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TMI Blog2023 (8) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... There is no evidence available on record to establish clandestine manufacture and clearance of cigarettes by the Appellant. The investigation has not brought in any evidence to establish that the Appellant had procured raw material or sale of impugned cigarettes by him to any person or obtained any payments from the alleged buyers or any transportation of the impugned cigarettes. In the absence of any such evidence to establish that the Appellant was the actual manufacturer of the cigarettes found at the unregistered premises at Fatuha Daniyava Road and the other godowns, the tag of manufacturer cannot be fixed on the Appellant - the Appellant cannot be considered as the manufacturer of cigarettes in this case and duty cannot be demanded from them for the cigarettes said to have been manufactured at the unregistered premised at Fatuha Daniyava Road and the cigarettes found at other godowns. Clandestine manufacture and clearance of cigarettes cannot be made merely on the basis of assumptions and presumptions. There must be tangible, direct affirmative and incontrovertible evidence available to establish clandestine clearance. The issue involved in the present appeals is cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Education Cess amounting to Rs.3,20,57,950/- (Rs. Three Crores Twenty lakhs fifty seven thousand nine hundred and fifty only) as per the annexure B1 B6 forming part of Show Cause Notice and Rs.1,09,55,570/- (Rs. One Crore Nine Lakhs fifty five thousand five hundred and seventy only) as per the annexure a1 to a4 of the Show Cause Notice. Thus totaling Rs.4,30,13,520/- (Rupees four crore thirty lakh thirteen thousand five hundred twenty only) of Central Excise Duty including AED, NCCD, Ed Cess and Secondary and higher Ed. Cess is hereby confirmed and order to recover the same from the noticee no. 1 under the provisions of Section 11A of the Central Excise Act, 1944. (ii) I order for the recovery of interest at the applicable rate from the noticee no. -1 on the amount as confirmed at para 105 (i) above under the provisions of Section 11AA of the Central Excise Act. (iii) I impose a penalty of Rs.4,30,13,520/- (Rupees four crore thirty lakh thirteen thousand five hundred twenty only), upon the noticee no. -1 Shri Rajkumar Gupta alias Raju Sultania alias Rajkumar Sultania, under the provisions of Section 11AC of the Central Excise Act for the reasons discussed above. (iv) I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.4,20,68,760/- which had been seized on 30.05.2014 from the undeclared godown of Shri Raju Sultnia Situated at Didarganj, Near Godrej Warehouse, Fatuha, Dist.-Patna under Rule 25 of the Central Excise Rules, 2002. However, I give an option to pay redemption fine in lieu of confiscation which shall be 50% of the value of the goods. The release of such goods on payment of redemption fine shall be done only after the goods are found to be fit for human consumption and meets the other legal requirement relating to health and safety. I also order to confiscate the unaccounted stock of raw materials / packing materials totally valued at Rs.12,37,770/- which had been seized on 30.05.2014 from the undeclared godown of Shri Raju Sultania situated at Didarganj, Near Godrej Warehouse, Fatuha, Dist.- Patna under Rule 25 of the Central Excise Rules, 2002. However, I give an option to pay Redemption fine in lieu of confiscation which shall be 50% of the value of the goods. The release of such goods on payment of redemption fine shall be done only after the goods are found to be fit for human consumption and meets the other legal requirement relating to health and safety. I order to confi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Excise Rules, 2002 for the reasons discussed above. I impose a penalty of Rs. 4,30,00,000/- (Rupees four crore thirty lakh only) upon Shri Santosh Jodhwani (Noticee no. 5) under the provisions of Rule 26 of the central Excise Rules, 2002 for reasons discussed above. I impose a penalty of Rs.4,30,00,000/- (Rupees four crore thirty lakh only) upon Shri Anand Tejwani (Noticee no. 6) under the provisions of Rule 26 of the central excise rules, 2002 for the reasons discussed above. If the amount determined at para 105(i) above is paid within 30 days from the receipt of the order along with the interest payable, then as per proviso to Section 11AC of the Act, the penalty imposed at para 105 (iii), (xii) (xiii), (xiv) (xv) and (xvi) above will be only 25% of the amount determined at para 101(i) above. The benefit of reduced penalty shall be available only if the reduced amount of penalty has also been paid within the period of thirty days from the receipt of this order. 2. The Appellant states that the present dispute relates to the demand of Central Excise Duty including AED, NCCD, Ed. Cess, and secondary and higher Ed. Cess amounting to Rs. 4,30,13,520/- for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... va Road, Dist. Patna and two other godowns situated in and around Patna, on 30.05.2014. From the statements recorded during the course search, it was alleged that the Appellant was the owner of ATPL and the unregistered factory premises of ATPL situated at Fatuha Daniyava Road. The Appellant had taken two godowns on rent in Patna and that they were engaged in manufacturing cigarettes from the unregistered premises at Fatuha Daniyava Road, without payment of central excise duty and cleared the same clandestinely from the said premises. In consequence to the said investigation, a show cause notice dated 28.11.2014 was issued to them by the Addl. Director General, DGCEI, New Delhi with the allegations that the Appellant is the owner of ATPL and the unregistered factory premise of ATPL and that the Appellant has engaged in clandestine removal of filter and non-filter cigarettes under different brand names. The said Notice was adjudicated by the Ld. Adjudicating Authority vide the impugned Order-in-Original dated 05.10.2018 wherein the entire demand as proposed in the Notice was confirmed along with interest and imposition of equivalent penalty. The present proceedings are against the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh the allegation of clandestine removal, the department has to undertake examination of various persons who may be a part of such removal such as transporters, customers etc. In the case of the Appellant, the department has not proceeded to inquire against Mr. Mahesh who had stated that the goods were sold by the Appellant to him and the same was the very basis of the start of the investigation against the Appellant. (viii) The Appellant states that it is a settled principle that the allegation of clandestine removal is a serious one and the same has be brought on record by the department, which has not at all been done in the present case. (ix) The Appellant relied on the decision of the Tribunal in the case of M/s AMBICA IRON AND STEEL PVT LTD vs COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX , ROURKELA 2022-TIOL-67-CESTAT-KOL wherein it has been held that clandestine manufacture and removal of excisable goods is to be proved by tangible, direct, affirmative and incontrovertible evidences relating to (i) Receipt of raw material inside the factory premises, and non-accounted thereof in the statutory records; (ii) Utilization of such raw material for cland ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Appellant was the brain behind the manufacturing and clandestine clearance of cigarettes. Accordingly, they prayed for dismissing the appeal filed by the Appellant. 6. Heard both sides and perused all appeal records. 7. We observe that the initial investigation was conducted against Shri. Santhosh Kr. Jodhwani, wherein stock of filter and non-filter cigarettes of various brands of M/s ATPL was found. The said Santhosh Kr. Jodhwani failed to produce any purchase documents against the stock of cigarettes found at his premises. In his statement, he stated that he used to contact Shri Mahesh for purchase of cigarettes and the orders were placed on phone and that the cigarettes were received in his godown directly from ATPL and that the payments were made in cash to different traders upon the instructions of Shri Mahesh. But, we observe that no statement was recorded from Shri. Mahesh to confirm the statement of shri Santhosh Kr. Jodhwani. The investigation has blindly accepted the statement of Shri Santosh Kr Jodhwani, without any evidence. Shri Santhosh Kr. Jodhwani in his statement stated that the Appellant is owner of ATPL. We observe that the investigation has not brought i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncidental or ancillary to the completion of a manufactured product; (ii) Which is specified in relation to any goods in the Section or Chapter notes of the Schedule to the Central Excise Tariff Act, 1985 as amounting to manufacture, (5 of 1986). and the word manufacturer shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable, goods, but also any person who engages in their production or manufacture on his own account;] From the above definition, it can be seen that in order to construe a person as a manufacturer it must be established that he employs his labour for production of goods or engages himself directly and produce goods on his own account. 11. In the present case, we observe that there is no evidence brought on record by the investigation to establish that the Appellant has engaged his labour to manufacture cigarettes in the Fatuha Daniyava Road premises where two cigarette making machines were found. There was no evidence available on record to implicate the Appellant in the manufacture of cigarettes found in the Fatuha Daniyava Road premises or at the other godowns. The ciga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d has been made. 14 . The clandestine manufacture and removal of excisable goods is to be proved by tangible, direct, affirmative and incontrovertible evidences relating to (i) Receipt of raw material inside the factory premises, and non-accounted thereof in the statutory records; (ii) Utilization of such raw material for clandestine manufacture of finished goods; (iii) Manufacture of finished goods with reference to installed capacity, consumption of electricity, labour employed and payment made to them, packing material used, records of security officers, discrepancy in the stock of raw materials and final products; (iv) Clandestine removal of goods with reference to entry of vehicle/truck in the factory premises, loading of goods therein, security gate records, transporters documents, such as L.Rs., statements of lorry drivers, entries at different check posts, forms of the Commercial Tax Department and the receipt by the consignees; (v) Amount received from the consignees, statement of the consignees, receipts of sale proceeds by the consignor and its disposal. Whereas, in the instant case, no such clinching or corroborative evidences to the above effect have been bro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Customs, Raipur [2018 (8) TMI 473 (Tri. - Delhi)] - Para 17 17 . We further find that the Revenue had neither disclosed any material nor described the method of stock taking to counter the case. We are unable to accept the contention of the Revenue without any basis, such as, the details of the weighment slip, counting slip etc., as the case may be. It cannot be on the basis of eye estimation or otherwise. 18 . The Learned Commissioner has asserted in the impugned order that the demand based on the Kacha Chithas and the statement of Director is sustainable and that no further corroboration was required in view of the clinching nature of the oral and documentary evidence establishing clandestine production and removal of finished goods at para 17.2 of the Order-in-Original is clearly contrary to the judicial precedents cited supra. 19 . We further find that the contention of the Learned Commissioner in the impugned Order-in-Original that it is neither feasible nor desirable to cause enquiry at all possible points concerning the clearances at Para 17.5 of the impugned order itself clarifies that the demand has been raised solely on the basis of assumption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y cash, of such goods by the manufacturers or persons authorized by him; (f) Use of electricity for in excess of what is necessary for manufacture of goods otherwise manufactured and validity 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. 21. We agree to the proposition of the learned Commissioner that the department is not required to prove clandestine removal by mathematical precision. However, the instant case, we find that not even single evidence has been brought on record to show clandestine removal, conclusively establishing at least in a sample transaction. We find that the Annexure-H contains alleged receipts by M/s SPRML date wise from the appellants. The Annexure contains Truck Nos. We do not find any investigation regarding the transportation at least, of which some evidence, in the form of Truck numbers, was available with the department. We also find that no stock verification has been conducted at the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he present case is based on the (a) computer generated sheets and (b) loose papers which cannot be relied upon as evidence, inasmuch there is no indication in the orders passed by the authorities below that the appellant was maintaining computerised records of their production and clearance of goods and whether any other computerised sheets were traced out in the files withdrawn. I find that there is no compliance of Section 36B of the Act as held by Hon'ble Supreme Court in the case of Anwar P.V. Vs. P.K. Baseer, MANU/SC/0834/2014 and further followed by this Tribunal in the case of Popular Paints vide Final order dated 06.08.18. I further find that the learned Commissioner (Appeals) erred in relying upon Section 36A of the Act, which is not applicable to the facts of the present case. I further find that the alleged private records cannot be relied upon as evidence without any corroborative evidence. I find that the Hon'ble Chhattisgarh High Court in the case of Hi-Tech Abrasives Ltd. Vs. CCE C, Raipur, 2018 (362) ELT 961 (Chhattisgarh), has held that:- 12.2 We have gone through the detailed order passed by the adjudicating authority and we find that so far as the demand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of clandestine sale, further corroborative evidence is also required. For this purpose no investigation was conducted by the Department. I further find that admittedly, in the present case, no such investigation has been conducted by the department qua purchase of raw material, use of electricity, sale of final products, payment, realization of sale proceeds, mode and flow back of funds. Similar view has been taken by the following judgements of the Hon'ble High Courts and this Tribunal, which have been affirmed by the Hon'ble High Courts and Supreme Court .. 9. I further find that merely deposit of money at the time of investigation would not amount to acceptance of allegations of clandestine manufacture and removal as alleged by the department. It is well settled law that, payment of money at the time of investigation would be treated as a deposit under protest, which is held in following judgements 10. I further find that burden to prove allegation of clandestine manufacture and removal is heavily on the department and has to be discharged by producing clinching evidence on record, which has not been discharged by the department in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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