TMI Blog2015 (4) TMI 992X X X X Extracts X X X X X X X X Extracts X X X X ..... REME COURT] the onus to prove that the currency represented sale proceeds of the clandestinely removed goods in on the department and it is the department which has to lead cogent evidence in this regard. But there is no such evidence. Therefore, the currencies recovered from the residential premises of Shri Babu Lal Makhija/Hira Lal Makhija Delhi and from the residential premises of Shri Harish Kumar Makhija -Kanpur cannot be held to be sale proceeds towards the clandestinely cleared goods. Merely on the basis of the entries in the notebook recovered from Shri Manoj Gupta under the heading of Kimti coupled with his statement, it cannot be concluded that those entries represent clandestine clearances of the consignments of Kimti Brand Gutkha by RPPL and on this basis duty demand of ₹ 57,51,000/- cannot be confirmed against RPPL. In this regard, we are supported by the judgements of the Tribunal in the cases of Charriot Cement Company vs. CCE (2003 (1) TMI 213 - CEGAT, KOLKATA) and Hira Enterprises and others vs. CCE Belgaon (2011 (5) TMI 896 - CESTAT BANGALORE), wherein it has been held that merely on the basis of the Railway receipts without being corroborated by other in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rand being manufactured by them by removing the same in a clandestine manner and that the consignments of Gutkha cleared clandestinely were being dispatched to various outstations through railways and that the railway bookings were being done through some railway booking agents. Accordingly, on 12.02.2004, the factory premises of RPPL at Narayana Industrial Area, Delhi, the factory premises of SPPL at Transport Nagar, Kanpur, the residence of Shri Babu Lal Makhija at New Rajinder Nagar, Delhi where Shri Hira Lal Makhija was also staying, the residential premises of Shri Harish Makhija at Pandu Nagar, Kanpur, residential premises of railway booking agent Shri Manoj Gupta at M-137, Pratap Vihar, Sector 12 Ghaziabad, Residential address of Railway Booking Agent Mohd. Iliyas at 156/6, Islam Nagar, Ghaziabad and some other parties were searched. From the residential premises at R-713, New Rajinder Nagar, Delhi of Shri Babu Lal Makhija who was in the business of Supari Gutkha, cash of ₹ 17,64,870/- was recovered and the same was placed under seizure on reasonable belief that the same is the sale proceeds illicitly cleared Gutkha by RPPL. From the residential premises of Shri Hari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mons issued to them to explain the cash recovery, but subsequently he appeared before the Investigating Officers on 09.11.2004 and informed that the cash belonged to one Shri Ashok Jain of Calcutta and who had left the cash with him for purchase of some property. Similar explanation was given by Shri Harish Makhija in respect of the cash recovery of ₹ 19 Lakh from his residential premises at Kanpur. Enquiry with Shri Kishan Lal Sonwani and Shri Prabha Shankar Shukla, Directors of RPPL indicated that they were Directors only on papers and were getting a salary of ₹ 3000/-per month each, that the Land building, plant and machinery of RPPL had been taken on lease from the Makhijas and that RPPL had also taken loan of ₹ 71 lakh from Makhijas. Inquiry also indicated that it is Shri Hira Lal Makhija and Shri Harish Makhija who were controlling the entire activities and business of RPPL. 1.3. It is in view of the above investigation that Show Cause Notice dated 08.12.2004 was issued to RPPL, Delhi, Shri Hira Lal Makhija living at R-713, New Rajinder Nagar, and Shri Harish Makiha living at 117/618, Pandu Nagar, Kanpur for (a) recovery of Central Excise duty amounting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earances of Kimti Brand or Rangila Brand Gutkha were recovered from the factory premises, that except for currency of ₹ 17,64,870/- seized from the residential premises of Shri Babu Lal Makhija and Hira Lal Makhija, which belong to one Shri Ashok Jain, Calcutta and was meant for purchase of some property, no evidence of any clandestine manufacture and clearance of Kimti or Rangila Brand Gutkha was found, that the stand of Shri Babu Lal Makhija with regard to the currency seized from his premises, from the very beginning, has been that the currency belongs to one Shri Ashok Jain of Calcutta which had been left by Shri Jain for purchase of some property and similarly in respect of seizure of currency of ₹ 19 lakh from the premises of Shri Harish Kr. Makhija at Kanpur, from the very beginning, his stand has been that this currency is meant for purchase of some property and is not the sale proceeds of illicitly cleared Gutkha, that in any case the burden of proving that the currency seized at Delhi and Kanpur was the sale proceeds of illicitly cleared Gutkha and hence, liable for confiscation is on the Department and in this regard, he relies upon the judgment of the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Makhija, the Commissioner has not discussed at all as to how and on the basis of which evidence, the provisions of Rule 26 of the Central Excise Rules are attracted, and in terms of the Rule 26 of the Central Excise Rule penalty is imposable on a person who has acquired possession of or is engaged in purchase, sale, storage, transportation or in any other manner dealing with any excisable gods which he knew or had reason to believe are liable for confiscation, that just because according to the Commissioner s finding RPPL is a dummy front company controlled by Shri Hira Lal Makhija and Shri Harish Kr. Makhija, the penalty equal to the duty demand confirmed cannot be imposed on them by invoking Rule 26 of the Central Excise Rules, that as regards, confiscation of the currency recovered from the residential premises of Shri Babu Lal Makhija Delhi and the residential premises of Shri Harish Kumar Makhija Kanpur, the burden of proving that this currency represents the sale proceeds of illicitly cleared goods is on the Department while absolutely no such evidence has been produced and that in view of the above submissions, the impugned order is not sustainable. 4. Shri Pramod Kuma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they were only the dummy directors and the company was actually being controlled by Shri Hira Lal Makhija and Shri Harish Kumar Makhija and for this reason the Commissioner has rightly imposed deterrent penalty on both these persons. He, therefore, pleaded that there is no infirmity in the impugned order. 5. We have considered the submissions from both the sides and perused the records. The evidence relied upon by the Department in support of its allegation of duty evasion of ₹ 57,51,000/- against RPPL is based on the following evidence on record. (a) A notebook recovered from Railway Booking Agent from Manoj Gupta in which on some certain pages under heading Kimti there were a number of entries which were interpreted by Shri Manoj Gupta as the RR numbers and the number of packages of the consignments of Kimti Brand Gutkha booked by him through railways, coupled with the statement of Shri Manoj Gupta wherein he has stated that the consignments of Kimti Brand Gutkha booked by him through railways and whose details are mentioned in the notebook, had been received from the factory of RPPL and that regarding receipt of the consignments for booking, he used to get intimation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he consignment of Kimti Brand Gutkha booked through him with railways for transportation and the same consist of the railway receipt number, the number of packages and the date of RRs, the Department has not obtained the copies of the RRs from the railways, in absence of which it cannot be inferred as to whether the RR numbers mentioned in the diary of Shri Manoj Gupta represent actual railway receipts under which certain consignments had been booked. Though, Shri Manoj Gupta in his statement mentioned Shri Sumit Kumar stating that he used to be informed by Shri Sumit Kumar about the arrival of the consignments for booking and it is Shri Sumit Kumar who used to make cash payments for the same, but no enquiry with Sumit Kumar, who during that period was an employee of RPPL, has been made and absolutely no statement of Shri Sumit Kumar had been recorded. In view of this, merely on the basis of the entries in the notebook recovered from Shri Manoj Gupta under the heading of Kimti coupled with his statement, it cannot be concluded that those entries represent clandestine clearances of the consignments of Kimti Brand Gutkha by RPPL and on this basis duty demand of ₹ 57,51,000/- ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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