TMI Blog2015 (6) TMI 336X X X X Extracts X X X X X X X X Extracts X X X X ..... had been retracted by him cannot be used for confirming duty demand against the appellant company unless that statement is corroborated by some other evidence. As regards the fact that at the time of search of premises of M/s. Rajesh Tobacco Co., a tempo brought by Shri Babu Lal Meena had brought lime tube and packing rolls, this fact, in my view, cannot be the evidence of manufacture of Laxmi brand unmanufactured tobacco pouches at the premises of M/s. Rajesh Tobacco Co. as it is very much possible that those premises may have been used for storage of these raw materials and merely the unloading of the Laxmi brand packing rolls and lime tubes at those premises cannot lead to inference that these raw materials were going to be used for manufacture of Laxmi brand unmanufactured tobacco pouches at those very premises. At the time of search, no attempt has been made by the Investigating officer to get the machines found in the premise of M/s. Rajesh Tobacco Co. examined by an expert to ascertain as to whether the same were in working condition. Though the fact as to whether the machines were in working condition or not, at that time, is not a factor relevant for demand of duty, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned order, we find that M/s. Goyal Tobacco Co. Pvt. Ltd. is engaged in the packing of pouches of unmanufactured chewing tobacco bearing brand name Laxmi Chhap falling under Chapter 24 of Central Excise Tariff Act, 1985. Shri Rajesh Goyal is one of the director of manufacturing unit. The manufacturing activities are being conducted from the premises located at B-21, Krishnapuri, Old Ramgarh Mod, Jaipur. Another proprietory unit in the name and style of M/s. Rajesh Tobacco Co. engaged in the trading of the tobacco products and having their godown for the purpose of storing their goods at the rented premises at 269, Govind Nagar East, Jaipur. 3. The premises of the appellants company were visited by the central excise officers on 18-1-2011 who conducted various checks and verifications. They also visited the rented godown of M/s. Rajesh Tobacco Co. situated at 269, Govind Nagar East, Old Ramgarh Mod, Jaipur and found certain goods of Laxmi Chhap brand were lying. In addition, the officers also found three packing machines from the said premises. 4. It is seen that the appellants during the course of investigation submitted before the Revenue that 3 pouch packing machi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctually be argued that the said machines were not in working condition, on the date of their seizure i.e. 18-1-2011. From comparative study of the photographs of the machines and panchnama, dated 18-1-2011, it is interesting to note that the machine which was alleged to be found plugged-in does not have motor in it, thus any argument that this particular machine was in working condition on 18-1-2011 is also too specious as it cannot be explained as to why a machine claimed to be scrapped should be plugged into the electric socket. Obviously it was a condition that motor could be attached anytime to run this machine. However, it may be mentioned that it would be rather too much to suggest that photographs and physical status of the seized machines can prove that the machines were out of order from 8-3-2010. Thus photographs and physical status can be indicative of condition of machines at a given time i.e. to say on 18-1-2011, but cannot provide absolute evidence that they were out of order even since 8-3-2010. Moreover the missing parts of the machines can always be attached to the machines to make the same operational as it does not require substantial engineering skills especiall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-working packing machines, found anywhere, have to be held as resulting in production of unmanufactured tobacco pouches. This can never be the case. It is installation of the packing machine in the factory engaged in the manufacture of chewing tobacco, which is relevant. 8. Admittedly, 3 packing machines were found from the premises at 269, Govind Nagar East, Old Ramgarh Mod, Jaipur, which was neither a factory nor registered premises and machine were in non-working condition and were found to be in dumped condition. As such, the deeming fiction in respect of packing machine in terms of provisions of Chewing Tobacco and Unmanufactured Tobacco Packing Machine (Capacity Determination and Collection of Duty) Rules, 2010 arrived at by the adjudicating authority for confirming of demand against the appellant cannot be prima facie appreciated. We accordingly hold that the appellant has good prima facie case in their favour so as to allow all stay petitions unconditionally. We order accordingly. (Pronounced in the open Court on ) Sd/- (Archana Wadhwa) Member (Judicial) 9. [Order per : Manmohan Singh, Member (T)]. - I have gone through the draft order recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat they were out of order even since 8-3-2010. Moreover the missing parts of the machines can always be attached to the machines to make the same operational as it does not require substantial engineering skills especially in machine No. 3 where even the lights were found glowing and motor was only missing. 12. Appellants have tried to submit that machines were old and obsolete and were lying in dumped condition. They have also tried to divert the main issue by putting the blame on visiting team that no condition of the machines was described in the Panchnama. They also made reference to other manufacturing unit in the name and style of M/s. Rajesh Tobacco Co. engaged in trading the tobacco products at the 269, Gobind Nagar, East Jaipur. 13. On perusal of above para as well as pleas of the appellants it is evident from Commissioner s observation that machine found plugged-in did not have motor in it. He also observed that as to why, a machine claimed to be scrap should be plugged into the electric socket. He also on perusal of photographs and physical status of the seized machines discarded this plea and held that it could not be proved that the machines were out of order f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g and supplying of finished goods was looked after by Shri Harish and son of Late Shri M. Ram who was their accountant. She also admitted that she was only signing cheque and was not linked to day-to-day working of the company. 18. Statement of Shri Harish Chandra, Accountant was also recorded wherein he also confirmed the fact admitted by Rajesh Goyal and also confirmed that the machines were working in the hall and were manufacturing unmanufactured tobacco of Laxmi Chhap brand. 19. On further being questioned, Shri Rajesh Goyal stated that under Rule 6(5) of Chewing Tobacco Unmanufactured Tobacco Packing Machine (Capacity Determination and Collection of Duty) Rules 2010, it was provided that which packing machine was not in use could be sealed by the departmental seal but in this matter he did not give any information to the Central Excise department regarding said 3 machines nor he got the premises at 269, Govind Nagar east, Jaipur registered for unmanufactured tobacco pouch packing activity. All the three machines installed in above premises were in his knowledge. 20. The statement of Shri Harish Chandra son of Shri Moola Ram indicated that he used to sit in the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... victing statements are best piece of evidence. Presence of these machines in the hall is prima facie established and deeming fiction created because these machines were installed in a unregistered premise. Sufficient evidence has come on record enforcing that duty was clearly demandable under Chewing Tobacco Unmanufactured Tobacco Packing Machine (Capacity Determination and Collection of Duty) Rules, 2010. 24. In view of these evidences, ld. Member (J) observation that the machines were in dumped condition, Chewing Tobacco and Unmanufactured Tobacco Packing Machine (Capacity Determination and Collection of Duty) Rules, 2010 are not attracted and no duty was demandable and finding that the machines were installed in the unregistered premises are not acceptable. That fact of production on these FFS machines in unregistered premises was admitted by Shri Rajesh Goyal, Director. 25. In view of clear facts and various statements recorded by the Revenue, it clearly comes out that M/s. Goyal Tobacco Company was in the knowledge of all affairs of tobacco manufacturing. They have possessed FFS machines but later they shifted because compounded levy was imposed on these machines makin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermore, premises were not registered thus inviting deeming provisions of Chewing Tobacco Unmanufactured Tobacco Packing Machine (Capacity Determination and Collection of Duty) Rules, 2010. Sd/- (Manmohan Singh) Member (Technical) Sd/- (Archana Wadhwa) Member (Judicial) (Pronounced on 31-12-2013) 27. [Order per : Rakesh Kumar, Member (T)]. - Heard both the sides on the point of difference. 28. Shri O.P. Agarwal, Chartered Accountant, the learned Counsel for the appellant, pleaded that in the premises of the appellant company - M/s. Goyal Tobacco Co. Pvt. Ltd. at B-21, Krishnapuri, Old Ramgarh Mod, Jaipur , only one pouch packing machine was found as against the declared number of only one machine, that no irregularity was found in the premises of the appellant company at B-21, Krishnapuri, Jaipur, that M/s. Rajesh Tobacco Co. at Plot No. 269, Govind Nagar East, Old Ramgarh Mod, Jaipur, a proprietorship concern of Shri Girdhari Lal Agarwal Father of Shri Rajesh Goyal, the Director of M/s. Goyal Tobacco Co. is a trading concern, that in the premises of M/s. Rajesh Tobacco, three old and unusable pouch packing machines were found on the basis of which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... achine has a system of fixing of zipper to the pouch and the zipper is used to lock the pouch and such type of pouches are called zipper pouches, that the pouches in 24 bags found in the premises could not be manufactured on this machine, that in this machine, the electric panel did not have the required two heater meters which are useful to supply electric power to sealer which seals the pouches, that in the electric panel, both the fuses were missing and in absence of these fuses, the machine could not work for the want of electric supply, that the fan belt of the machine was also cracked and was bent at several places and in absence of proper fan belt, the machine could not function at all, that in view of this, the third machine was also in scrap condition, that the duty demand against the appellant company has been confirmed by invoking Rule 18(2) of the Chewing Tobacco and Unmanufactured Tobacco Packing Machine (Capacity Determination and Collection of Duty) Rules, 2010 readwith Notification No. 16/2010-C.E., dated 27-2-2010 according to which if it is found that the goods have been manufactured in or cleared from a unit, which is not registered with Jurisdictional Central Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e machine have been found, the plug of one machine was connected to the electric socket on the wall and its light bulb was glowing and a packing roll was also lying on the machine, that this indicates that that machine was in operation, that during the period when the search of the premises of M/s. Rajesh Tobacco Co. was going on, a tempo arrived with packing rolls and lime tubes, which were unloaded in those premises and on being enquired by the officers, the driver produce a GR issued by M/s. Standard Transport Organisation, Jaipur and also a bill issued by M/s. Rajput Plastic, Brijpuri, Delhi, that this is also a clear indication that the packing of chewing tobacco pouches was going on in the premises of M/s. Rajesh Tobacco Co., that there was a mixing machine also in the premises of M/s. Rajesh Tobacco Co. which was in operational condition, that Shri Pramod Kumar Sharma, Accountant and Production Manager of M/s. Goyal Tobacco Co. in his statement dated 18-1-2011 has stated that three pouch packing machines were available at 269, Govind Nagar, Old Ramgarh Road, Jaipur out of which the one found connected to the electric point was operational and other two were not operational, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Chewing Tobacco and Unmanufactured Tobacco Packing Machines Rules, 2010. The duty demand against the appellant company is on the basis of the three packing machines found in the godown of M/s. Rajesh Tobacco Co., which is owned by Shri Girdhar Lal Agarwal Father of Shri Rajesh Goyal. It is not in dispute that M/s. Rajesh Tobacco Co. is a trading company and its business was being looked after by Shri Rajesh Goyal. The duty demand of ₹ 3,17,41,935/- against M/s. Goyal Tobacco Co. is on the basis of the three packing machines found in the premises of M/s. Rajesh Tobacco Co. The department s allegation is that these three packing machines were being operated for manufacture of Laxmi brand unmanufactured tobacco pouches of the retail sale price of ₹ 2/- per pouch and these pouches were being cleared from these premises and on this basis, Rule 18(2) of the Chewing Tobacco and Un-manufactured Tobacco Packing Machine Rules, 2010 has been invoked for confirmation of duty demand. 32. In terms of Rule 7 of the Chewing Tobacco and un-Manufactured Tobacco Packing Machine Rules, 2010, duty payable by a manufacturing unit for a particular month shall be calculated by applying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purpose of these rules, the goods shall be deemed to have been manufactured or produced with the aid of a packing machine, if they are cleared from a factory where a packing is installed, irrespective of whether it is in use or not or is in working condition or not. From the perusal of Rule 18(2) and the explanation to Rule 19, it is clear that in terms of Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determined and Collection of Duty) Rules, 2010, when pouch packing machines are found in a premises and it is also found that in those premises chewing/un-manufactured tobacco pouches have been manufactured or have been cleared from such premises, it shall be presumed that - (a) those pouches have been manufactured by using the machines found in the premises, irrespective of whether the same were in use or not or are in working condition or not; and (b) it shall also be presumed that those machines were operating machines for the purpose of Rule 7 since 1st day of the month of April of the financial year. 34. Thus, in the present case, for determining the duty liability, what is relevant is as to whether or not, not there was manufacture or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elt and the other two machines as per the appellant s contention, were just scrap and were not at all in operating condition, (b) at the time of search, there was no examination of the machines by an expert to ascertain as to whether the same were in operating condition; and (c) monthly power consumption in the premises of M/s. Rajesh Tobacco Co. was 263 units to 501 unit as against the power consumption varying from 907 units to 3352 units in the premises at B-21, Krishnapuri, Jaipur. 35.1 In this regard, the provisions of Section 9D(2) readwith Section 9D(1) are important. In terms of sub-section (1) of Section 9D a statement made and signed by person before any Central Excise officers of a Gazetted rank during the course of enquiry or proceeding under Central Excise Act, 1944 shall be relevant, for the purpose of proving in any prosecution for an offence under this Act, the truth of the facts which is contained, if the person who had made the statement is examined as a witness before the Court and the Court of the opinion that having regard to the circumstances of the case, the statement should be admitted as evidence in the interest of justice. The only situati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has been relied upon by the Department is requested, the same has to be allowed to establish as to whether the statement had been voluntarily given and if the Revenue chooses to rely upon the statement, then in that event, he would have to be made available for cross-examination, failing which, the statement cannot be considered as evidence. Since in this case the statements of the employees of M/s. Goyal Tobacco Co. are sought to be relied upon for proving the allegation that the manufacture of branded unmanufactured tobacco pouches was going on by using the pouch packing machines in the premises of M/s. Rajesh Tobacco Co. and since in spite of their cross-examination having been requested and the request being a valid request, the same was not allowed, the statements of these persons cannot be relied upon as evidence. 36. As regards the fact that at the time of search of premises of M/s. Rajesh Tobacco Co., a tempo brought by Shri Babu Lal Meena had brought lime tube and packing rolls, this fact, in my view, cannot be the evidence of manufacture of Laxmi brand unmanufactured tobacco pouches at the premises of M/s. Rajesh Tobacco Co. as it is very much possible that those pre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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