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2019 (10) TMI 849 - AT - Central ExciseClandestine removal - Pan Masala Gutka (PMG) - unaccounted raw material and finished goods - it is alleged that the receipts of various packing material and finished goods were not recorded in their records and therefore the goods found at factory in Dashrath, Baroda and Godown situated at Jasubhai Fulabhai Godown at N.H. No. 8, Dashrath, Baroda were seized - demand of ₹ 1,38,93,527/- made on the basis of trial run conducted by the officers - HELD THAT:- The Appellant has challenged the trial run on the ground that the same was conducted arbitrarily and wrongly by the officers. Further the statements were retracted by way of affidavit and cross examinations - it is found that during investigation the persons whose statements were recorded had retracted their statements. During cross examination the employees and the director Shri R.M. Dhariwal has stated that the statements were recorded under threat, coercion and duress. In such case, only on the basis of statements and trial run to ascertain the consumption of PLR, demand cannot be made. On the basis of average consumption of Printed laminated, a packing material arrived on the basis of disputed trial run, it cannot be alleged that the Appellant has manufactured PMGs and the same in turn were removed clandestinely. Only on the basis of alleged average consumption of PLR, the charge of clandestine removal cannot be made. Only from PLR, PMG cannot be produced, it is a mere packing material. The show cause notice has not shown any unaccounted receipt or excess consumption of main raw materials i.e. Supari, Tobacco, Katha, kimam, perfume, menthol which are main raw materials for manufacture of PMG. The packing material would come into picture, only once raw material is consumed and the finished goods are produced - thus, on the basis of receipt of PLR (packing material) or trial run which is also even disputed, it cannot be concluded that the Appellant has manufactured unaccounted PMG and cleared the same without payment of duty. Cross-examination - the adjudicating authority has held that the cross examination should not have been allowed - HELD THAT:- The grant of cross examination is valuable right of the assessee and request for same cannot be brushed aside by merely denying the same. In the present case the cross examinations of employees and the officers were allowed by the predecessor of the adjudicating authority and hence the same had to be considered - the statements given by the employees accepting clandestine removal stands retracted by them. In such case there is no reason to rely upon such statements to allege clandestine removal. Duty demand of ₹ 10,32,064.92 - demand has been made on the ground that 19669.351 Kgs of Plastic Laminated roll was found from the godown of the Appellant - HELD THAT:- There is no evidence that the Appellant were to clear such PLR without payment of duty from their factory. Ultimately the said roll after release was consumed in the manufacture by the Appellant. In that case only on the limited ground that the PLR was found at godown of Appellant, the duty demand cannot be made as the goods were not intended to be removed without payment of duty nor there is any evidence to allege so. Confiscation of goods worth ₹ 29,12,368.93 - HELD THAT:- The goods were raw material/ packing material except 2 gms PMG pouches which were lying in factory in strips form. As far as the raw material and packing material is concerned, the same were legally acquired and there is no case for seizure/ confiscation of same. In respect of finished goods, we find that the PNG were in strip form awaiting packing in inner cartoon and then corrugated boxes - there are no reason to seize/ confiscate the goods when the goods did not reach RG-1 Stage nor there was any preparation on part of assessee to remove the same clandestinely. Demand of ₹ 5,43,750/- has been confirmed on records of Sarco Roadlines - HELD THAT:- No evidence has been adduced to show as to who from the Appellant concern consigned the goods and what is the origin of goods. In such case merely on the basis of transporter’s record, it cannot be concluded that the goods were cleared clandestinely by the Appellant - demand not sustainable. Confiscation of goods seized from M/s Jivan Agencies, Raipur and M/s Vinayak Agencies, Jodhpur - goods has been seized on the ground that the same did not have any identification marks - HELD THAT:- No evidence to show that the said goods were consigned by Appellant unit. Further we find that there are glaring inconsistencies in the statements of Shri Gautam Zabak, Partner of M/s Jivan Agencies. In one of his statement 28.11.94, he stated that the goods were received from Appellant Unit, Baroda and in next statement he stated that the goods were received from Pune Unit. Thus the statements of Shri Zabak were contradictory and without investigation and corroboration, it cannot be said that the Appellant had cleared the seized goods. Further Shri Zabak also retracted his statement. In such case, there are no reason to sustain the confiscation of seized goods. The demands, penalties and confiscation ordered by the adjudicating authority is not sustainable - appeal allowed - decided in favor of appellant.
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