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TMI Blog2019 (5) TMI 1285X X X X Extracts X X X X X X X X Extracts X X X X ..... FFS machines were found installed, out of which three were found running. The officers of Central Excise found that production of chewing Tobacco and packing was going on. The officers recovered four bags each containing 19440 plain pouches (without any print) of chewing tobacco and 48 medium size packets each containing 360 small tobacco pouches. Further 470 Kg of loose tobacco and 35 roll packing material (each roll weighing 5.5 Kg) and 200 Kg BOPP film bags were found in the said premises. It appeared to revenue that said quantity of packed chewing tobacco had been clandestinely manufactured and was intended to be removed clandestinely. Therefore, the said material was seized. The value of the seized material was Rs. 2,43,240/-. The seizer was done through panchnama dated 12.09.2014. It appeared to revenue that the said goods were manufactured in violation of provisions of Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010 (hereinafter shall be referred to as '2010 Rules'). The seized goods and as well as said FFS machines were kept in the room where the machines were installed and the room was sealed and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alled and commissioned by the operator/mechanic of the firm on 10.09.2014 at the premises of Sri Srikant Chaurasia located at Churamanpur, who was satisfied with the operation of machines. iv) Photocopy of Invoice no.3 dated 02.09.2014 & invoice no.4 dated 04.09.2014 issued from Book no.1 of M/s Anmol Packaging, Kanpur regarding sale of one pouch packing machines (old) through each invoice, at value of Rs. 12,540/- and Rs. 15,960/-, respectively and GRs No.73499 dated 02.09.2014 and 74166 dated 04.09.2014 of M/s Sarn Roadways Company and receipt no.34782 dated 04.09.2014 and 34384 dated 07.09.2014, evidencing the transportation of these machines from Kanpur to Varanasi. (v) Photocopy of certificate dated 30.12.2014 of Shri Dharmendra, proprietor of M/s Anmol Packaging, Kanpur (similar to M/s Ambey Engineering mentioned at (ii) above) stating therein that they are engaged in sale and purchase of old machines. The old machines, after repair, are sold to customers. vi) Photocopy of affidavit dated 30.12.2014 of Shri Dharmendra, proprietor of M/s Anmol Packaging, Kanpur (similar to M/s Ambey Engineering mentioned at (iii) above) stating therein under oath that they have sold th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the search carried out on 12.09.2014, Sri Srikant Chaurasia was found engaged in clandestine manufacture and clearance of unbranded chewing tobacco, by using four automatic FFS machines at unregistered premises located at 328 Ka, Churamanpur, Near Jansewa Hospital, Varanasi. No documents whatsoever in relation to date of installation of seized four machines and seized raw materials were either recovered at the time of seizure or produced by Sri Srikant Chaurasia. At the time of search and seizure, on 12.09.2014, Sri Srrikant Chaurasia in his statement dated 12.09.2014 admitted to the production and clearance of unbranded chewing tobacco without obtaining central excise registration and without following the CTUTPM Rules, 2010. He further disclosed that the said four FFS machines, purchased from local scarp dealers, were brought and installed during the month of December, 2013 and Jan, 2014. The various persons present on the spot, whose statement was also recorded admitted the production of unbranded chewing tobacco, in the aforesaid premises, by using the seized four FFS machines. However, Sri Srikant Chaurasia after approx four months of seizure, retracted from his statement date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... machines were received by him in Varanasi through M/s Saran Roadways Company and he kept these machines in his semi finished house at Churamanpur. He purchased two old pouch paching machines from M/s Ambey Engineering, Saketnagar, Kanpur on 07.09.2014 for Rs. 21,660.00 in cash and got delivery of same in Varanasi on 10.09.2014 and trial was done on 11.09.2014, at his Churamanpur house. 55.2 that before the trial run the mechanics demanded packaging material thereafter he purchased raw tobacco on payment of Rs. 20,640.00 from Naveen Tobacco Co. on 11.09.2014, for the trial he purchased color laminated rolls on credit from M/s R. M. Polypack on 08.09.2014 and on 09th Sep, 2014 he purchased BOPP film bag from M/s Varanasi Packaging Shop and made payment of Rs. 18,000/- for same on 10.09.2014 and Rs. 15,600/- on 18.09.2014. The above raw material was used during trial run by the worker and no commercial production was made by him. 55.3 that for the purpose of operation of above machines he was going to submit, on next day i.e. 12.09.2014, appropriate application as per provisions of Rule 6 (10) of Un-manufactured Tobacco Packaging Machine (Capacity Determination and Collection of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Learned Original Authority has observed that the location of co-noticees is spread out to far corners of the state and if cross objection is provided the adjudication proceedings will get delayed to the extent of almost derailing it. He has further referred to provisions of Section 9D of Central Excise Act, 1944 and in para 66.3 he has observed that the request for cross examination is clearly a dilatory tactics and he has denied the request of the appellant for cross examination. He has further relied on the statements recorded on 12.09.2014 and opinion dated 13.09.2014 and agreed with the said show cause notice. He confirmed the demand of Central Excise duty of Rs. 9,13,97,000/- and imposed equal penalty on Shri Srikant Chaurasia. The Original Authority appropriated Rs. 15 lakh paid by Shri Srikant Chaurasia. The Original Authority imposed a penalty of Rs. 1 lakh on M/s Naveen Tobacco Company and Rs. 50,000/- each on M/s Ambey Engineering, M/s Anmol Packaging, M/s Saran Roadways Company under Rule 26 of Central Excise Rules, 2002. Aggrieved by the said order, above stated appellants are before this Tribunal. 6.1 We have heard Shri Kamlesh Singh learned Advocate on behalf of M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same is as a result of under influence, threatening and illegal pressure of officers of department. c. That the appellant in reply explained that Shrikant Chaurasia did not provide Tin No- hence he purchased his two machines on sale invoice. The adjudicating authority did not give any finding on Para No.16 of the reply to show cause notice therefore order impugned imposing penalty is not sustainable in the eye of law. d. That the charge of evading of central excise duty in collusion with purchaser Shrikant and abating him for evading tax is baseless in the light of documentary evidence submitted by appellant. e. That the sold two machines were found on spot and revenue failed to prove that these were purchased from elsewhere therefore transaction of appellant firm is proved on the spot therefore finding of adjudicating authority that the appellant has not effected the sale of machine is baseless against the evidence on record. The revenue suspected the bona fide sale on technical ground which is against the law. f. That the appellants firm admitted the sale of machines to Shrikant and also admitted the installation and trial of machine after sale which is proved on record a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m admittedly effected sale on dated 11.09.2014 without any malice and in common business of the firm to Shri Srikant Chaurasia and it is baseless to say that the sold goods was not supplied to Shrikant Chaurasia which was seized during the search itself goes to establish that the appellants firm has already supplied raw tobacco and no such burden can be sifted upon the firm. The firm substantiated the fact of sale by filling transaction record of appellant sale before the adjudicating authority but finding has been recorded against the evidence on record. b. That the appellant in his reply submitted that Shri Ganesh was the employee of the firm and he had issued several bills in favour of purchases including bill dated 11.09.2014 issued to Shrikant Chaurasia. The appellant annexed several bills along with the reply to the show cause notice but in the impugned order perverse finding has been recorded that the Ganesh Salesman has only issued bill dated 11.09.2014 to Shri Shrikant Chaurasia which is against the evidence on record therefore penalty imposed upon the appellant firm is unjustified and order of penalty against the appellant is liable to be quashed. 6.5 We have heard Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1973 relating to search and seizure shall apply to the search and seizure proceedings under Central Excise Act, 1944. Sec.100 of CRPC, 1973 states that before making a search, the officer or other person about to make it shall call upon two or more independent and respectable inhabitants of the locality in which the place to be searched is situated or of any other locality, if no such inhabitant of the said locality is available or willing to be a witness to the search. In present case no witness produced by the department from the locality of the seizure. g. That the opportunity of Cross-examination was not given by adjudicating authority. The grounds for rejection of Cross-examination taken by the Commissioner was that after long time there was a chance that witness may change his mind or statement. That in the case of Commissioner of Central Excise, Meerut-I Vs Parmarth Iron Pvt. Ltd. reported in 2010 (260) ELT 514 (All.) Hon'ble Allahabad High Court has ruled as under:- "We, therefore, have no hesitation in holding, that there is no requirement in the Act or Rules, nor do the principles of natural justice and fair play require that the witnesses whose statements were recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctory without payment of duty; c) Discovery of such finished goods outside the factory; d) Instances of sale of such 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) Statements of buyers with some details of illicit 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." None of the elements are present in this case. No evidence regarding discovery of goods outside the factory, receipt of sale, statements of buyers, proof of transportation of final product etc. was produced by the department. n) That Revenue was not brought any evidence to prove any of the points stated above to prove clandestine manufacture & clearance, since the entire demand of excise duty is not sustainable on merit the appellant is not liable to pay penalties under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter and seller of the FFS machines and seller of tobacco are also appellant before this Tribunal and they have during the hearing as recorded in the aforesaid paras confirmed the authenticity of all the documents which were produced by Shri Srikant Chaurasia on 05.01.2015. Further, as held by Hon'ble Allahabad High Court in the case of Parmarth Steel Iron Pvt. Ltd. reported at 2010 (26) ELT 541 (All.) wherein it was ruled to the effect that the statements which are not offered for cross examination cannot be considered as evidence. Since, Original Authority has not allowed cross examination of any of the persons none of the statements are admissible evidences for arriving at the decision. We also note that it was held in the case of Arya Fibers Pvt. Ltd. Vs Commissioner of Central Excise, Ahmedabad-II reported at 2014(311) ELT 529 (Tri.-All.) that clandestine removal by a manufacturer needs to be established by collecting evidence in relation of procurement of raw materials, actual removal of unaccounted finished goods, discovery of such goods outside the factory, instances of sale of such goods to identified parties, receipts of sale proceeds of such goods by the manufacturer, use ..... X X X X Extracts X X X X X X X X Extracts X X X X
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