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TMI Blog2019 (3) TMI 547X X X X Extracts X X X X X X X X Extracts X X X X ..... /2009 Dt. 27/01/2009 Sr. No. Appeal No. Parties Names Duty Penalty 1. E/1815/2009-EX[DB] Shimla Food & Flavours v. CCE, Lucknow Rs.59,400/- Rs.1,17,642/- 2. E/1816/2009 -EX[DB] Shri Ashok Kr.Gupta, Partner of M/s.Shimla Food & Flavours v. CCE, Lucknow Nil Rs.1,17,642/- 3. E/1850/2009-EX[DB] Aanchal Polypack v. CCE, Lucknow Nil Rs.4,58,242/- 4. E/2082/2009-EX[DB] Rajesh Kumar Gupta, Prop.M/s. Himachal Marketing Co. V. CCE, Lucknow Nil Rs.59,400/- Order-in-Original No. 02/Commissioner/LKO/CX/2009 Dt. 30/01/2009 Sr. No. Appeal No. Parties Names Duty Penalty 1. E/1289/2009-EX[DB] Shimla Food & Flavours v. CCE, Lucknow Rs.45,27,103/- Rs.45,27,103/- 2. E/1290/2009-EX[DB] Shimla Chemicals v. CCE, Lucknow Rs.72,76,500 Rs.72,76,500- 3. E/1004/2009-EX[DB] Aanchal Polypack v. CCE, Lucknow Nil Rs.1,18,03,603/- 4. E/1291/2009-EX[DB] Rajesh Kumar Gupta, Prop.M/s.Himachal Marketing Co. V. CCE, Lucknow Nil Rs.1,18,03,603/- 5. E/1292/2009-EX[DB] Shimla Products V. CCE, Lucknow Nil Rs.1,18,03,603/- 6. E/1293/2009-EX[DB] Ashok Kumar Gupta Partner of M/s.Shimla Food & Flavours v. CCE, Lucknow Nil Rs.1,18,03,603/- 7. E/1317/2009-EX[DB] Ani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is seen that during the search in the official premises of HMC, one van loaded with 22 bags of Gutkha was found to be parked near the said premises. On asking, the Central Excise documents in respect of the said 22 bags could not be produced by HMC. Therefore, the same was seized under a reasonable belief that the goods loaded in the premises have been cleared without payment of duty. Further on search of the premises of the said noticee, 35 rolls of packaging material was found near the main gate of the factory premises. The authorized signatory of the said noticee explained that the said rolls stand received by them on the same day itself from M/s.Aanchal Polypack under the cover of a challan dated 01.06.2004 and have yet to be entered in the records. However, on contact with the officers searching the premises of M/s.Aanchal Polypack, it was found that no Bill/Challan dated 01.06.2004 corresponding to the said 35 rolls stand issued by the said manufacturing unit. Accordingly, on a reasonable belief that these 35 rolls of packaging material have also been cleared clandestinely by the manufacturer M/s.Aanchal Polypack, the same were seized by the officers. Further the stock-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Indian currency of Rs. 4.00 Lakhs also stand confiscated. Appeal No.E/1815/2009-EX[DB], E/1816/2009-EX[DB], E/1850/2009-EX[DB], E/2082/2009-EX[DB] stand filed against the said order of the Commissioner. 5. In the above background further investigations were taken up by the Revenue. During the further investigations, statements of various persons including the appellants' buyers and the representative of the transporter agency were recorded. Shri Indra Bahadur Singh, Booking Clerk, working in transport agency M/s.Lucknow Tulsipur Forwarding Agency deposed that even though description of the goods on the G.R./Challanas issued by their agency was Zarda, but actually 'Gomti' brand Gutkha was booked by one Shri Yadav. Statements of consignment agents of the transporter Shri Madan Pal Singh and Nashir Ahmed, who were handling the goods booked by M/s.Lucknow Tulsipur Forwarding Agency, Lucknow were also recorded deposing thereby that 'Gomti' Gutkha was transported in the guise of Zarda. Further three main buyers of 'Gomti' Gutkha, Shri Kedar Nath Gupta of Kerana Gupta Store, Colonelganj, Shri Anand Kr. Of M/s.Chowdhury Dinanath & Sons, Gonda and Shri Munsilal of M/s.Roshan Traders, B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duties alleging clandestine activities, we proceed to decide the two sets of appeals as under. O-I-O No.01/Commissioner/LKO/CX/2009 7. Shri S.K. Pandey, learned Advocate, Shri A.P. Mathur, learned Advocate & Shri Amit Awasthi, learned Advocate appearing for the Appellants have contested the impugned orders on number of grounds. It is the contention of the learned Advocate Shri S.K. Pandey that the impugned orders are factually incorrect inasmuch as in the seizure case the adjudicating authority has confirmed the demand of duty in respect of the 22 bags found loaded in the pick up van, which was located outside the premises of M/s. Himachal Marketing Company. Admittedly the said unit is not the manufacturing unit. In fact the goods manufactured by M/s. SFF are being cleared to the said M/s. Himachal Marketing Company, who are further selling the same to various customers. He has drawn our attention to the Panchnama drawn by the officers, which shows that the said van was intercepted, when the same was parked outside the premises of M/s. HMC AT 23, Datia House. As per the statement of Shri Rajesh Kr. Gupta, proprietor of HMC the aforesaid bags were loaded in the van on 30.05.2004 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redeem the same on payment of redemption fine of Rs. 58,242.00, we find that during the relevant period, the said appellant was working under small scale exemption as also in terms of the Hon'ble Supreme Court decision in the case of M/s Metlex (I) Pvt. Ltd. V/s Commissioner of Central Excise, New Delhi reported as 2004 (165) E.L.T. 129 (S.C.) the activity of lamination does not amount to manufacture and as such M/s Aanchal Polypack was not clearing their goods on payment of duty. In these circumstances, it cannot be said that they cleared their goods in a clandestine manner, in the absence of any duty liability upon them there was no duty liability against the said appellant, thus justifying confiscation of the said goods. The same is accordingly set aside. 9. As regards imposition of penalties on M/s.Shimla Food & Flavours as also on Shri Rajesh Kr. Gupta of M/s.Himachal Marketing Company or M/s.Aanchal Polypack as also on Shri Ashoki Kr. Gupta having held that there is no clandestine activities on the part of the assessee, we set aside the penalties imposed upon them. 10. In nutshell the impugned Order-in-Original No. 01/Commissioner/LKO/CX/2009 Dt. 27/01/2009 is set aside an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justifiably done. He submits that the said statement of Shri Indra Bahadur Singh is based upon the version of Shri Yadav, who used to bring the goods to the transporters for booking the same. As such even the version of Shri Indra Bahadur Singh is based upon hearsay evidence and not on his personal knowledge. He submits that inasmuch as the goods were sent to the said transporters in a packed condition, the statement of Shri Indra Bahadur Singh to the effect that the goods booked were Gutkha and not Zarda cannot be appreciated inasmuch as he would not be knowing the contents of the packets, which were not opened by him. Shri Panday, learned Advocate further submits that HMC was also trading in tobacco and was buying the goods locally from the other traders and were booking the same. Further some of the buyers in their statements have submitted that they were purchasing the goods from HMC and were themselves booking the same for transportation through the transport agency. As such the findings of the adjudicating authority that all the goods transported through M/s.Lucknow Tulsipur Forwarding Agency are goods which have been manufactured by M/s.Shimla Chemicals and M/s.SFF cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that during the period August, 2003 to January, 2004 Shimla Chemicals has procured unaccounted Supari from Shimla Products. The said allegation is made only on the basis of statement of Shri Santosh Kr.Trivedi, an employee of Shimla Products. According to the said statement some quantity of Supari was dispatched to Shimla Chemicals and rest was used for manufacture of sweet Supari. There is no quantification given by Shri Trivedi as regards the quantity of Supari supplied to SFF and SC. There is also no evidence of transport of Supari by Shimla Products to the factory of SFF and SC and as such reliance by the adjudicating authority on the uncorroborated statement of employee of M/s.Shimla Products is neither justified nor in accordance with the settled law. 14. Shri Pandey, learned Advocate further submits that the Revenue has alleged removal of 3,92,13,000 pouches of 'Gomti' Gutkha, without payment of duty. The appellants have already shown the manufacture of 2,57,34,555 pouches of Gutkha has having been manufactured and cleared on payment of duty during the period in question. He submits that the manufacture of Gutkha to the tune of 70.58 MT as alleged by the Revenue required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat neither the sale records of HMC were scrutinized or adduced in the show cause notice to support the department's claim to the effect that the impugned goods were sold in excess of the purchases made by HMC from SFF or SC. He submits that as per the settled law the onus to prove clandestine activities of the manufacturers is on the Revenue and is required to be discharged by tangible, cogent evidences of removal and such findings of clandestine removal cannot be upheld on the basis of the third party records or the statements, there being no corroborative evidences. For the above proposition he has relied upon various decisions of the Tribunal as detailed below:- (1) Grauer & Weil (India) Ltd. v. CCE, Meerut [2000 (116) E.L.T. 618 (T)] (2) Vigirom Chem Pvt.Ltd. v. CCE, Bangalore [2010 (251) E.L.T. 544 (T-Bang.] (3) CCE V. Brims Products [2011 (271) E.L.T. 184 (Pat.)] (4) CCE, Lucknow v. Sigma Castings Ltd. [2012 (282) E.L.T. 414 (Tri.-Del.)] (5) Mahesh Silk Mills v. CCE, Mumbai [2014 (304) E.L.T. 703 (Tri.-AHMCd.)] (6) Arya Fibres Pvt.Ltd. v. CCE, AHMCedabad-II [2014 (311) E.L.T. (Tri.-AHMCd.)] (7) Gupta Synthetics Ltd. v. CCE, AHMCd-II [2014 (314) E.L.T. 225 (T-AHMCd.)] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods manufactured from Shimla Food and Flavours as also from Shimla Chemicals and was buying their entire production himself. He was further selling the goods to various customers either directly from their premises, in which case the customers were booking the goods through the transporters on their own or the said goods were being booked by M/s.HMC through M/s.Lucknow Tulsipur Forwarding Agency for which various GRs/Challans were being issued by the said agency. Shri Indra Bahadur Singh, Booking Clerk of said transport agency, in his statement deposed that the goods booked through them were actually Gutkha whereas Zarda was being shown in the GRs/Challans. However, the said deponent has nowhere disclosed as to how he was aware of the fact that the goods transported through them were Gutkha and not Zarda. Admittedly the goods being transported were duly packed and there was no occasion for the said Shri Indra Bahadur Singh to open the bags and to find out the exact nature or description of the goods. However, he has stated that Gutkha was being received from the appellants through one Shri Yadav who brought the goods to the transport agency and as per the information given by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yers etc. The appellants had made a request for cross-examining the deponent of the said statement which has not be granted by the Adjudicating Authority. Though some of the statement stand retracted by the deponents but the same had been relied upon by the Adjudicating Authority. The Hon'ble Allahabad High Court in the case of Commissioner of Central Excise V/s Parmarth Iron Pvt. Ltd. reported as 2010 (260) E.L.T. 514 (All.) has observed that the statements recorded during the course of investigation are required to meet the requirements of Section 9D of the Central Excise Act. If the said statement have not been tested on the tool of cross-examination, the same cannot be taken in consideration and have to be kept out of the realm of evidence. Not only that the Hon'ble Punjab & Haryana High Court in the case of M/s Jindal drugs Pvt Ltd. V/s Union of India reported as 2016 (340) E.L.T. 67 (P & H) as also in the case of M/s Ambika International V/s Union of India reported as 2018 (361) E.L.T. 90 (P & H) has held that not only cross-examination but examination-in-chief is also required to be undertaken during adjudication. The Hon'ble Chhattisgarh High Court in the case of M/s Hi Te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have not been tested by the tool of cross-examination and are in the nature of a third party statements and cannot be solely relied upon, we note that the Revenue has not advanced any evidence for procurement of the other raw materials. Admittedly manufacture of Gutkha involves and requires number of raw materials and in the absence of any allegation of procurement of excess raw materials of all the varieties, mere reference to Supari procurements by itself would not be sufficient to uphold the findings of clandestine removal. 23. Though the legal issue that clandestine removal is to be arrived at on the basis of positive evidences and the Revenue is under an onus to produce sufficient evidences or the evidences to the extent which would inspire confidence in the Revenue's allegations or would show at least preponderance of probabilities are well settled by catena of judgments. We take note of the recent decision of this Bench in the case of Kurele Fragrances Pvt.Ltd. and Others v. Commissioner of Central Excise, Kanpur vide Final Order No.70730-70734/2017 dated 24.07.2017. Vide the said order the Tribunal dealt with an identical evidences of the GRs and Challans issued by the tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the transporter, M/s Vinod Forwarding Agency and were lying with the Revenue were being used for issuing show cause notice without conducting any investigation. In view of the aforesaid finding of facts recorded by the Tribunal we do not find any infirmity in the impugned order. The present appeal lacks merit and is hereby dismissed. The questions of law are answered accordingly in favour of the respondent assessee and against the Department" We find that the evidences available in the present case as also in the said decision of the Tribunal in the case of Kurele Fragrances Pvt. Ltd. are of the same nature and as such the ratio of the law declared in the above decision of the Tribunal, upheld by Hon'ble High Court is squarely applicable to the facts of the present case. 24. At this stage we may take note of another decision of this Bench of the Tribunal in the case of Durga Trading Co. Final Order No.70721-70726/2016 dated 08.08.2016, wherein the same transport company M/s. Lucknow Tulsipur Forwarding Agency was involved and based upon the investigations made at their end. In the said decision, the Adjudicating Authority had himself dropped the demand of around Rs. 5.18 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch goods to identified parties; (e) receipt of sale proceeds, whether by cheque or by cash, of such goods by the manufacturers or persons authorized by him; (f) use of electricity far in excess of what is necessary for manufacture of goods otherwise manufactured and validly cleared on payment of duty; (g) statement of buyers with some details of lillicit manufacture and clearance; (h) proof of actual transportation of goods, cleared without payment of duty; (i) links between the documents recovered during the search and activities being carried on in the factory of production; etc." While examining the evidences in the present case from the above broad category laid down by the Tribunal, we note that there is virtually no evidence on record to show that the two manufacturing units M/s Shimla Chemicals & M/s SFF were clearing their goods in a clandestine manner. As already observed the entire case of the Revenue is based upon the statement and if the same are not taken into consideration no other evidence is available on record. The evidence produced by the Revenue do not establish their case even on the principle of preponderance of probability. It may be observed that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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