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2020 (1) TMI 533 - CESTAT KOLKATAClandestine manufacture and removal - Pan Masala containing Tobacco - manufacture and removal even after the surrender of registration in May, 2007 without declaring these machines as required under Rule 6 of Pan Masala Packing Machines (Capacity Determination & Collection of Duty) Rules, 2008 - HELD THAT:- The investigations carried out by DGCEI do not bring home the charge of manufacture and removal of Pan Masala Containing Tobacco and that of clandestine removal against the Appellant. We find that the test reports of samples of residues collected by the officers of DGCEI indicate the presence of tobacco only. Even the other test reports of other material sent for testing to the Chemical Examiner, Central Excise, Kolkata as referred by Ld. Authorized Representative also does not report the presence of Betel Nuts. Ld. Advocate for the Appellants has also disputed the manner and method of collection of samples of residues from alleged 11 Packing Machines and has disputed the test reports. Also, Betel Nuts are essential ingredients to classify any goods as “Pan Masala containing Tobacco” and that generally it contains more than 90% of Betel Nuts. Also, the officers did not find any Betel nuts in the factory of M/s. Paras Pan Products Pvt. Ltd. at the time of search. There is no evidence of any use of Betel Nuts in the factory of the Appellant or any evidence of purchase and use of Betel Nuts by the Appellant. Thus the revenue has failed to prove the manufacture and removal of “Pan Masala containing Tobacco”. It is the case of the Revenue that the department has made enquiry from 2 of the 3 suppliers of packaging material who have confirmed the supply of packaging material to the Appellant during April, 2008 to June, 2008 which was used by the Appellant for packing of “Pan Masala containing Tobacco” in their factory - in this regard that the documents relied upon by the Revenue nowhere mention the name of the Appellant in Challans being relied upon by the Revenue - the clandestine manufacture of goods cannot be alleged on the basis that the Appellant has procured unaccounted packing material and in turn used for manufacture of goods removed clandestinely. It is mere packing material. The Show Cause Notice has not shown any unaccounted receipt or consumption of main raw materials i.e. Supari, Katha, Kimam, Perfume, Menthol or Tobacco which are main raw material for manufacture of “Pan Masala containing Tobacco”. The packing material would come into picture only once raw materials are consumed and finished goods are produced. Reliability of statements - HELD THAT:- The admissibility of evidence without following the procedure established under Section 9(D) (i) of the Act, is not admissible as an evidence in the investigation proceedings. The persons giving the statements have not been examined, cross examined by the adjudicating Authority/Appellant - thus, the statements recorded from the various persons have no evidentiary value. It is now well settled that charge of clandestine removal is a serious charge and must be proved by adducing tangible, cogent and affirmative evidence which are completely lacking in the instant case. The demands and penalties ordered by the Adjudicating Authority is not sustainable - Appeal allowed - decided in favor of appellant.
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