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TMI Blog2015 (4) TMI 992X X X X Extracts X X X X X X X X Extracts X X X X ..... Makhija, the brother of Shri Hira Lal Makhija owns the brand Kesar and the Gutkha of Kesar Brand is manufactured by M/s Sun Products Pvt. Ltd., Transport Nagar, Kanpur (hereinafter referred to as SPPL). Shri Babu Lal Makhija is the brother of Shri Hira Lal Makhija and Shri Harish Makhija, having residence at R-713, New Rajinder Nagar, Delhi. The residence of Shri Harish Makhija owner of the brand Kesar is at 117/618, Pandu Nagar, Kanpur. The Directorate General of Central Excise Intelligence received an information that RPPL and SPPL are evading duty in respect of Gutkha of Kimti , Rangila and Kesar Brand 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 M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and accordingly, the Central Excise duty leviable in respect of the same was determined as Rs. 57,51,000/-. However, neither any attempt was made to obtain from the railways, the copies of the RRs whose details were mentioned in the notebook seized from the residential premises of Shri manoj Gupta nor those RRs were given by the railways. Though, there was an employee named Sumit, working with RPPL, no enquiry was made with him. As regards, the seizure of cash of Rs. 17,64,870/- from the premises of Shri Babu Lal Makhija in Delhi, initially Shri Babu Lal Makhija did not respond to seven summons 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 Rs. 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 Rs. 3000/-per month each, that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d penalty of Rs. 50 lakh each on Shri Hira Lal Makhija and Shri Harish Kr. Makhija under rule 26 of the Central Excise Rule, 2002. 2. Heard both the sides. 3. Shri Krishankant, Advocate, the Ld. Counsel for the appellant, pleaded that except for certain unaccounted quantity of Supari, Gutkha and packing material in the factory premises of RPPL, no other irregularity had been found and as such there was no shortage of the finished product vis a vis the balance recorded in the RG-1 Register, that no incriminating documents showing illicit clearances of Kimti Brand or Rangila Brand Gutkha were recovered from the factory premises, that except for currency of Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had been booked by the railways were available while in the present case, the allegation of duty evasion is based only on the entries in the notebook being maintained by Shri Manoj Gupta, which according to him are the railway receipts numbers, but the railway receipts have not been obtained from railway booking office, that the cross examination of Shri Manoj Gupta also does not support the Department s case, that while imposing penalty under Rule 26 of the Central Excise Rule, 2002 on Shri Harish Kumar Makhija and Shri Hira Lal 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Factory, Najafgarh in respect of which its Directors, Shri Amit Sood admitted that this quantity had been cleared without any invoice. He also pointed out to the statements dated 27.09.2004 Shri Neelam Singh Chauhan proprietor of M/s Durga Trading Company, who stated that they were supplying Supari to RPPL for which Shri Hira Lal Makhija or Shri Prabha Shankar Shukla used to approach him. He also pointed out to the fact that inquiry with Shri Prabha Shankar Shukla and Shri Kishan Lal Sonwani, the Directors of RPPL indicated that 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 Rs. 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 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 7. This leaves the evidence in form of the entries under the heading Kimti in the notebook recovered from Manoj Gupta. Though, according to the statement of Shri Manoj Gupta, the entries represented the details of the 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 paym ..... X X X X Extracts X X X X X X X X Extracts X X X X
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