Kosi on 30.08.09 anf found the stock of unaccounted cigarettes involving duty to the tune of ₹ 3,41,015/-. A Show Cause Notice proposing confiscation of seized goods and penal action was issued to the party vide C.No. V(15)Seiz/Pelican/Alg/32/2010/479 dt.17.02.10. The case has been adjudicated against the party vide OIO No. 167/Adj/2010 dt.28.07.10. It shows that the Noticee is habitual offender of evasion of duty. (xix) A team of the officers of Commercial Tax, Kosikalan seized the unaccounted raw materials of M/s PTI Kosi on 14.11.10. The case was decided by the Deputy Commissioner, Kosikalan, vide order dated 27.12.10 and a penalty of ₹ 41,600/- was imposed on the party. It shows that the notice is a habitual offender. (xx) During search at undeclared premises situated at G-38, Kosikalan situated opposite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remises and thus, have contravened the provisions of Rule 6 of the Central Excise Rules, 2002; (iii) They failed to pay duty involved on dutiable goods, removed without cover of any invoice and without payment of proper duty and thus, have contravened the provisions of Rule 8 of the Central Excise Rules, 2002; (iv) They failed to properly maintain the Daily Stock Account, in as much as they did not enter the production and removal of the Cigarettes, removed clandestinely and seized by the officers and thus, have contravened the provisions of Rule 10 of the Central Excise Rules, 2002; (v) They failed to issue proper invoice in respect of Cigarettes clandestinely removed from their factory premises and thus, have contravened the provisions of Rule 11 of the Central Excise Rules, 2002; (vi) They failed to properly and correctly file the monthly returns showing actual production and clearance etc. of the excisable goods and thus, have contravened the provisions of 12 of Central Excise Rules, 2002; (vii) They removed the finished excisable goods i.e. Cigarettes, involving Central Excise duty to the tune of Rs.39,97,29,445/- (Rs.14,63,69,518/- + ₹ 25 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her submitted that the goods involved in Central Excise Duty demand of around ₹ 16 crores required about 1.48 lakh KG of tobacco and other raw materials and packing materials and there were no allegations of wrongful procurement of such huge quantity of raw materials and packing materials. Further in respect of two lorry receipts which are stated in the show cause notice the appellant contended before the Original Authority that there was no mention that any goods were transported under the cover of those lorry receipts. Further appellants submitted that demand of Central Excise Duty of around ₹ 25 crores was calculated on the basis of certain investigation in respect of packing materials which was never received by the appellant. Therefore, appellant had contended before the Original Authority that the unit was under physical control and all activities of appellant were under the physical supervision of the Central Excise Officers and, therefore, allegations of clandestine removal are baseless. They further submitted that in view of the physical presence of the officers of Central Excise in the factory allegation of suppression cannot sustain and, therefore, the extend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atav, Inspector of Central Excise, Range Kosikalan was present in the factory. He further submitted that factory from the beginning was under physical supervision of Departmental Officers and the machines used for production were properly sealed by the officers when the shift gets over and Central Excise Officers posted in the factory used to check production and clearance of the goods manufactured and, therefore, the charge of clandestine removal cannot be held sustainable under such circumstances. He further submitted the fact that the factory was under physical supervision of Central Excise Officers was proved through cross examination of departmental officers who were posted at the factory and who physically supervised production and clearance of appellant s unit and that the learned Original Authority has also accepted the fact that Central Excise Officers used to till and un-seal the machines and production used to take place only after unsealing the machines till the machines were re-sealed. He further submitted that the finding given by the Original Authority without appreciating the facts that as appellant s unit manufacture of cigarette was under physical control by Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased on unaccounted purchase of 2146 Bobbins of CKT Papers from M/s.Gravure Printers Converters Pvt. Ltd. Kolkata and used of such bobbins in Cigarette manufacturing as per input/output ratio (1Roll/Bobbin of CT papers of consumed for manufacturing of 10 CFCs) accepted by Shri S. C. Sharma, Authorized Signatory of the appellant company in his statement dated 24.02.2012 and statement dated 27.11.2012 of Shri A. K. Singh, Director of the company. Statement of Shri P. S. Nayar, Director of M/s. Gravure Printers Converters Pvt. Ltd. was also recorded by the officers to prove the supply of such quantity of CT papers to the appellant company without any accountal and record. It is further alleged that the RR were issued in the name of Shri V. K. Gupta who was an employee of M/s.Pelican Tobacco Pvt. Ltd. He has also submitted some documents related to transportation of the said CT Papers of the appellant company. One Invoice No.10 dated 09.04.2008 issued by M/s. Gravure Printers Converters Pvt. Ltd. which was resumed from the residential premises of the Director were relied upon to prove the charges of un-accountal purchase of CKT papers from M/s. Gravure Printers Converters Pvt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r manufacturing of Cigarette. It is a well settled principle of law that merely on the basis of one ingredient charges of clandestine removal cannot be proved. The above submissions are based on the following case laws; i. 2006 (204) ELT 607 [Ruby Chlorates (P) Ltd. Versus CCE, Trichy] ii. 2006 (193) ELT 471 Tribunal Bangalore [Abba Rubbers v. CCE, Cochin] d. The cross examination of Shri. P.S. Nayar, Director of M/s. Gravure Printers and Convertors Pvt. Ltd. were also recorded by the Commissioner wherein he categorically held that he is not aware of that whether Shri. B.K. Gupta is the employee of the appellant company or not. From his cross examination it is proved beyond doubt that some other manufacturer is purchasing CKT paper in a wrongful manner who might have been using the said CKT paper for manufacturing of duplicate cigarettes of the Appellant s brand names. It is also proved from the cross examination of P.S. Nayar that the Appellant has never authorized B.K. Gupta to purchase CKT paper on behalf of the appellant company. e. The cross-examination of G.S. Jatav, Inspector (now Superintendent) who was posted in the month of January, 2011stated that he was regu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said that such cigarettes were cleared clandestinely from the factory of the Appellant. Even otherwise the seizure made at the different premises were separately adjudicated and are still pending before the Learned Commissioner Appeals (Lucknow) and same cannot be relied upon to prove such a huge quantity of removal of cigarettes clandestinely. 7. Further the learned counsel has submitted that entire demand of ₹ 39 crores is based on third party documents and based on statements which are contradictory and properly denied during cross examination. He has, therefore, submitted that the said demands are not sustainable. He has relied on following case laws to support his case:- (i) 1996 (85) ELT 260 (T) Rhino Rubbers Pvt. Ltd. vs. CC Bangalore, (ii) 2002 (141) ELT 558 (T) Kothari Synthetic Industries vs. CCE, (iii) 2013 (193) ELT 539 (T) Jai Mata Industries Ltd. vs. CC, Rohtak and (iv) 2013 (293) ELT 234 (T) Shirley Dyers vs. CCE 8. The learned counsel further submitted that since the goods were being manufactured under the physical supervision of Central Excise Officers the suppression of facts cannot be alleged and, therefore, extended period of limitation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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