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TMI Blog2020 (1) TMI 1452X X X X Extracts X X X X X X X X Extracts X X X X ..... unal. 2. By the order dated January 29, 2014, being the subject matter of the first set of appeals, E/75579-75581/2014, the Commissioner has confirmed a central excise duty demand of Rs. 17.25 crores and ordered recovery thereof from the sole proprietorship firm, M/s. Arjun Sahu & Sons, Berhampur, Odisha of which Brundaban Sahu, the appellant no. 1, is the sole proprietor, under Section 11A(1) of the Central Excise Act, 1944 along with interest thereon under Section 11AB thereof. The Commissioner has also ordered appropriation of Rs. 62.40 lakhs deposited by the said firm during the course of investigation towards the said duty demand confirmed and has imposed penalty of an equivalent amount of Rs. 17.25 crores under Section 11AC of the Act read with Rule 17 of the Pan Masala Packing Machines (Capacity Determination and Calculation of Duty) Rules, 2008 upon the appellant no. 1, Brundaban Sahu. Penalties of Rs. 20 lakhs each have been also imposed on the appellant nos. 2 and 3, Bibhudatta Sahu and Manoj Kumar Sahu respectively, under Rule 26 of the Central Excise Rules, 2002. 3. By the order dated February 17, 2014 the Commissioner has: (i) Confiscated the seized 960260 pouches ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orded in the course of investigation carried out thereafter, regarding alleged operation of packing machines without permission and manufacture and clearance of the goods manufactured with the said machines without alleged payment of duty by the said firm. 6. During the said search and seizure the Officers of the Central Preventive Unit seized six packing machines along with finished goods and packing materials, which together was valued at Rs. 23,40,143/- from the factory premises of the said firm. They also seized from the residential premises of the appellant no. 1 1080 Kgs. of loose Khara Masala as well as 57 roll bundles of packing materials of brand "Shree Laxmi Nrusingha Ketaki Masala", of total value of Rs. 5,35,025/-, along with Indian currency of Rs. 14.47 lakhs, under Panchnamas dated February 03, 2010. The six packing machines were, however, provisionally released upon deposit of a sum of Rs. 62.50 lakhs by the said firm. 7. In the show cause notice issued on August 6, 2012 it was alleged that during the period July 2008 to December 2010 the said firm had 5 undeclared packing machines for manufacture and packing of notified goods which were cleared without payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufactured by using the said 6 packing machines unauthorisedly and removed without payment of duty in violation of the Pan Masala Rules and the said Rules. The show cause notice proposed confiscation of the said 6 packing machines and the finished goods along with packing materials seized under Rule 17 of the Pan Masala Rules read with Rule 25 of the said Rules as well as confiscation of the sum of Rs. 14.47 lakhs under Section 121 of the Customs Act. The show cause notice further proposed imposition of penalties upon the said firm and the appellant no. 1 under Section 11AC of the Act read with Rule 25 of the said Rules and Rule 17 of the Pan Masala Rules and under Rule 26 of the said Rules read with Rule 18 of the Pan Masala Rules respectively and also upon the appellant no. 2 under Rule 26 of the said Rules. 9. The appellants having filed their respective replies to the two show cause notices personal hearings were held by the Commissioner, after which the impugned orders have been passed. 10. One of the main contentions of the appellants in both the appeals is that inspite of specific requests of theirs in the replies to the show cause notices, as well as reiterating the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred upon the adjudicating authority to deny such an opportunity of cross examination is an exception which has to be based on cogent and relevant grounds. We find that the reasons contained in the impugned orders do not satisfy the said requirement. 14.1 In the case of Andaman Timber Industries Vs. CCE, 2015 (324) ELT 641 (SC), dealing with this issue, the Hon'ble Supreme Court observed and held as follows: "6. According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically men ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and circumstances of the case, there the Supreme Court rejected the plea of the petitioner praying for cross-examination. But here as would appear while filing the interim show cause under Annexure-25, the petitioner has wanted to cross-examine Mr. Tapan Chandra Dey and Soumendra Kumar Sahoo before filing their final reply. Since the same was not acceded to, in our considered view, the entire decision making process has been vitiated. This is because in case during cross-examination the petitioner is able to demolish the statements of Mr. Tapan Chandra Dey and Soumendra Kumar Sahoo then the entire foundation of the case of the department would collapse. In such background, the opposite party ought to have permitted cross-examination of the above noted two witnesses. In this context, we are satisfied that the decision cited by Mr. A. Hidayatullah, learned Senior Counsel in Andaman Timber Industries (supra) applies in all fours to the present case. There also the statement of the witnesses, whom Andaman Timber Industries (supra) wanted to cross-examine, formed the basis of impugned show cause." 14.3 In the instant case also we find that the very foundation of the case agai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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