2018 (9) TMI 1355 - AT - Central Excise

Clandestine manufacture and removal - Deshi Gutkha - assessee s stand is that having rented out the premises, they have not carried out manufacturing activity. Held that - Learned Advocate has not been able to show us and establish that the goods were actually not manufactured by the appellant but by Shri Umesh Chandra. The goods illegally manufactured having been recovered from the premises belonging to the appellant and rent agreement produced by him having been established to be a false fabricated document, the onus gets shifted to the appellant to show that the Gutkha in question was not manufactured by him. There is no evidence to rebutt the above allegations of the Revenue. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Confirmation of demand of duty on illegal manufacture of Deshi Gutkha.
2. Validity of rent agreement and ownership of premises.
3. Liability for duty payment on confiscated goods.
4. Legal boundaries for duty payment in case of unregistered premises.

Analysis:

Issue 1:
The judgment confirms the demand of duty amounting to ?16,418 against the appellant for the illegal manufacture of Deshi Gutkha. The goods were seized from the appellant's premises following a police raid. The Revenue initiated proceedings against the appellant, culminating in the issuance of a show cause notice and subsequent orders by the Adjudicating Authority and Commissioner (Appeals).

Issue 2:
The appellant claimed not to be in possession of the premises where the Gutkha was seized, stating that the premises were rented out to another individual. The rent agreement presented by the appellant, although attested by a Notary, was found to be unregistered and suspected to be a false document. The appellant failed to prove that the goods were not manufactured by them, shifting the burden of proof to establish otherwise.

Issue 3:
Regarding the contention that the goods were confiscated but not redeemed, therefore no duty liability should arise, the Commissioner (Appeals) clarified that duty liability arises upon the manufacture of excisable goods, regardless of the timing of duty payment. In this case, since the goods were manufactured illegally at unregistered premises, the lack of approved boundaries for manufacture, storage, and clearance negated the appellant's argument against duty payment.

Issue 4:
The judgment rejected the appellant's claim of having rented out the premises, affirming the decision of the lower authorities. The absence of evidence to support the appellant's position, combined with the illegal manufacture and lack of approved premises, led to the rejection of the appeal. The duty demand against the appellant was upheld, and the appeal was consequently rejected.