TMI Blog2001 (3) TMI 787X X X X Extracts X X X X X X X X Extracts X X X X ..... The appellant buys unmanufactured leaf tobacco from outside sources, and despatches the same to the Company s cigarette factory in Azamabad, Hyderabad. At the cigarette factory, the unmanufactured tobacco is processed into cut tobacco after blending and cutting at the Primary Manufacturing Department. (d) This cut tobacco is then issued to the cut Tobacco Stores where it is normally stored for about 24 hours. (d.1) Cut Tobacco from the Cut Tobacco Stores is then issued to the Cigarette Making Department for being made into cigarette sticks in the cigarette making machines. While the cigarettes are made in the cigarette making machines, certain quantity of cigarette sticks get wasted and are generated as waste cigarettes in the cigarette making machines. Further, certain quantity of dust and sand from the cut tobacco is also generated and collected in the Dust Recovery Units. Certain quantity of tobacco dust/sand gets mixed with the atmospheric air and is lost since it cannot be collected in the dust recovery units. The cigarette making machine also filters and throws out shorts and winnowings, as waste. A certain quantity of waste is also collected as floor sweepings. (d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how cause notices under Rule 9(2) read with proviso to Section 11A(1) of the Act on cut tobacco and imposed mandatory penalty for an equivalent amount under Section 11AC of the Central Excise Act read with Rule 173Q and ordered payment of interest at 24% per annum with effect from 1-11-1993, under Section 11AB. 2. The grounds taken in appeal are :- (a) that the entire case based on comparison and variance is based on registers and formula declared by the appellant as per Departmental manual instructions which were under constant scrutiny and verification of the Departmental authorities. Therefore, the present SCN has been made out only a hypothetical basis of non-accountal and consequent assumed clandestine removal of cut-tobacco; (b) there was no requirement under the said Notification viz. 355/86 and 121/94 to declare any specification of weight or that cigarettes should be made as per the declared formula only to entitle eligibility of the notification claimed; (c) theoretical weight cannot be matching the actuals since theoretical norms are claimed prior to production and in any case the cigarette production was under physical control; (d) Departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e wilful . And submitted that there is no suppression or mis-statement in the present case and overruled decision of the Tribunal relied upon by the Commissioner would not be correct law; (j) The findings of the Commissioner that there can be only positive variance is not correct decision which is arbitrary since variance can be positive or negative; (k) Ld. Commissioner has failed to fix and arrive at the tolerance levels due to various factors and has confirmed a demand on the basis of conjuctures. There was no material to prove allegation of clandestine removal and the allegation of concocting of the records is a serious allegation made without any basis and it cannot be upheld in a physical control system as held by the Tribunal in the case of Leather Chemicals and Industries 1984 (15) E.L.T. 451. They also rely upon 1993 (63) E.L.T. 86, 1984 (15) E.L.T. 451 and 1998 (100) E.L.T. 8 (S.C.) to submit that there cannot be any case to come to a conclusion of clandestine removal in this case; (l) the burden of proving the clandestine removal was clearly on the Department as has been settled by various case-laws on the subject. The results of the cross-examina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the procedure established by law, vide the manual to determine the normal working difference i.e. variation between the theoretical and actuals has not been complied with, then we cannot find variance being alleged to be abnormal. These proceedings, therefore initiated and continued are having no foundation. (b) from the total quantity of cut-tobacco, over a period of the demand, which is found to have been removed without using the same in the manufacture of cigarettes as alleged it would appear that large quantities of unaccounted tobacco were being generated and or removed. Since the Anti Evasion Officers have visited the factory on specific information and by surprise, they should have therefore found certain quantities of cut-tobacco which was to be clandestinely removed by the appellants, if there is an iota of fact, in the allegation that over a period of years, the appellants were systematically removing clandestinely large quantities of cut-tobacco. No such quantity was found. Since there is no finding of any variations found in the cut-tobacco stores and or stocks before us, and no seizure of cut-tobacco has been conducted on the date of this surprise visit, by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal). (2) C.C.E., Allahabad v. Tirupati Cigarettes 2000 (121) E.L.T. 81 (T) of various authorities which also persuade us to come to a conclusion that when the Anti Evasion Officers have not fixed after arriving at any normal working difference as per the procedure established by law, relying upon these case-law and on merits, we cannot find any case for confirmation of demand as made out by ld. Commissioner. We find that ld. Commissioner has relied upon the (statements of various persons but has not relied upon the) cross examination of the deponent of these statements especially that of the General Manager (Operations), Mr. Mukherjee and Mr. M.M. Sami that it was practically impossible for even a handful cut-tobacco to go out of the factory unaccounted, which leave alone lorry loads of the quantity alleged to have been removed from the factory premises. (e) Ld. Counsel for the Revenue during the hearing relied upon Board s Instructions No. 67/88-CX. 6, dated 9-6-1988. We do not understand how this instruction would help the case of Revenue. This instruction, itself provides that no end-use certificate of cut-tobacco was necessary . Therefore, reading of this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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