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TMI Blog2024 (10) TMI 323X X X X Extracts X X X X X X X X Extracts X X X X ..... s provided in Section 9D of the Central Excise Act 1944, a Statement of any person recorded under the said Act, shall be relevant in adjudication only when such person is examined in the adjudication proceedings. The ground on which the Commissioner has imposed penalty on the Appellants does not satisfy the ingredients of Rule 26 of the Central Excise Rules 2002. It is an admitted fact that the Appellants were not made parties to Show Cause notice dated 9-9-2011, which proposed confiscation of the goods and imposition of penalty on SMFPPL. The Appellants were made party only to Show Cause Notice dated 31-8-2012 which demanded duty from SMFPPL by interpreting the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules 2008. This Show Cause Notice dated 31-8-2012 proposed imposition of penalty on the Appellants under Rule 26 of the Central Excise Rules 2002. As held by this Hon ble Tribunal in Meenakshi Food Products (P) Ltd v CCE [ 2019 (7) TMI 904 - CESTAT AHMEDABAD ] , the said Rule 26 can apply only to a person who is involved in the clearance of goods by different ways enumerated under Rule 26, whereas in the present case, duty demand had been made on i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant, Shri J. M. Joshi, was Director of SMFPPL prior to 7-10-2000 and he resigned as Director of SMFPPL with effect from 7-10-2000. The Appellant, Shri Sachin J. Joshi, is son of Shri J.M.Joshi and was authorized to operate Bank accounts of SMFPPL for the period from January 2009 to March 2011. The appellant Vinayak Kashiram Sawant was the Director of SMFPPL from 17.5.2008 to 11.4.2011. The appellant Balraj Maurya was the Authorized Signatory of SMFPPL. 1.2 Briefly, the facts of the case are that SMFPPL having their factory at Plot No.901, GIDC, Sector 28, Gandhinagar, Gujarat-3802028, was engaged in the manufacture of Gutkha (Pan Masala containing Tobacco). It appears from the record that on 1-3-2011, SMFPPL filed with Central Excise department, Declaration in Form 1, under Rule 6 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 issued under Section 3A of the Central Excise Act 1944, giving particulars of 62 Machines for packing of Gutkha. A revised declaration in respect of the said 62 machines was filed on 4-3-2011 and the said Machines were duly verified by the Range officers on 4-3-2011. As per the said declaration filed on 4-3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... am Meghwal, who, inter alia, stated that he was working in Packing department since one month, f) Statement dated 12-3-2011 of Ganga Singh, who was working as Gate keeper, g) Statement dated 24-8-2011 of Balraj Maurya, authorized representative of SMFPPL, who inter alia, stated that he looked after day to day excise matters of SMFPPL. He followed instructions of Dilip Jani. He further stated that Dilip Jani received instructions from Mumbai office of SMFPPL. He however, did not know who controlled Mumbai office. He stated that Gutkha was produced as per directions of Dilip Jani, who received message from Mumbai office. He stated that the Daily Stock Register and Sales Invoices had been taken over by Dhule Police and local Sales Tax authority, h) Statement dated 30-5-2011 of Manoj Kumar, Director of SMFPPL, wherein, he inter alia, stated that he joined as Director on 1-7-2010 and resigned as Director on 30-4-2011. Except him, no other Director was at the Registered Office. He was not aware whether employees of SMFPPL worked under the directions of J.M.Joshi and Sachin J. Joshi. i) Statement dated 27-6-2011 of Vinayak K. Sawant, Director of SMFPPL, in which he inter alia, stated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in March 2011. The said Show Cause Notice dated 31-8-2012 proposed imposition of penalty on the Appellants under Rule 26 of the Central Excise Rules 2002, on the ground that the Appellant had knowingly and deliberately aided and abetted SMFPPL to evade payment of the said Central Excise duty. 1.7 The Appellants, J. M. Joshi and Sachin J. Joshi replied to and contested the said Show Cause Notice dated 31-8-2012 by their letters dated 17-12-2012 and 31-12-2012 respectively, whereby, the Appellants inter alia submitted that the Appellants were not involved in the manufacture and clearance of goods by SMFPPL. It was submitted that the Appellants statements were exculpatory and they had in their statements categorically denied that they looked after the production of SMFPPL. It was submitted that since the department s case was based merely on statements of others, the Appellants were entitled to cross-examine the persons whose statements were relied upon in the Show Cause notice and accordingly the Appellants sought such cross-examination. The appellants Vinayak Kashiram Sawant and Balraj Mauraya also filed their reply dated 31.12.2012 and interalia submitted that their statements were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be engaged in packing pouches of higher MRP in contravention of declaration filed by them under Rule 6 of PMPM Rules, 2008. Clearly the Appellant unit contravened the provisions of Rule 6(6), 7 and 9 of the PMPM Rules, 2008 and since the notified goods were manufactured in contravention of their declaration, therefore as per the provisions of Rule 9 of the PMPM Rules, 2008 the rate of duty applicable to goods of Highest RSP, Rs. 3 in this case will be applicable in respect of all packing machines operated by the Appellant and they are liable to pay duty as per said RSP on all machines. The language of Rules is absolutely clear in this regard and leaves no scope of any doubt. We thus hold that the duty demand is sustainable and the impugned order inasmuch as it relates to central excise duty liability on the basis of Highest retail sale price i.e. Rs. 3, interest on duty and penalty on Appellant Unit as imposed by the adjudicating is legal and we do not find any reason to interfere with the same. Therefore the impugned order inasmuch as it relates to demand of duty and penalty against the appellant company is concerned is upheld. 8 . Coming to the personal penalty imposed upon th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant s responsible for alleged violation in present case. However we find that in the present case no involvement of these Appellants is on record. The Appellant had sought cross examination of the aforesaid persons which has been denied by the adjudicating authority. In such case when the statements were not recorded in investigation of present case, the same cannot be relied upon. Even also in absence of cross examination in terms of Section 9D of the Central Excise Act, 1944, these statements cannot be relied upon. We find that Shri J.M. Joshi was not a director of SMFPPL since year 2000 and that he had sold all his shares even before the investigation in the instant case had begun. None of the witnesses has made any statement to the effect that the Appellants were aware of or involved in the alleged clandestine removal by SMFPPL. Also Shri Sachin Joshi was not even director of the Appellant Unit at any point of time. There is no acceptance of the any of two Appellants to manage the affairs of the unit. The Ld. Adjudicating authority has relied upon Sections 266 and 270 of the Companies Act and to hold that Shri Dilipkumar Amrutlal Jani is director for namesake only and the Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case, there was no proposal to confiscate goods. Hence for this reason also the penalty under Rule 26 cannot be imposed. Even above all we do not find any involvement of Appellant in alleged act of violation. Shri J.M. Joshi was director only till year 2000 and no involvement of him or Shri Sachin Joshi who was previously authorised signatory is appearing on record or either through statement of any person. Therefore in absence of any evidence of involvement of both of these persons in any act of violation of Pan Masala Packing Machinery Rules, 2008 or central excise law, we do not find any reason to impose penalty upon them. We therefore set aside the impugned order only to the extent, it imposes penalty upon Shri J.M. Joshi and Shri Sachin Joshi, resultantly the penalty on both of these persons is set aside. 11 . As a result of our above discussions and observations, appeal filed by M/s. Meenakshi Foods Pvt. Ltd. is dismissed, appeal filed by Shri Dilip Kumar Amritlal Jani is partly allowed in the above terms and appeals filed by Shri J.M. Joshi and Shri Sachin Joshi are allowed. 4.1 It follows from the aforesaid decision that:- a) There is no involvement of the Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any way involved in the alleged contravention committed by SMFPPL of operating the Pan masala Packaging Machines differently from that declared by SMFPPL under Rule 6 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules 2008. We find that the entire case of the department is based merely on statements of various persons however, the cross-examination was denied by the Commissioner despite specific request to grant such cross-examination was made. Hence, no reliance can be placed on such statements as laid down in the following judgments that, as provided in Section 9D of the Central Excise Act 1944, a Statement of any person recorded under the said Act, shall be relevant in adjudication only when such person is examined in the adjudication proceedings:- Basudev Garg v CC 2013 (294) ELT 353 Andaman Timber Industries v CC 2015 (324) ELT 641 (SC) Kelvin Industries v CCE- 2023 (3) CENTAX 252. 4.3 It is further observed that in any event, none of the statements which have been relied upon in the Show Cause Notice establish the said Appellants involvement in the alleged contravention committed by SMFPPL of operating the Pan masala Packaging Machines di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earance of SMFPPL and not the Appellants. This is also the finding of this Hon ble Tribunal in the said decision in Meenakshi Food Products (P) Ltd v CCE 2019 (370) ELT 1330. 4.4 It is further observed that the ground on which the Commissioner has imposed penalty on the Appellants does not satisfy the ingredients of Rule 26 of the Central Excise Rules 2002. It is an admitted fact that the Appellants were not made parties to Show Cause notice dated 9-9-2011, which proposed confiscation of the goods and imposition of penalty on SMFPPL. The Appellants were made party only to Show Cause Notice dated 31-8-2012 which demanded duty from SMFPPL by interpreting the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules 2008. This Show Cause Notice dated 31-8-2012 proposed imposition of penalty on the Appellants under Rule 26 of the Central Excise Rules 2002. As held by this Hon ble Tribunal in Meenakshi Food Products (P) Ltd v CCE 2019 (370) ELT 1330, the said Rule 26 can apply only to a person who is involved in the clearance of goods by different ways enumerated under Rule 26, whereas in the present case, duty demand had been made on interpretation of the Pan Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant namely Vinayak Kashiram Sawant, the Director of SMFPPL, it appears from the records that he looked after Silvassa plant of SMFPPL, further Dilip Jani, Director of SMFPPL ,Gandhinagar has admitted that he was looking after production and clearance of goods at Gandhinagar factory. As such, we find that he was not concerned with the activities of SMFPPL, Gandhinagar. In that view, penalty imposed upon him under Rule 26 is hereby set aside. 4.8 The appellant, namely Balraj Maurya, authorized person and authorized signatory of SMFPPL, it appears from records that he was the person responsible for and looking after day to day activities relating to central excise including filing Form I declaration and ER 1 returns, maintained daily stock register, preparing central excise invoice for clearance of goods and has admitted to have made mistakes in making declarations. However, it also appears from records that he was acting upon the instructions of Dilip Jani, Director of SMFPPL. It is not the case of the revenue that the appellant is beneficiary of any duty evasion, if any committed by SMFPPL. He was mere employed director of the company. In these facts and taking into conside ..... X X X X Extracts X X X X X X X X Extracts X X X X
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