TMI Blog2019 (4) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Central Excise Superintendent. When the department itself is controlling manufacturing process of the appellant, in that circumstance, without hand in gloves with the Central Excise officers, the clandestine removal cannot take place - Moreover, in this case, no incriminating documents received from the possession of the appellants. Moreover, no extra amount has been received from the custody of the appellants which can be presumed the sale of clandestine removed goods. he whole case of the Revenue is based on the third party document and the statements of various persons whose cross examination has not been granted in terms of Section 9D of the Central Excise Act,1944. The allegation based on the third party document without any corroborative evidence cannot be the basis to allege clandestine removal of the goods. In the absence of examination-in-chief, allowing the cross-examination, the adjudication is a futile exercise. As the said procedure has not been followed by the authority below and the appeal of M/s. Pelican has already been dismissed. In that circumstance, the statements of witnesses on the basis it has been alleged that the appellants are engaged in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued to demand duty on account of clandestine removal of the goods without payment of duty and to impose penalty on both the appellants under Rule 26 of Central Excise Rules, 2002. The matter was adjudicated, the demand of duty was confirmed vide Order-in- Original dt.23.8.2011 against M/s. Pelican and equivalent penalty under Section 11AC of Central Excise Act, 1944. The penalty of ₹ 10 crore each was also imposed on both the appellants before us under Rule26 (1) of the Rules. 3. While entertaining the stay applications filed by the appellants along with M/s. Pelican, this Tribunal has directed M/s.Pelican to make deposit of 50% of duty within eight weeks and on such deposit made by M/s.Pelican, waiver of pre-deposit was granted to both the appellants for entertaining the appeals. The said order was challenged by M/s.Pelican before Hon ble Punjab Haryana High Court and Hon ble High Court vide order dt.26.7.2013 directed M/s.Pelican to deposit ₹ 6 crores within 15 days. In the mean time, this Tribunal on 23.9.2013 dismissed all the appeals of M/s.Pelican as well as the appellants for non compliance with the direction of Hon ble High Court. M/s.Pelican filed a sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch simply explained the working of M/s. Pelican and denied the allegation that they have ever received cut tobacco from M/s. J.S. Enterprises and M/s. Surya Tobacco Products. The whole allegation is based on the statements which were obtained on the back of the appellants. 5. He further submits that it is alleged in the SCN that the CKT paper which was cleared by M/s. Gravure Printers Convertors Pvt.Ltd. to M/s. Aman Enterprises were actually used by M/s. Pelican for manufacturing cigarettes. For this only one letter dt.9.4.2010 from the director of M/s. Gravure Printers Convertors Pvt.Ltd. was relied upon to prove the charges of clearance of CKT paper to M/s. Pelican in the garb of M/s. Aman Enterprises. Although there was nothing in the letter to prove that the CKT paper were cleared to the appellant company through fictitious firm in the name of M/s. Aman Enterprises. Therefore, on the basis of mere statements, the charge of clandestine removal is not proved. The said letter was further clarified and denied that no goods were cleared to M/s. Pelican under the garb of M/s. Aman Enterprises. Therefore, on the basis of mere statement, the charge of clandestine removal is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s recovered from third party cannot be relied upon in the absence of cogent evidence. 8. He further submits that as per provisions of Rule 6 of Central Excise Rules, 2002, the manufacturing of cigarettes is under the physical control of the department. Further, as per para 2.2. of Chapter 4 of CBEC s Supplementary instructions in respect of cigarettes the officers check the operations by the assessee as per instructions contained in the commodity manual for cigarette and thee were strict instructions mandated in the cigarette manual which are required to be followed by the officers and officers have to exercise different checks on arrival of the inputs, during the manufacturing and packing and at the time of removal. Besides following commodity manual for cigarettes para 2.2 of Chapter 4 of Supplementary instructions also prescribed that each and every invoice of cigarettes has to be countersigned by the inspector, or by the superintendent before the cigarettes were removed from the factory. It is well settled principle of law that in case of physical control the charges of clandestine removal of the goods cannot be held sustainable. Reliance is also placed on the judgment of Hy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Singh, director of M/s. Pelican was the main brain behind hatching the conspiracy to procure raw materials in such a way where no need of account arises as the same were procured in different fictitious firm names and by this way, they could hide the actual procurement of raw materials from the department and the appellants themselves made arrangements with Bommidala Purnaiah to procure cut tobacco in the name of J.S. Enterprises, which he described his trading unit to them. The payments of raw materials were made thorough demand drafts of the value less than ₹ 50 to avoid the identity of the persons who get those demand drafts prepared. Such demand drafts were got prepared by his employees from different banks in Delhi by giving their false identities and addresses on the requisition slips. Shri A.K.Singh also floated a new company namely M/s. Pelican Enterprises of which M/s. Pelican Tobacco Co.Ltd. was the proprietor. The appellant floated this unit to manage the cash sale proceeds of the cigarettes clandestinely removed by M/s. Pelican. The cash sale proceeds were received back to M/s. Pelican Enterprises. During the course of investigation, the appellant did not give sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pelican approached Hon ble High Court as well as Hon ble Apex Court against the order of stay wherein M/s. Pelcan to make deposit 50% of duty in dispute. Further, the appeals of the appellants have already been restored by this Tribunal vide its order dt.27.8.2018 and the said order has not been challenged by the Revenue. Therefore, the objection raised by the ld.AR is not sustainable and accordingly, the same is discarded. 17. Now come to the merit of the appeals filed by the appellants. We find that during the relevant period in terms of Rule 6 of Central Excise Rules, 2002, the factory of the appellants was under physical control of the Superintendent or Inspector of Central Excise, wo were required to assess the duty payable before removal by M/s. Pelcan. However, as per Chapter 4, cigarettes would have been removed only on invoice which shall be countersigned by the Central Excise Superintendent. When the department itself is controlling manufacturing process of the appellant, in that circumstance, without hand in gloves with the Central Excise officers, the clandestine removal cannot take place. Moreover, in this case, no incriminating documents received from the possessio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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