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TMI Blog2015 (10) TMI 1566X X X X Extracts X X X X X X X X Extracts X X X X ..... of supplier of raw material and the buyers of the finished goods as well as the appellants. On the basis of the statements as well as of the balance sheet, it was found that the appellant is manufacturing Gutkha containing Tobacco and the data resumed reveals that the percentage of Tobacco in Gutkha ranges between 7 to 8% during the year 2000-2001 and 2001-2002. The representative samples of Madhu and Asha brand Gutkha were drawn and sent for analysis to Shriram Institute of Industrial Research, Delhi. On analyzing the Shriram Institute of Industrial Research, the report shows that Tobacco leafs are having 7.9% by mass in Madhu brand Gutkha and 7.8% by mass in Asha brand Gutkha, therefore, on an average 7.85% leafs contained in Gutkha. On said basis, it was calculated that the average percentage of Tobacco in Gutkha manufactured by CACF is 7.99% on that basis the quantity of tobacco consumed was calculated for the period 01/4/2002 to 28/11/2005 and it was alleged that the Gutkha manufactured is much more than the quantity shown in the statutory records. On that basis duty, was demanded from the appellant in the show cause notice. The show cause notice was adjudicated and the impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of tobacco would come on dry basis to 7.82% which corroborates the report of Shriram Institute which is relied upon by the authorities below. Therefore, there is no excess consumption of tobacco during the material period. He submits that it is purely assumption that percentage of consumption of tobacco remains same throughout. As it is evident from the show cause notice itself that the consumption percentage of tobacco has come down to 9.24% in the year 2005-2006 compared to 11.49% in the year 2004-2005 and 10.27% in the year 2003-2004. He further submits that in any event the test report dated 20/03/2006 of the sample drawn on 19/01/2006 from the Gutkha seized on 28/11/2005 cannot be basis to the Gutkha manufactured during the period 2002-2005. To support the said contention, he relies on the decision of Hindustan Fibres Ltd. vs. CCE, Jaipur reported in 2009 (245) E.L.T. 337 (Tri. - Del.). He also submits that the allegation of clandestine manufacture and clearance are based only on assumption and presumption without any documentary evidence, as it is clear from the facts, that to manufacture Gutkha following raw materials are required (a) Supari - 70 to 80% (b) Kattha - 5 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of purchases of tobacco shown in the books of accounts and if any cash purchases has been made and the same has not recorded in the books of accounts therefore the quantity purchased in cash is required to be taken into consideration but the quantity purchased in cash is not the basis of issuance of show cause notice. He also submits that the statement of Shri Purshottam Das, Dealer has been recorded who stated that he received Gutkha from the appellant without payment of duty, but he was not made party to the show cause notice, which clearly shows that the statement was taken under coercion. Likewise, he submits that the statement of Shri Rajesh Shukla, and the co-appellants are not voluntarily statement and the same cannot be relied. He further submits that no cross-examination of the persons, whose statements have been relied was afforded to the appellant and therefore same is contrary to the settled principal laid down by the Hon'ble Allahabad High Court in the case of CCE, Meerut - I vs. Parmarth Iron Pvt. Ltd. reported in 2010 (260) E.L.T. 514 (All.) as no cross-examination of the persons whose statement has been relied has been afforded despite several requests, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was deducted and the rest of the quantity of Gutkha alleged to be clandestinely manufactured and cleared without payment of duty. The main contention of the appellant is that tobacco contains moisture. We also note that tobacco is an agriculture product and it contains moisture. This is not in dispute. When the raw tobacco purchased by the appellant contains moisture and this tobacco has been purchased by the appellant during the period 2002-2005 and the same has been used in the manufacture of Gutkha during the relevant time therefore the test conducted on the samples in March 2006 will definitely having less moisture content. We have seen the test report also which shows that the percentage of tobacco contained in Gutkha is on dry basis which shows that the tobacco contains in the pouch of manufactured Gutkha is having less moisture content. It is also a fact on record that no sample of raw tobacco was drawn during the course of investigation to ascertain the moisture content in tobacco. On the contrary, the appellant has produced a report dated 14th February 2007 of Harcourt Butter Technological Institute, Kanpur which confirms that moisture content is 15.38%. The said report p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sary for manufacture of goods otherwise manufactured and validly cleared on payment of duty; (g) statements of buyers with some details of illicit manufacture and clearance; (h) proof of actual transportation of goods, cleared without payment of duty; (i) links between the documents recovered during the search and activities being carried on in the factory of production; etc." Without establishing the above evidences, the demand on account of clandestine manufacture/removal is not sustainable. 10. As in this case no opportunity of cross-examination of the persons whose statement has been relied by the adjudicating authority given to the appellant, the impugned order is in violation of principal of natural justice, therefore, impugned order is set aside. The matter is consigned to the Adjudicating Authority for denovo adjudication to adjudicate the matter afresh after affording the cross-examination of the persons whose statement has been relied in the adjudication to support their case on the basis of corroborative evidence. It is pertinent to mention here that the demand on account of balance sheet purchase figures and test report showing the consumption of tobacco is not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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