9911796707
TMI Blog2022 (7) TMI 229X X X X Extracts X X X X X X X X Extracts X X X X ..... Indore by which the demands and penalties were confirmed against them, for alleged clandestine manufacture and clearing of excisable goods. 2. The appellant, M/s MSS Food Processors is a partnership firm having Partners Shri Sunil Sadhwanin, Shri Amarchand Upadhyay having their factory premises at Plot -D, Sector-E, Sanwer Road, Indore. The owner of the factory premises and machinery is Sh. Nitesh Wadhwani who has given on rent the premises with machinery to M/s MSS Food Processors. They are engaged in manufacture of Gutka Masala (Pan Masala containing tobacco). Their brand names are Shimla, Vansh, Malik chand, Mama, Kargil. Appellant Sh. Bahadur Singh is working in M/s MSS Food Processors as electrician. Appellant - M/s Mahadev Shiv Shambhu Freshners Processors is Proprietorship firm of Shri Omprakash Talreja engaged in manufacturing and packing of sweet supari in pouches and claiming benefit of SSI exemption. Their factory is located at 231-B, Sector-F, Sanwer Road, Indore. Appellant, Sh. Ramesh Dhammani is the Supervisor in M/s Mahadev Shiv Shambhu Freshners Processors. Shri Omprakash Talreja had given the factory premises with machinery on lease of Rs. 30,000/- per month for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri D.B. Pujari in his statement dt. 25.05.2011, stated that the said agreement was actually notarized by him in March'2011 after Holi Festival and the said document was entered in his Notary register against the entry kept blank for dt. 11.02.2011. It was alleged that Shri Omprakash Talreja has fraudulently prepared the Rent agreement, so as to escape from the demand of central excise duty and penalty. Shri Talreja provided his manufacturing unit, packing machines etc. for clandestine manufacture of Gutka of 'Shimla', 'Kargill' brands, out of the packing material and gutkha mix supplied by M/s MSS, and has also provided them their vehicle No. MP09 KC-5789 for transportation of the clandestine manufactured Gutkha. He has apparently not received the rent amount from Shri Abdul Salam, as he could not show the accounting of said amount. Statement of Shri Abdul Salam was recorded on 15.11.2011 wherein he accepted the Rent agreement and hiring of factory. He also stated that he was in factory on 18.02.2011 but went for having refreshment between 11 - 11.30 Hrs., and when came to know of the visit of the officers at 12.30, he ran to Ajmer and other places and came back on 03.11.2011. He r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssors and Shri Dinesh Mehta owner of premises 12 - A, Private Industrial Area, Village - Bhourasala, Sanwer Road, Indore. The proposal was based upon allegation based on search conducted on dt. 22.02.2011 at unregistered premises 12 - A, Private Industrial Area, Village - Bhourasala, Sanwer road, Indore, in the presence of Shri Dinesh Mehta, owner of said premises. Shri Mehta stated that premises was given on rent to Shri Anmol Mishra who is related to "Shimla" Gutka factory, since November' 2009 and submitted copy of rent agreement dt. 02.04.2010. During search 10 Gutka Pouch packing machines were found which were connected to the power point and the power supply was through 125 KVA Diesel Generator, which was filled with ¾ diesel. Three outer packing-sealing machines, two weighing machines, one bag stitching machines, finally packed Gutka pouches of "SHIMLA" and "MALIKCHAND" Pan Masala/ gutka bearing name and address of MSS, Gutkha Masala weighing 595.07 Kg (for packing of Gutkha Pouches) were also found. It was alleged that Pan Masala Gutkha was manufactured in said machines clandestinely by Shri Anmol Mishra. The witnesses of rent agreement Shri Jitesh Joshi and Shri Gha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... based upon search conducted at Godown of Liyaqat Ali situated at 28-A, Sector - C, Industrial Area, Sanwer Road, Indore. It was alleged that during search printed lamination rolls/ outer packing of "Shimla Gutkha", "VANSH Gutkha", "MALIKCHAND Gutkha" bearing name and address of M/s MSS, and packed in jute and plastic bags were found. Shri Liaqat Ali handed over Rent Agreement dated 01.07.2007 showing that the godown was taken over on rent by Shri Sunil Sadhwani, partner of M/s MSS, who has signed as Sanjay Ajwani, as established by hand writing expert. It was alleged that the seized goods were stored and being supplied to the unregistered factory of M/s Mahadev and at Bhourasla, for clandestine manufacture of Gutkha/ Pan Masala. The show cause notice proposed confiscation of seized goods viz. 72115 Kgs of Printed lamination rolls valued at Rs. 1,80,28,750/- and 18160 Kgs of Outer pouches valued at 32,56,750/- and imposition of penalty on Shri Sunil Sadhwani, M/s MSS Food Processors and Shri Liaqat Ali (Godown Owner). (vii) A show cause notice C. No. IV (16) SIC/08/2011/5622-5628 dt. 13.02.2012 was issued based on seizure of Truck No. UP-78-AN-4940 on 23.02.2011, which was f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ani, Rs. 5 Lakh on Shri Ramesh Kumar Damani. The adjudicating authority however reduced the demand and held that duty demand for the period prior to 01.04.2010 is not sustainable as there is no evidence of manufacture of Gutka. He confirmed demand under Rule 17 (2) of Pan Masala Rules for the period April 2010 to 18.02.2011, which provides that where notified goods have been found to have been manufactured in or cleared from a unit which is not registered, then the duty liability is required to be determined on the basis of number of packing machines found available in the premises of the unit and the retail sale price of the pouches manufactured with the aid of such packing machines (FFS) and unless evidence to the contrary is provided to the satisfaction of the Central Excise officer, such machines shall be deemed to have been in operation since the 1st day of April of the financial year in which the unit was found to be not registered, and shall be construed as operating packing machines for the purpose of Rule 7 and dealt with accordingly. That on the day of search on 18.02.2011 at the factory of M/s Mahadev, the Pan Masala packing machines were engaged in clandestine manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acking machines valued at Rs. 24,06,480/- and imposed penalty of Rs. 5 lakh on M/s Mahadev. The adjudicating authority ordered confiscation of same on the ground that no documents evidencing payment of central excise duty was found and M/s Mahadev were engaged in manufacture of Pan Masala and Gutkha without following the provisions of Rule 6, 7 and 9 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules 2008 and the seized goods are liable for confiscation and penalty. (iv) In case of SCN No. IV (16) SIC/11/2011/25694 dt. 02.09.2011, the adjudicating authority ordered confiscation of Truck No. MP09 KC 5789 valued at Rs. 2,19,966/-, and absolute confiscation of goods found to be loaded viz. Gutkha and Pan Masala pouches of Malikchand and Shimla brands alongwith lamination rolls, secondary and outer packing valued at Rs. 6,73,460/-, Cotton box of acetate valued at Rs. 1,79,850/-, Gutka mix valued at Rs. 3900/-. He also imposed penalty of Rs. 3,00,000/- under Rule 25, penalty of Rs. 2,00,000/- under rule 26 of CER, 2002 and of Rs. 1,00,000/- under Section 112 (2) of Customs Act, 1962 on M/s Mahadev. The above order was passed on the ground that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d goods and confiscation of 10 packing machines. He also imposed penalty of Rs, 5 lakhs under Rule 25 on Shri Anmol Mishra. (vii) In case of show cause notice IV (16) SIC/12/2011/654-661 dt. 06.01.2012 all the proposals were dropped as manufactured Tobacco was not held to be excisable. (viii) In case of show cause notice IV (16) SIC/08/2011/5622-5628 dt. 13.02.2012 issued to Shri Shiv Bahadur Chouhan and Others on seizure of Truck No. UP78-AN-4940 alongwith 4275 Kgs of lamination rolls of "Shimla" brand Gutka and 678.6 Kgs of outer packings of Shimla Gutkha, the adjudicating authority ordered absolute confiscation of lamination roll and outer packings, confiscation of vehicle. He also imposed penalty of Rs. 3 Lakhs each on Shri Shiv Bahadur Singh Chauhan and M/s MSS. The order was passed on the ground that Shri Shiv Bahadur Singh Chauhan is the owner of said vehicle and did not turn up for enquiry even after issue of summons. Shri Shiv Bahadur vide letter dt. 07.07.2011 informed, that on 02.10.2010 he had sold the truck to one Shri Shambhu Singh, and enclosed photocopies of some documents namely Bikri -kray Saudaraseed, delivery note, Form 29, Form No.30 (under C.M.V. Rules) af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s MSS. Further Shri Anmol Mishra was using mobiles which numbers were issued in the name of Shri Navneet Agarwal and Shiv Bahadur Singh Chauhan, both employee of M/s MSS. It was also found that Shri Sunil Sadhwani has taken on rent a godown for clandestine storage of lamination rolls and outer packaging which were being used for clandestine manufacture of Gutka/ Pan Masala of their brand at unregistered factory. Further it is also found that the vehicle is registered in name of Shri Shiv Bahadur Singh Chouhan who was an employee of M/s MSS. The evidences connect M/s MSS with the seized goods at aforesaid locations. M/s MSS was aware that such laminations and outer packings found in vehicle no UP78-AN-4940 were not duty paid excisable goods and were liable to confiscation. Therefore M/s MSS found to be dealing with excisable goods which were liable for confiscation and is liable for penalty under Rule 26 of CER, 2002. (ix) In case of show cause notice IV (16) SIC/15/2011/24996-25000 dt. 24.08.2011 issued to Shri Sunil Sadhwani, M/s MSS and Liaquat Ali owner of Godown at 28-A, Sector - 'C', Sanwer Road, Indore on seizure of 72,115 Kgs of printed lamination rolls and 18610 Kgs of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d liable for penalty under Rule 26 of CER, 2002. That M/s MSS is liable for penalty as they are owner of seized goods. 5. Being aggrieved, the appellants are in appeal before this Tribunal. 6. Learned Counsel appearing for M/s Mahadev submits that, under Rent agreement dt. 11.02.2011, the factory was rented out with all machines to Shri Abdul Salam of Village Ambakhedi. Tehsil - Hatod, Indore, for Rs. 30,000/- per month, for continuation of manufacture of sweet supari and the agreement was duly notarized. After that the proprietor Shri Omprakash Talreja went on pilgrimage and was unavailable to confirm the status on 18.02.2011, when the visit was made to the factory by the officers. It was alleged that two persons namely Shri Anmol Mishra and Shri Ramesh Dammani were employed by the Appellant as Manager and Supervisor. Shri Omprakash Talreja on 16.05.2011 during recording of his statement submitted his affidavit alongwith agreement dt. 11.02.2011 with Shri Abdul Salam. The statements of Abdul Salam were recorded on 15 and 16.11.2011 and he has clearly stated that he was in the factory of M/s Mahadev on 18.02.2011. At the time when the Raid team arrived, he was outside the factory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.2010 to 18.02.2011 only. The above findings admittedly hold absence of any clandestine manufacture, transportation, sale or engagement of other parties to act detrimental to interest of revenue till April, 2010. The impugned order has accepted the submission of the Appellant about absence of clandestine manufacture from 2007 to March' 2010. There are no evidence for changes in fact on and from 01.04.2010. There are no evidence either oral or otherwise for change of opinion for period w.e.f 01.04.2010. The deviation in determination and the opinion is merely to stretch and support the deeming fiction of section 3A read with Rule 17(2) of P.M. Rules applied. The adjudicating authority has relied upon the statement of Shri Suresh Katiyar, Supervisor at M/s Shiv Udyog to canvass that M/s MSS were getting the manufactured tobacco produced at M/s Shiv Udyog, and then supplied to M/s Mahadev as Gutka Mix. Shri Katiyar has retracted his statement during cross examination and hence cannot be considered as evidence. The Ld. Counsel relies upon decision of Tribunal in case of Rohit Vashishtha, Narendra Kumar, Director, Safe Décor Pvt. Ltd, Vs. CCE & ST. - JAIPUR - I reported in 2019 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjudicating authority did not grant the cross examination, and the Appellant had to approach CESTAT, who have vide Final Order No. A/52551/2016 - SM (BR) dt. 23.06.2016 allowed the cross examination. The CESTAT's order was upheld by the Hon'ble High Court and later the SLP filed by the department before Hon'ble Supreme Court was also dismissed. It was only after such orders passed by CESTAT, Hon'ble High Court and upheld by Supreme Court, that cross examinations were permitted and hence it is revenue's fault that the cross examinations were conducted after eight years. When the appellant was not given opportunity by the adjudicating authority, in that case the contention of the adjudicating authority, that examination-in-chief and cross examination after eight long years has no meaning, is erroneous. That for retracted statements of Shri Anmol Mishra, the impugned order ignores details of property transactions brokered by him in past years. Merely non compliance of accounting or taxation by a third party cannot be construed against the Appellant M/s Mahadev in any manner. Onus to prove clandestine removal cannot be discharged by unconnected, uncorroborated and retracted statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financial year, has an exception in the said Rule, which shifts the date of commencement of deemed production if evidence to the contrary is provided. This means, if a person is in a position to establish actual date of manufacture, the deeming provisions would not apply prior to that date. If the evidence available on record to show the actual period during which production and clearance of Pan Masala had taken place, duty would be confirmed from that date only. The adjudicating authority himself held that no manufacture of Gutkha took place till 01.04.2010. There is also on record agreement between Appellant - Mr. Talreja and Shri Abdul Salam executed on 11.02.2011, and the premises including machines were given on rent by the Appellant. As such it is clear that the factory premises cannot be held to be manufacturing notified goods prior to 11.02.2011. He placed reliance on this Tribunal order in case of Shri Krishna Gopal Lawanaia Vs. CCE Kanpur 2018 (7) TMI 1278 - CESTAT Allahabad. He submits that there is no evidence of manufacture and the theory of preponderance of probability would be applicable only when there are strong evidences leading only to one conclusion of clandest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ches of Shimla and Malikchand brands bearing name of manufacturer M/s MSS Food Processors, Plot D, Sector-E, Industrial Area, Sanwer Road, Indore Registration no. AALFM8543RXM001 were also found. It was alleged that at both premises the goods of M/s MSS were being manufactured and duty is demandable on bulk Pan masala/ Zarda Masala from M/s MSS and duty on 41 machines installed at M/s Mahadev Shiv Shambhu Freshener Processors at 231-B, Sector-F, Sanwer Road, Indore from Appellant and others Jointly and severely under Pan Masala Packing Machine (Capacity determination and Collection of duty) Rules 2008 "PMPM" Rules. Also duty on 10 machines installed at 12-A, Private Industrial Area, Village Bhourasala, Sanwer Road, Indore from M/s MSS and others Jointly and severely under Pan Masala Packing Machine (Capacity determination and Collection of duty) Rules 2008. That on the basis of cash sales of manufactured Tobacco of M/s Shiv Udyog, presumptive calculations were made on the basis of VAT return(s) filed by M/s Shiv Udyog, to determine the duty on gutkha mix allegedly supplied by M/s MSS to factory of M/s Mahadev and factory at Bhourasla Premises and duty was demanded from M/s MSS. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ptions of clandestine manufacture stand on wild grounds. He relied upon the judgment of Hon'ble High Court of Patna in case of CCE Vs. Brims Products 2011 (271) E.L.T. 184 (Pat.) in this regard. He submits that there is no evidences as per the impugned order itself, yet the demand against M/s MSS has been made. The deeming law cannot be applied in such facts. The Adjudicating authority in para 90.12 has himself held that there is no demand for the period prior to 2010 holding that there is no evidence. That even after 2010, since there are no evidences and there is no change of facts, hence there cannot be any demand. There are no evidences, oral or otherwise, for fresh start of another opinion for period w.e.f 01.04.2010, to allege manufacturing and clandestine removal of alleged Gutkha mix. The deviation in determination and the opinion is merely to support the deeming fiction of Section 3A, applied on M/s Mahadev and Shri Anmol Mishra. Import of such analogy and cross application of Sec 3A is unsustainable. Shri Suresh Katiyar who deposed as supervisor of M/s Shiv Udyog on 24-25.02.2011 has retracted his statements regarding the nexus of brands of the appellants with coded words ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ELT 243 (Guj), CCE vs. Swati Polyester 2015 (321) ELT 423 (Guj), Commissioner Vs Swati Polyester 2015 (321) ELT A217 (SC), Flevel International Vs CCE 2016 (332) ELT 416 (Guj), Arya Fibres Pvt. Ltd. Vs. CCE 2014 (311) ELT 529 (T), TGL Poshak Corporation Vs CCE 2002 (140) ELT 187 (T). There is no evidence of manufacture and hence no demand can be made as held by the Tribunal in M/S ARYA FIBRES PVT. LTD, M/S NOVA PETROCHEMICALS LTD. AND OTHERS Vs. CCE AHMEDABAD-II 2014 (311) ELT 29 (Tri.-Ahmd.). He also submitted that there is complete absence of enumeration of situations in which one could hold with slightest probability that there have been clandestine manufacture and clearances. That in Pan Parag India v CCE, 2013 (291) ELT 81, it has been held that the theory of preponderance of probability would be applicable only when there are strong evidences heading only to one and only one conclusion of clandestine activities. The said theory cannot be adopted in cases of weak evidences of a doubtful nature. M/s MSS are neither related with the goods seized at different places nor is there any evidence to establish any commercial link of the appellants with the vehicles, godown or the good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be seen that whether the machines seen in video of Bhourasla premises can be termed as FFS - packing machine. As per Rule 2(c) of PMPM Rules 2008, 'Packing machine' in above rules has been defined, and the notified goods are not simply Pan Masala or Gutkha, but such Pan Masala/ Gutkha which are "manufactured with the aid of automatic packing machine and packed in pouches" (Form, Fill and Seal), as per Notification No. 29/2008-CE. He has drawn our attention to snaps taken out of the video provided to him by Revenue, and contends that there is vital technical failure, as department ought to have obtained a Chartered Engineers Certificate for the fitness of the wreckage portrayed as "Packing Machines" as to whether such machines were complete packing machines and whether if not all such machines required at least one hopper etc., for packing of any goods or whether without such hoppers such machines be said to be a functional machine. That immediately after the search and seizure, the officers had taken possession of the alleged wreckages and shifted to Central Excise Office. They made repeated requests for appointment of a Chartered Engineer for inspection of seized machines and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital part "feeding Hopper". Denial of verification of the incomplete equipment has rendered the findings as biased and legally unsustainable. There is a vital technical failure as department ought to have obtained a Chartered Engineers Certificate for the fitness of the wreckage or dismantled machines, portrayed as "Packing Machines", whether such machines were complete packing machines. He relied upon the decision of Constitutional Bench of Hon'ble Supreme Court in matter of COMMISSIONER OF CUSTOMS (IMPORT), MUMBAI Vs. M/s. DILIP KUMAR AND COMPANY & ORS.2018 (7) TMI 1826 - SUPREME COURT wherein Hon'ble court held that every taxing statue including charging, computation and exemption clause (at the threshold stage) should be Interpreted strictly. That in case of ambiguity in a charging provisions, the benefit must necessarily go in favour of subject/assessee, but the same is not true for an exemption notification, wherein the benefit of ambiguity must be strictly interpreted in favour of the Revenue/State. The denial of cross examination of Panch witness, Photographer and Videographer who were eye witness to status of machines at the time their seizure is erroneous, as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her agreement in past which was allegedly destroyed by the Appellant. It is clear that the disputed Rent agreement was fabricated elsewhere during the proceedings, and was subsequently planted by Shri Dinesh Mehta to save his skin. That in such facts the said agreement cannot be presumed as a documentary evidence against the appellants, as it fails to comply with the provisions of Section-36A of CEA 1944. Merely signatures of the Search witnesses on said rent agreement cannot render it as a document under Section36A of the Act, to be used against the Appellant. Bringing outside documents during search is in violation of Section 18 of CEA 1944. The Adjudicating Authority has not considered the procedure and manner of search as contained in Cr. PC 1898. Section 18 of CEA refers to CrPC as to how searches are to be made. During the search it is the duty of the officers to maintain sanity of search proceedings in a cordoned environment, and any unrecorded external or internal breach of such cordoning renders the panchanama stale/void. 10. There is no determination on submissions before the Adjudicating Authority that as per the prevalent law the name and address/details of the tenant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dwriting on disputed document which is typed. Neither Shri Tuteja nor the department obtained sample handwriting / sample signature of the appellant. Shri HS Tuteja admitted to have not qualified any degree or diploma in such field. The department ought to have sent the questioned document to an accredited lab for Examination, relating to the Questioned Documents. During Cross examination, Shri Tuteja admitted that though he has not taken any formal education, his training through experience is equivalent to training by Scotland Yard. When asked for his failure to obtain fresh specimen signatures for comparison, he stated that admitted signatures are adequate. He admitted that in disputed signature only letter "A" is clear and subsequent letter are neither identifiable nor readable, whereas in admitted signatures subsequent letters are identifiable. He admitted to have compared only initials of Anmol Mishra with his full signatures without having any admitted initials. On being asked for his failure to obtain admitted initials of Anmol Mishra, he stated that people change their signatures during such sampling. He refused the signatures available on PAN card and Driving License as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thora of judgments. In the case of State of Maharashtra v. Sukhdeo Singh, the Apex Court opined that before a Court can act on the opinion - evidence of a handwriting expert, two things must be proved beyond any manner of doubt, namely, (i) the genuineness of the specimen/admitted handwriting of the concerned accused and (ii) the handwriting expert is a competent, reliable and dependable witness, whose evidence inspires confidence. There is no determination on the methodical opinion of two hand writing experts as produced by him of Mrs. Nutan Supekar, Certified Forensic Document & Hand Writing Kothari Market, Indore. (Trained at Central Forensic Science Laboratories (C.B.I.), New Delhi, and Life Member- Indian Academy of Forensic Sciences, Kolkata) and Shri Brijesh Ram Shankarlalji Sharma, 134, Nanda Nagar Stadium Ground, Indore - 452 Oil (M.P.). The adjudicating authority has erred in placing reliance on retracted statements of Appellants, as such statements have no evidential value in eyes of law. He relied upon orders in case of Suntrek Aluminium P. Ltd. Vs. CCU & CE, ST 2013 (6) TMI 3 - GUJ - HC, 2013 (288) E.L.T. 500 (Guj.). The entire case against Appellant has been made agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfiscation and hence no penalty is imposable on him. Rule 25 of the CER, 2002 contains two sub-rules i.e. sub-rule (1) and sub-rule (2). Further, sub-rule (1) of rule 25 of the CER, 2002 contains four clauses, viz. (a) to (d). No sub-rule or clause thereof of rule 25 has been mentioned in the SCN and the impugned O-in-O. It is well settled law that penalty is not imposable if sub-rule or clause thereof is not mentioned in the SCN. That without prejudice to the said submission, it can be seen that penalty under rule 25 is imposable only on the manufacturer under the circumstances mentioned therein. Similarly, penalty under rule 17(1) of the Pan Masala Rules is also imposable only on the manufacturer of notified goods. Appellant is not the manufacturer of the goods under seizure and does not have any relation with the seized goods. Therefore, penalty cannot be imposed on him under the said rules. Penalty under rule 26 of the CER, 2002 can be imposed on a person only when it is proved beyond doubt that the person dealing with excisable goods knew or had reason to believe that such excisable goods were liable to confiscation. In the instant case, there is no evidence on record to prove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mani in his statement dt. 18.02.2011, 19.02.2011 and 24.02.2011 confirmed that earlier Dillagi Sweet Supari was being manufactured but from sometimes gutka manufacture was also started. Machine Operator Shri Surendra Kumar Jain, Shri Ramakant Mishra and Shri Vinod Kumar Shukla, packing worker of M/s Mahadev in their statements dt. 18.02.2011 stated that earlier Dillagi Supari was being manufactured, but from some times Gutka manufacturing was also started and that Gutka Masala was not manufactured in factory but was brought in small Eicher vehicle. Though they have retracted their statements but did not give reason to deny the statements after 8 long years. Further they confirmed that earlier 'Dillagi Supari' was packed occasionally, raw material and packing material used to come from M/s MSS. No facility of manufacture of Gutka Mix. No employee, supervisor stated regarding ownership of Shri Abdul Salam. Finished Gutka pouches of Kargill brand valued at Rs. 13,54,640/-, Gutka Mix valued at Rs. 2,26,500/-, Packing material viz. PVC Bags outer packs, pouch laminates of Rs. 1690/-, Rs. 8100/- and Rs.2,00,500/- were found. That the duty as per Pan Masala Packing Machines (Capacity Dete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be discarded by subsequent retraction. He has criminal history and does work for money. He was hired for shifting liability of manufacture, which is tutored and under influence. Shri D.B. Pujari during his examination-in-chief confirmed that he does not remember date of filing of retraction and does not have copy of retraction and that his cross examination was sought by M/s Mahadev. This shows that Shri Pujari might not have filed the retraction and somebody else has filed retraction in his name. 16.2 In case of search and seizure on 22.02.2011 in Private premises at 12A, Private Industrial Area, Bhourasala Village, Sanwer road, Indore in presence of Dinesh Mehta, the premises was stated to be taken on rent by Shri Anmol Mishra, and 10 Gutka pouch packing machines were found in operative condition to which the power supply was made by 125 KVA generator, and the fuel tank was found to be ¾ filled. Three outer packing sealing machines, two weighing machines and one stitching machine were found. Gutka pouches of Shimla and Malikch - and brand and Gutka Mix weighing 595.07 Kgs were found stored. No facility of manufacture of Gutka Mix was found. Shri Dinesh Mehta. Owner of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale bills in name of fake and fictitious customer in cash. 16.4 In case of seizure of Truck No. UP78-AN-4940 on 23.02.2011, he submitted that the said Truck was parked in abandoned condition and was loaded with 4275 Kgs Roll of lamination rolls and outer pouches for manufacture of Shimla brand Gutka and Pan Masala, totally valued at Rs. 13,01,752/-. The owner of goods is M/s MSS as during investigation it was found that the truck was registered in the name of Shri Shiv Bahadur who was employee of M/s MSS, as accepted by Shri Sunil Sadhwani, Partner of M/s MSS. Shri Shiv Bahadur Singh did not appear for recording of statements and the sale-purchase letter of truck (few months earlier) to one Shri Shambhu Singh was found to be not genuine. The sale/ purchase letter was notarized by Notary Shri K.N. Jaiswal, who in his statement dt. 28.07.2011 stated that the documents were notarized ante dated and the signature of Shri Shambhu Singh was not put before him. The hand writing expert Shri H.S Tuteja in his report also confirmed that the signature of Shri Shambhu Singh were forged. In view of above seizure it is clear that the lamination and packing material for manufacture of Shimla bra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ablish case of clandestine removal and violation of excise procedure, the burden shifts on assessee to prove that he is innocent. He relies upon the theory of 'preponderance of probability'. The persons/appellants who has the benefit of advice of lawyers, thus their retraction has to be viewed with suspicion. The statement tendered before tax authorities is admissible evidence and cannot be discarded summarily on subsequent retraction. That the circumstances of statements shows the demand is correct. The confessional statements are out of ambit of Section 9D and the demand based on confessional statement are justified. He relied upon orders in case of National Boards Vs. CCE, Calicut 2014 (313) ELT 113 (TRI), CCE, Salem Vs. CESTAT Chennai 2019 (366) ELT 647 (Mad.), Sudhir Sharma Vs. CC 2015 (319) ELT 450 (Del.), Harika Resins Pvt. Ltd., and Sama Rajasekhar Vs. CC,CE & ST 2021 (7) TMI 891 CESTAT - Hyd., Abbas Haji Vs. GOI & Othrs 1984 (15) ELT 129 (KER), Power Control Corporation Vs. CCE & ST, JAIPUR - I 2019 (369) ELT 471 (RAJ.). He further relied upon orders in customs case of Collector of Customs, Madras & Othrs Vs. D. Bhoormull 1983 (13) ELT 1546 (SC), that there is no mathemati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch tobacco in manufacture of Gutka Mix which was cleared to M/s Mahadev and one more premises situated at 12A, Private Industrial Area, Bhourasla, Indore, allegedly taken on rent by Shri Anmol Mishra, where the gutka mix was packed in Gutka pouches. The demand against M/s Mahadev and Shri Anmol Mishra has been computed on the basis of number of machines found to be installed in respective factory premises. Also the demand of duty against M/s MSS on Gutka Mix/ Masala has been computed on the basis of quantity of goods sold in cash sales by M/s Shiv Udyog, and as shown in their VAT return. Similarly the finished goods and packing material found from different premises and vehicles has been confiscated and penalties has been imposed upon M/s Mahadev, M/s MSS and Shri Anmol Mishra and other Appellants holding that the goods belong to M/s MSS. We find that Mr. Omprakash Talreja, Prop. of M/s Mahadev has challenged the impugned order on the ground that factory was rented out to Shri Abdul Salam, and hence the demand of duty from him is wrong, since the Gutka was manufactured by Shri Abdul Salam and hence Mr. Salam is the manufacturer. That the statements relied upon by the adjudicating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such contract, whether he received any consideration to enter into such contract and if so then what was the consideration/payment; whether the agreement was colourable device of M/s Mahadev or M/s MSS to start manufacturing Gutkha from 11.02.2011 keeping Abdul Salam in front. It had to be determined as to whether any alleged blank entry on any other date would be a conclusive proof that subject agreement was entered against blank entry, and when was the stamp paper for the agreement purchased and in whose name. We find that the impugned order is absolutely silent on these material issues and thus highly erroneous. The Agreement is a documentary evidence for the purpose of Rule 17 of PMPM Rules 2008, and when the contracting parties accept the agreement, it cannot be doubted. We also find that the Examination -in- chief of Notary - Shri D.B. Pujari was conducted on 06.12.2018 by the Adjudicating Authority, wherein he stated that he has already filed his retraction from his statement given to the investigating officer. Going by the contents of cross examination and examination-in-chief, we find that since the statement given by Notary Shri D.B. Pujari (during investigation) stands r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidence to show that Shri Omprakash Talreja was operating the factory after 11.02.2011 or was knowing about manufacture of Gutka in the said premises. In such case we hold that Shri Omprakash Talreja cannot be considered as owner or of occupier the factory and manufacturer, and hence no duty can be demanded from him. The adjudicating authority has contended that the statements retracted by the workers during examination-in-chief and cross examination are eight years old, and are meaningless. However we find that the Appellant asked for cross examination after issue of show cause notice dt. 06.07.2012, which was not granted and the Appellants being aggrieved had filed appeal before CESTAT against such refusal. It was only after the Final Order No. A/52551/2016 - SM (BR) dt. 23.06.2016 passed by the CESTAT and subsequently upheld by the Hon'ble High Court and dismissal of SLP filed by the Department, that cross examinations were permitted. In such circumstances when the Appellants had no opportunity to test the veracity of the statements due to refusal of the revenue, it cannot be said that the examination-in-chief and cross examination after eight years, will not serve any purpose. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be made from M/s Mahadev as they cannot be held to be operating the factory, but even otherwise also we find on merits, there is no reason to demand duty for the period 01.04.2010 to 18.02.2011 and the duty at the utmost could have been demanded for 18 days of February' 2011 only, if we go by the reasoning of the adjudicating authority given by him for setting aside of duty demand till 01.04.2010. The Adjudicating authority has demanded duty for the period 01.04.2010 till 18.02.2011 by applying deeming fiction under Rule 17 (2) of Pan Masala Packing Machines (Capacity Determination and Collection of Duty), Rules, 2008 (Pan Masala Rules). In show cause notice the duty demand from M/s Mahadev was proposed for the period June' 2007 to 18.02.2011. However the adjudicating authority confirmed the demand only for the period April 2010 to 18.02.2011 for the reasons given in Para 90.12 and 90.16 holding as under : Para 90.12 - In view of above discussion and judicial pronouncements, I find that in the instant case, since the investigations could not provide any evidence that clandestine clearances of Gutka Pouches from the factory of M/s Mahadev and clandestine clearances of Gutka Mix f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2010 as cut off date. We are not able to subscribe to this reasoning of applying 01.04.2010 as cut off date from which the demand can be made from M/s MSS and/or M/s Mahadev. He has applied deeming provision of Rule 17 (2) of the Pan Masala Rules as amended vide Notification No. 8/2010 - CE (NT) dt. 27.02.2010 which reads as under : "(2) If it is found that goods have been cleared from a unit which is not registered with the jurisdictional Central Excise Office, then the duty liability of such unit shall be determined on the basis of number of packing machines found available in the premises of the unit and the retail sale price of the pouches manufactured with the aid of such packing machines and unless evidence to the contrary is provided to the satisfaction of the Central Excise Officers such machines shall be deemed to have been in operation since the first day of April of Financial Year in which the unit was found to be not registered. And shall be construed as operating packing machines for the purposes of Rule 7 and dealt with accordingly." 21. The Adjudicating Authority when himself found that there is no evidence of manufacture of gutka mix/ masala by M/s MSS and manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and also there is no evidence of any pouch packing of Gutkha/ Pan Masala before February, 2011, the demand cannot be made for period before February, 2011. Further as per adjudicating authority's own findings, no evidence of procurement of gutka mix, manufacture of Gutka pouches and clearance of Gutka pouches before 18.02.2011 by M/s Mahadev is on record, in that case no demand before February, 2011 can be made from M/s Mahadev. Our view is also fortified by the precedent order in case of Shri Krishna Gopal Lawania Vs. CCE Kanpur reported in 2018 (7) TMI 1278 - CESTAT ALLAHABAD wherein it was held as under: 8. After hearing both the sides duly represented by Shri Aalok Arora advocate with Ms. Rinki Arora advocate and Shri Rajeev Ranjan Additional Commissioner, we find that there is no dispute about the fact that the appellants were operating illegally from premises located at Rehan Kala Village, Agra and were indulging in clandestine manufacture and removal of Pan Masala, without obtaining the registration and without paying the duty. The only dispute required to be resolved in the present appeal is as to whether duty is required to be paid by the appellant for the period during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so been imposed on Shri Anmol Mishra, Shri Amarchand Upadhyay, Shri Sunil Sadhwani and Shri Ramesh Kumar Damani. Initially the show cause notice proposed demand for the period June'2007 till February, 2011 but the Adjudicating Authority restricted the presumptive demand for the period 01.04.2010 till February, 2011, as stated by him in Para 90.12 and 90.16 of the impugned order. The show cause notice and the impugned order alleges that M/s Shiv Udyog were issuing cash sales bill in the name of fictitious customers towards clearance of manufactured Tobacco, whereas the same was received by M/s MSS for manufacture of Zarda Masala i.e., Gutka Mix for onwards supply to M/s Mahadev and another premises at Bhourasala allegedly owned by Shri Anmol Mishra, without payment of central excise duty. The show cause notice alleged that at both the above places, the goods of Appellant M/s MSS i.e. Gutka pouches were being packed and duty is demandable on BulK Pan/ Zarda Masala from M/s MSS; On 41 machines from M/s Mahadev Shiv Shambhu and others jointly and severally under Pan Masala Rules and on 10 machines installed at Bhourasala from m/s MSS and others jointly and severally. To arrive at the q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but we find that even there is no corroboration of such statements with even a single evidence. Only on the basis of retracted statements and coupled with fact that there is no procurement of raw material/ packing material, manufacture, clearance and transportation and receipt of consideration or identification of buyers, no duty demand can be made against M/s MSS. No discrepancy in stock was noticed on 19.02.2011, when the factory of M/s MSS was visited by the officers. The alleged quantity of Zarda Masala cleared i.e., 1082,479 Kgs. has been calculated on the basis of VAT returns of M/s Shiv Udyog, without any corroborative evidence at the end of M/s MSS. Hence the allegation of clearance of Zarda Masala by M/s MSS is not sustainable. The show cause notice and the impugned order has also placed reliance on statement of Shri Suresh Katiyar who deposed as Supervisor of M/s. Shiv Udyog on 24/25.02.2011, that the manufactured tobacco was manufactured for supply to M/s MSS and that the tobacco bags has coded words for brand name of M/s MSS. However we find that Shri Suresh Katiyar retracted his statement on 02.03.2011 and complained that his statement was not voluntary and was recorde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h upheld the order passed by CESTAT. In such case no fault can be found if the examination-in-chief was conducted after eight years. There was no hurdle from the Appellant's side for conducting the examination in chief immediately after last show cause notice which was issued in the year 2012. Even otherwise also we find that there is no evidence of manufacture of any unaccounted Gutka Mix as the appellants were regularly maintaining all records of stock purchase, transportation, receipts consumption in the required manner. They have been regularly filing their ER-1 Returns and have also been subjected to audit. Moreover the appellants were operating under PMPM Rules 2008 since June 2008. It cannot be the case that for three continuous years, such officers failed to note any objectionable or unaccounted stock of raw materials. In view of above there is no possibility of any clandestine manufacture and clearance of Gutkha Mix. Our view is also based upon order in case of Ghodavat Pan Masala Products Ltd. 2004 (175) ELT 182 (TRI) as under : "14. After hearing rival submission, perusal of the records and the case laws relied on by both the sides, we find that the demand of the depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and tangible evidence. (ii) 2001 (130) E.L.T. 334 (T), Chennai M.T.K. Gurusamy V. CCE, Madurai Clandestine removal - Evidence Standard of - No positive evidence to establish clandestine removal adduced by department - Quantity alleged removal calculated on basis of transport company's records based on presumptions and assumptions not sustainable. (iii) Gurpreet Rubber Industries, 1996 (82) E.L.T. 347 (T) = 1996(63) ECR 68 (T) Clandestine production and removal not proved by any evidence such as installed capacity purchase & utilization of raw materials labour employed, power consumed, etc., demand set aside. (iv) Ambica Metal Works - ECR Vol. 29 page 549 Evasion of duty must be based on solid and acceptable evidence (v) D.S. Screen Pvt. Ltd. - 1990 (50) E.L.T. 475 (Tri.) In the absence of any corroborative of circumstantial evidence fraudulent removal not inferable. (vi) V.K. Thampy - 1994 (69) E.L.T. 300 Investigation not done to ascertain whether the parameters like electricity consumed - Raw materials used. (vii) K. Harinath Gupta - 1994 (71) E.L.T. 980 Clandestine removal burden on dept - Sources of raw materials not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... position as brought out in the cases mentioned above leaves no doubt that the demand cannot be sustained on the ground of presumption. 15. From the replies to the show cause notice dated 9-10-97, 6-1-97, 2-2-97, 17-2-97 on pages 120 to 211, it is crystal clear that the appellants have submitted specific replies to the points raised by the department and as such it was incumbent on the department to prove their case beyond reasonable doubt. In the absence of any strict, tangible, direct, positive and corroborative evidence, we do not find any justification to sustain the demand raised in this case. We, therefore, set aside the impugned order and allow the appeals filed by the appellants with consequential relief, if any." 24. Further when the revenue has made allegation of clandestine removal of Gutka Mix/ Zarda Masala, the onus is on the revenue to prove clandestine manufacture and clearance. Onus has to be discharged by sufficient cogent, and unimpeachable evidences as held in following cases: a. CCE Vs Vishwa Traders Pvt. Ltd. 2013 (287) ELT 243 (Guj), CCE Swati Polyester 2015 (321) ELT 423 (Guj), b. Commissioner Vs Swati Polyester 2015 (321) ELT A217 (SC), c. Flevel In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod the factory of M/s Mahadev was rented out by the Proprietor Shri Omprakash Talreja to Shri Abdul Salam. No evidence of linking M/s Mahadev or M/s MSS with said goods was found. There is no acceptance on the part of the Appellants that the goods were owned by them. The revenue did not cause any enquiry with the supplier regarding purchaser/ recipient of said goods nor tried to ascertain the same. Only for the reason that the vehicle had some quantity of Gutka Mix and lamination roll, outer packing and gutka pouches bearing name of M/s MSS, it cannot be said that the seized goods had ownership of M/s Mahadev or M/s MSS. None of the persons from M/s Mahadev or M/s MSS have owned the goods or accepted the transportation. In case of lamination and outer packing or acetate, neither M/s Mahadev or M/s MSS were in manufacturing of said goods and hence the same cannot be held to be non duty paid. No enquiry has been caused from the regular supplier of M/s MSS to ascertain as to whether the lamination and outer pouches were consigned by them. In such case we find that no case is made out to impose penalty on M/s Mahadev or M/s MSS. Hence the penalty imposed upon them is required to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght have affected serviceability and I therefore decide that verification by the Chartered Engineer after lapse of eight years would not be fruitful. I have gone through the still photographs and video of search operation conducted on 22.02.2011 at Bourasala premises all machines are visible. Pouch packing machines were available and some of them are connected to the power points. However, the Commissioner observed that feeding hopper (a detachable part of the machine) was missing from all the machines. Further most of the machines were opened and internal parts were exposed. I notice that some of the parts, chains, nuts bolts etc were lying near some of the machines. It appeared to me that maintenance or repairs might be going on said machines, as some of these were in dismantled condition. There were other machines namely outer packing machines, two weighing machines, one bag stitching machine, weighing machines etc required for finally packing of Gutkha pouches in outer packing. Large quantity of raw material (Gutkha Mix) and fully finished gutka pouches of various brands were found in said premises. The generator set of 125 KVA was found in operational condition. Besides these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l and engaged in clandestine clearances of Gutkha pouches from 02.04.2010 only under rule 17 (2) of Pan masala Rules, 2008. In case of show cause notice IV (16) SIC/14/2011/119-125 dt. 22.02.2011 on seizure of goods valued at Rs.8,87,774/- the adjudicating authority on the above grounds ordered for confiscation of goods and also imposed penalty under rule 25 on Shri Anmol Mishra. We find that the Appellant was detained on 18.02.2011 and arrested on 19.02.2011 in connection with investigation at M/s Mahadev. On 22.02.2011 the officers visited premises situated at 12-A, Private Industrial Area, Village Bhourasla, Sanwer Road, Indore belonging to one Shri Dinesh Mehta. The lock was break open by Shri Dinesh Mehta and during search ten pouch packing machines and other packing stitching and weighing machine was found. Also Gutkha pouches and gutkha masala weighing 595.07 kgs found. Photography and videography of the search proceedings was also done. Shri Dinesh Mehta in his statement dt. 22.02.2011 stated that he has rented out the premises to Shri Anmol Mishra from November 2009 on a monthly rental of Rs. 30,000/- per month, which was being paid by the Appellant in cash to him. The sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esting for technical inspection of machines. The machines were removed from the premises on 22.02.2011 by the department and shifted to central excise office and are in possession of the department. The adjudicating authority refused inspection on the ground that after lapse of eight years the serviceability of the machines may have been affected and thus verification by chartered engineer is not warranted. We find that this observation of the adjudicating authority is against the principles of natural justice. Even otherwise also at the time of visit at factory, the officers should have conducted testing to show that the machines were able to pack gutka pouches or were in workable condition. Either the adjudicating authority should have got the machines examined himself from expert or machine manufacture/ technical person/ chartered engineer or should have provided the Appellant the opportunity to get the machines inspected so as to ascertain the fitness of such machines to produce Gutka pouches. The inspection of machines would not have caused any prejudice to the revenue. This was necessary as the machines were not doing any production activity at the time of search and the prem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aphs and above facts, we are of the view that the machines cannot be said to be packing machines. We find that if the machines are being made basis of demanding duty liability under PMPM Rules, in that case the first and foremost primary requirement is presence of a packing machine. In absence of feeding hoppers, and given the fact as recorded by the adjudicating authority that some parts were missing, we are of the view that seized equipments do not fit into the definition of Packing Machines as provided in Rule 2(c) of PMPM Rules 2008. The levy is on installed packing machines and it cannot be on dismantled and/or incomplete equipment. Hence on this ground alone the proceedings against the appellants are liable to be set aside, as PMPM Rules for the purposes of fictional and deemed manufacture and levy requires strict interpretation of term "packing machine" and the intendments arrived in impugned order are thus void and baseless. Our views are also based upon the judgment of Hon'ble Apex Court in case of COMMISSIONER OF CUSTOMS (IMPORT), MUMBAI Vs. M/s. DILIP KUMAR AND COMPANY & ORS. 2018 (7) TMI 1826 - SUPREME COURT wherein it was held as under:- "40. After considering the va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by considering these machines as having been used for illicit packing of excisable goods which were later cleared resulting in non-payment of duty. Admittedly, no other corroborative evidence has either been collected or presented by the officers in confirmation of such demand. In such situation, the actual condition of the machine at the time of detention of the said machines has become crucial. We note that the appellant on various occasions (25-2-2011, 18-3-2011, 19-5-2011, 4-7-2011, 8-7-2011, 14-7-2011) repeatedly requested for examination of the machines by the experts. The same was not accepted by the Department. We are not able to understand as to why such a vital aspect of investigation, that too on repeated requests of the appellant, was not accepted by the Revenue. Apparently, such examination by experts would have clearly brought out the exact status of the machines, the possibility of such machines having been put to use for clandestine manufacture, etc. The inference by the Commissioner that the machines were plugged in, the motor can be fitted at any time to run the machine, is fallacious. The Original Authority himself records that some of the essential parts in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the contrary is provided to the satisfaction of the central excise officers, such machine shall be determined to have been in operation. Keeping in view the above provisions of the Rules, we find that the non-functional scrap condition of the machines have been repeatedly asserted by the appellants on many occasions during the course of investigations. No verification or technical examination of the machines have been carried out by the department to establish the functional capability of the machines. Since the machines were detained and were under custody of the department, the repeated prayer of the appellant for technical examination is the only rebuttal the appellant could make in terms of Rule 18(2). Admittedly, the machines were not in operation at the time of the visit by the officers and were not having many essential parts including motors. This has been recorded in the impugned order. However, the Original Authority inferred that the machines can be made operational easily and the appellant failed to establish that they were not in operation during the impugned period. We find that such inference is not supported either by fact or by law. We note that the status of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cross-examination was sought by the appellant, which was not allowed by the Adjudicating Authority. However, reliance was placed on these statements as a corroborative evidence to conclude that these machines were in fact used for packing dutiable items. As such, in terms of 2010 Rules, duty liability was determined. In this connection, we note that denial of cross-examination and relying on the statements, put the impugned order in legal jeopardy. The provisions of Section 9D of the Central Excise Act, 1944 is very clear. By now, it is well-settled legal position that the Adjudicating Authority, if he intends to rely on the contents of any statement recorded under the Central Excise Act, 1944, then the procedure, as prescribed under Section 9D, has to be followed scrupulously. In fact, in a recent decision, the Hon'ble Punjab &Haryana High Court in the case of Jindal Drugs Pvt. Ltd. - 2016 (340) E.L.T. 67 (P&H) held that Adjudicating Authority cannot straightaway rely upon the statement recorded during the investigation before the central excise officer, unless and until, he can legitimately invoke clause (a) of Section 9D(1). The statements given under Section 14 are to be examin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty under PMPM Rules. We also find that the Appellant had been requesting for cross examination of Panch Witness, photographer and videographer, as they were witness to seizure of machine. Despite repeated requests for several years, they were not allowed to cross examine the eye witnesses of panchanama, the photographer and the videographers. Also when the investigating officers are of the view that the factory belongs to the Appellant, he should have been included in the proceedings as he was available in custody. No evidence except the rent agreement on which his signatures are disputed is on record can show that he was in possession of said factory. He was not even found to have keys or possession of said place. No evidence to this effect is on record. In panchnama it is mentioned that nearby persons informed the officers, that the Appellant is in possession of premises. However none of such person's identity has been disclosed in the panchnama or SCN, neither there is any testimony of such persons. The Appellant at the time of investigation had all the right to be present and contest about the timing and manner of collection of disputed agreement and contest about its content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same rent and asked to show where he has booked increased rent, he failed to do so, and feigned ignorance. He also failed to show in his submitted accounts the entries for the amount of increase in rent. He also failed to answer as to why the disputed agreement or the signatures are not dated. During cross examination of witness of disputed Rent Agreement Shri Jitesh Joshi stated that he could not trace any date on which such agreement was signed. He admitted that said agreement does not disclose on which date it was signed. He could not explain as to why he did not dated his own signatures. The Appellant has contended that they have disputed the report of signature expert Shri H.S Tuteja, as he has tainted public repute. They also submitted that for the purpose of showing that the signature on Rent agreement belongs to the Appellant, neither Shri Tuteja nor the department obtained his sample handwriting / sample signature. Shri H. S. Tuteja admitted to have not taken any degree or diploma in such field. The Department ought to have sent the questioned document to an accredited lab such as CENTRAL FORENSIC SCIENCE LABORATORY, BHOPAL, Directorate of Forensic Science Services, M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de that the rent agreement was signed by Shri Anmol Mishra. Even the Adjudicating Authority in the impugned O-in-O has not stated as to why any expert would have refused the signatures on PAN and Driving License as admitted signatures. The Government documents are highly acceptable and beyond doubt. Our views are also based upon the decision of Hon'ble Bombay High Court in case of BHARGAV KUNDALIK SALUNKHE VERSUS STATE OF MAHARASHTRA reported as 1995 (12) TMI 384 - BOMBAY HIGH COURT wherein the Court held that - "12. The Apex Court in the case of Magan Bihari Lal v. State of Punjab, has held that it is unsafe to base the conviction solely on the expert opinion without substantial corroboration. In that case it was alleged that the handwriting on the Railway Receipt was of the same person who wrote the specimen handwriting. The appellant in that case was charged for forging a Railway Receipt on the strength of which some iron sheets were retired from the railway station. The Apex Court did not sustain the conviction on the basis of this evidence and held thus :- (Para 7) "It is true that B. Lal, the handwriting expert, deposed that the handwriting on the forged Railway Receipt Ex. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ." We need not subscribe to the extreme view expressed by the Supreme Court of Michigan, but there can be no doubt that this type of evidence, being opinion evidence, is by its very nature, weak and infirm and cannot of itself form the basis for a conviction. We must, therefore, try to see whether, in the present case, there is, apart from the evidence of the handwriting expert B. Lal, any other evidence connecting the appellant with the offence. 30. The adjudicating Authority has not considered the issue relating to evidence of a handwriting expert. In case of State of Maharashtra v. Sukhdeo Singh, the Apex Court opined that before a Court can act on the opinion evidence of a handwriting expert two things must be proved beyond any manner of doubt, namely, (i) the genuineness of the specimen/admitted handwriting of the concerned accused and (ii) the handwriting expert is a competent, reliable and dependable witness whose evidence inspires confidence. Since none of such exercise has been undertaken we are of the view that the handwriting report or the rent agreement cannot be relied upon. We also find that the Appellant had produced the opinion of two hand writing experts viz. i) M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I 473 - CESTAT New Delhi and Anwar P.V. Vs. P.K. Basheer, 2017 (352) ELT 416 (SC). We also find that the adjudicating Authority has erred in placing reliance on retracted statements of appellants and such statements, as the same were not corroborated with any evidence thus have no evidential value in eyes of law. Our view is based upon judgment in case of SUNTREK ALUMINUM P. LTD. VERSUS COMMISSIONER OF CUS., C. EX. & ST., RAJKOT 2013 (288) E.L.T. 500 (Guj.) wherein it was held that - "6.7 More importantly the statement in question was too weak to be relied on as evidence on law, in absence of any corroboration thereof by cogent evidence. The show cause notice mentioned the details of different firms such as Paresh Metals, Rajkot, M/s. Mangalm Metals, Ahmedabad, M/s. Krishna Metals, Ahmedabad, M/s. Sunil Metals, Ahmedabad, M/s. Harish Metals etc., to allege that the raw materials were received by the appellant from those firms. However, statement of none of the above parties was recorded which could have corroborated the statement relied on, except that the statement of the proprietor of M/s. Harish Metals, Morbi was recorded who stated that the scrape was sold to the appellant as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used for the manufacture of such brands of gutkha in factory at Bhorasla was actually and physically received from the factory of M/s MSS. The SCN does not contain any evidence to establish clandestine manufacture of zarda masala in question. There is no evidence on record to prove alleged clandestine manufacture by M/s MSS with reference to the installed capacity of the factory, excess consumption of the electricity, number of labourers employed, quantity of raw materials consumed, difference in the stock of inputs and final products, amount received on account of clandestine sale and disposal of such amount. Thus for want of above evidence relating to the above points, clandestine manufacture and removal of zarda masala, from the premises of M/s MSS, cannot be sustained merely on the basis of presumption only. We also rely on CESTAT order in case of C.C.E, Bangalore, V/s Jindal Aluminium Ltd, reported at 1998 (29) R.L.T. 183 (CEGAT). In view of above facts we hold that no penalty is imposable on Shri Anmol Mishra. 32. In case of Show Cause Notice IV (16) SIC/08/2011/5622-5628 dt. 13.02.2012 a penalty of Rs 3,00,000/- each has been imposed upon M/s MSS and Shri Shiv Bahadur Singh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation or outer packing which were found in seized vehicle to ascertain their duty paid/ non duty paid nature. We have already noted that no linkage of the seized goods with M/s MSS has been established. Further no statement of Shri Shiv Bahadur Singh Chauhan is on record to show that he was involved in illegal transportation, hence the contention of the adjudicating authority that the goods were liable for confiscation being not duty paid, is not correct. The adjudicating authority has held that Shiv Bahadur Singh during enquiry and reply to SCN has stated that the vehicle was sold to one Shri Shambhu Singh, who had expired. The signature of Shambhu Singh appearing on sale/purchase documents of vehicle were got examined by hand writing expert, with the bank documents who reported that the signatures are different and hence the owner of Truck is still Shiv Bahadur Singh. We find that revenue did not make any further enquiry with M/s Shiv Bahadur Singh to ascertain facts regarding sale of vehicle viz. how the sale transaction was made and through whom the vehicle was sold and how he has received the consideration. In above circumstances we are of the view that no case is made out for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odowns; what means of transportation was used for bringing the said goods upto the said godown; who was instrumental in transportation of the said material and unloading in the said godown; and to whom, when and by whom the payment for purchase of such goods were made. That the SCN do not place any evidence on record that such goods were non duty paid, as all excisable goods available in market are considered to be duty paid goods, until proved otherwise. The adjudicating authority relying on the report of unqualified hand writing expert Shri H.S Tuteja, held that signatures on rent agreement were made by Shri Sunil Sadhwani and the godown was occupied by Shri Sunil Sadhwani on the day of search. No body came forward to produce documents evidencing the payment of central excise duty in respect of seized goods which is ample proof that no central excise duty was paid. Hence the goods are liable for absolute confiscation. That Shri Sunil Sadhwani is well acquantied with the complexities of gutka manufacturing and was instrumental in storage of non duty paid lamination rolls and outer packing in said godown and is liable for penalty under Rule 26 of CER, 2002. That M/s MSS is liable f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orage, transportation, unloading, godownkeepers etc in relation to seized goods by Shri Sunil sadhwani or M/s MSS is on record. The Appellant and its partners were regularly complaining that duplicate products of their brands are being sold in the market. Even then no attempts were made for any forensic test or visual comparision or chemical analysis of the seized / abandoned materials with the goods of the appellants. In absence of such preliminary and vital investigations, the nexus of the seized goods is zapped with the appellants. Such nexus can not be presumed on the basis of retracted statements or reverse mathematical calulations. The impugned order confirming duty and imposing various penalties on appellants is thus not sustainable on the basis of such zapped nexus. Further we find that the adjudicating authority has relied upon statements given by the individuals. However during the examination-in-chief and the cross examination thereof, some of them has resiled from their statments. We find that no comparison of seized packing material i.e lamination or outer pouches was conducted with the packaged goods of M/s MSS. No supplier of M/s MSS has been enquired regarding suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
