9911796707
TMI Blog2022 (8) TMI 1152X X X X Extracts X X X X X X X X Extracts X X X X ..... that these two appellants had no role in transporting, removing, depositing, keeping, concealing, storing etc., as required for imposition of penalty under Rule 26 of the Central Excise Rules. Accordingly, the appeals are allowed and the penalty imposed are set aside. Sh. Vidyut Gupta - it is alleged that he along with his father Sh. Raj Kumar Gupta has played an active role in setting up of factory/ procurement of machine, monitoring of payment, monitoring of raw material supply etc. - HELD THAT:- Admittedly this appellant was neither a Director nor an employee of M/s Musk Tobacco. It appears that this appellant along with his father Sh. R. K. Gupta had provided the infrastructure and machinery for manufacture of cigarette to M/s Musk Tobacco. Further, they also gave guidance as and when required by the then Directors of M/s Musk Tobacco due to their experience in cigarette manufacturing. Considering the facts and circumstances and the documents on record, it is found that this appellant was not involved in day-to-day affairs of M/s Musk Tobacco and further was not involved in transporting, removing, depositing, keeping, concealing, etc., of excisable goods. Accordingly, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . These appeals were also dismissed along by the Final order dated 14.02.2014 but were later restored on 27.08.2018 by Final Order No. 60330 60333 of 2018. In these appeals, we are dealing with only the penalties imposed on the above five appellants under Rule 26 of the Central Excise Rules is concerned. 3. Brief facts of the case are that search was conducted by the Officers of Directorate General of Central Excise Intelligence (DGCEI) on 26.09.2007 at the premises of Musk Tobacco (India) Pvt. Ltd., (MUSK). The officers also searched residence of Shankar Pal Pradhan and Raghuwar Dayal (since deceased) and resumed some records; both were employed in Gupta Agricultural Farm‟, which belongs to Raj Kumar Gupta (since deceased). Besides these, the Officers also searched residence of Sh. Inderjeet Yadav, an employee of R. K. Cigarettes and resumed records. Officers also visited other various premises. The officers resumed records from M/s Musk Tobacco also, however during investigation, records resumed from M/s Musk Tobacco were found in order. 4. During search in the factory of M/s Musk Tobacco the officers found 15000 loose cigarettes of Perfect Brand, value of Rs.4,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed role and /or concern relating to the day to day activity of M/s Musk Tobacco. 8. M/s Musk Tobacco obtained Central Excise Registration Certificate dated 11.12.2006 bearing Registration No. AADCM8618CXM001, for manufacture of Cigarettes. M/s Musk Tobacco was working under the provisions of Rule 6 of Central Excise Rules, 2002 (as the manufacturing of cigarettes is under physical control of the Central Excise Department, and as per para 2.2 of Chapter-4 of CBEC‟s Supplementary Instructions in respect of Cigarettes, all the operations of cigarette manufacturing units are under physical control of the officers of Central Excise, including receipt of inputs, manufacturing and removal of goods from the factory premises under the strength of invoice, which is duly counter-signed by the Inspector or the Superintendent of Central Excise). 9. M/s Musk Tobacco commenced production w.e.f. June, 2007 and effected their first clearance w.e.f. July, 2007. This fact is corroborated by certificate dated 20.01.2012 issued by the Superintendent of Central Excise Service Tax, Range - Kasganj, certifying that M/s Musk Tobacco is working under physical control of Central Excise Departme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by the family and where these are situated, he replied that the family has one factory at Manpur Nagari, P.O. Neoli at Etah District, which is yet to come in full operation. In answer to specific question, if he was involved in the day-to-day activities of M/s Musk Tobacco, he stated that he was not involved in day-to-day activities of M/s Musk Tobacco. He had also stated that he cannot comment on the day-to-day working of the company. It is further evident from the show cause notice that there is no proposal for imposing penalty on this appellant. Hence, the penalty imposed under Rule 26 on this appellant, in a mechanical manner is without application of mind. Accordingly, it is prayed that penalty under Rule 26 is fit to be set aside. 10.3. Sh. Rahul Chauhan (Director) - This appellant was one of the Directors in M/s Musk Tobacco. In the course of statement recorded, he had stated that the day-to-day activities are taken care of by the other Director - Sh. Ajay Kumar Saxena, and he is not aware with the same. It is observed in para 47 of the show cause notice that this appellant was not even aware as to how the raw material reached the factory and how the finished goods mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice that since Raj Kumar Gupta (deceased) is the owner of the factory premises, given on rent to M/s Musk Tobacco and also Sh. Ajay Kumar Saxena, Director (since deceased). However, the statement are exculpatory and nothing is coming out in his statement against these appellants. Revenue also recorded statement of some other persons, which do not implicate these appellants in any manner. 12. It is further urged that the whole case of revenue has been made on the basis of some third party records and statements. Neither the third party records have any evidentiary value nor the statements recorded during investigation, as the Adjudicating Authority have not examined any of the witness of revenue in the adjudication proceedings. Thus, in terms of Section 9D of the Act, these evidences are not reliable piece of evidence. It is further urged that the show cause notice is defective and bad for non-joinder of necessary parties. Admittedly, the factory of M/s Musk Tobacco was under physical control of the departmental officers. As per Rules 6 of Central Excise Rules, no clearance can take place except with prior assessment and approval of the Range Superintendent/ Inspector, posted fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t delivery of the goods specified therein or abets in making such invoice; or (ii)..... ...... ...... ..... 17. The case of the Revenue is that investigations revealed that M/s Musk Tobacco has manufactured and clandestinely removed cigarettes without paying duty. Accordingly, duty was demanded and penalty was imposed under Section 11AC on M/s Musk Tobacco. The appeal of M/s Musk Tobacco has been dismissed by this Tribunal and has attained finality. We have to now deal with only the penalties imposed on the five appellants herein. Now, we deal with the findings on record and the pleadings before us with respect to each and examine whether a penalty under Rule 26 on each of them can be sustained. 18. Rahul Chauhan - So far as this appellant is concerned, it is alleged that he along with Sh. A. K. Saxena (since deceased) were Directors of M/s Musk Tobacco, but they appeared to be without any financial base or working knowledge of the company. They were found enrolled in the pay roll of Gupta Agricultural Farm‟, Prop. Raj Kumar Gupta. It was appeared that Sh. Raj Kumar Gupta and his son were involved in the day-to-day affairs of M/s Musk Tobacco. Although, this appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsporting, removing, depositing, keeping, concealing, storing etc., as required for imposition of penalty under Rule 26 of the Central Excise Rules. Accordingly, we allow the appeals and set aside the penalty imposed. 20. Sh. Vidyut Gupta So far as this appellant is concerned, it is alleged that he along with his father Sh. Raj Kumar Gupta has played an active role in setting up of factory/ procurement of machine, monitoring of payment, monitoring of raw material supply etc., It is also alleged that he along with Sh. R. K. Gupta have provided infrastructure, all the machinery etc., to M/s Musk Tobacco for manufacturing of cigarette, and were the persons behind functioning of M/s Musk Tobacco. - Majority of shares in M/s Musk Tobacco are held by Sh. Raj Kumar Gupta and his family. As they hold the majority shares the entire benefit derived from clandestine activity would accrue to them. Thus, M/s Musk Tobacco more or less were family affairs of Sh. R. K. Gupta. This appellant has admitted of having provided the infrastructure and machinery to M/s Musk Tobacco for manufacture of cigarette. Further, the procurement of dye, printing of shell and slider at Gurgaon was looked afte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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