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Tribhuvan Tobacco Products Versus Commissioner of Central Excise, Delhi-I

Waiver of pre deposit - whether the CESTAT was correct in coming to the prima facie conclusion that the Appellant "failed to make a case for full waiver of duty and penalties." - Held that:- A foundational fact that would have to be shown to exist by the Department for attracting the deeming fiction under Rule 18 (2) of the Rules is that the goods were found to have been "manufactured in or cleared from" the premises searched. The CESTAT, when it hears the appeals on merits, will have to address .....

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must be sufficient other evidence to corroborate the said retracted statement would also have to be examined in detailed by the CESTAT.

Court would not like to express any opinion on the merits of the above contentions given the limited scope of the present appeal, and particularly since the CESTAT will have to deal with the appeal before it on merits. Having examined the order of the Commissioner in light of the submissions of learned counsel for the parties, as noted hereinbefore, .....

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r And Vibhu Bakhru, JJ. For the Petitioner : Ms Anjali J. Manish and Mr Rahul Ranjan, Advs For the Respondent : Mr Rahul Kaushik, Senior Standing Counsel ORDER 1. This is an appeal under Section 35-G of the Central Excise Act, 1944 against the order dated 31st July, 2015 passed by the Customs, Excise & Service Tax Appellate Tribunal ('CESTAT') in a stay application filed by the Appellant Assessee in an appeal against the order-in-original dated 28th February/3rd March 2014 confirming .....

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mission of both the sides, we find that the demand made as per rule 18 (2) of the said rules required to be rebutted by the applicant. The seizure of Machine, Packing material, Packing Machine of Products are to be explained with dear supporting evidence. This requires detailed appreciation of contention by both the sides. 4. On perusal of records and arguments we are Prima -Facie of the opinion that the applicant failed to make a case for full waiver of duty and penalties. Accordingly we order .....

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issued to the both the Appellant Assessee (a proprietory concern) (as Noticee No.1) and Mr. Kunal Indoria (Noticee No.2) was that a search was conducted at the premises at Gali No.10, Jagatpur Extension, Wazirabad Village, Delhi on 10th October, 2010. The officers of the Department found that one portion of the premises was used for manufacturing of khaini (chewing tobacco) and the other portion was used for storing raw materials, packing materials, etc. Both the portions had separate electrici .....

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ni without obtaining Central Excise registration and without paying the appropriate Central Excise duty. On physical stock taking, the officers found packing materials valued at ₹ 2,01,500/-, raw materials valued at ₹ 1,00,650/- and finished goods valued at ₹ 95,280 in the premises. As the goods were unable to be accounted for by Mr. Kunal Indoria they were also seized. Some loose papers found in the premises were also seized. Mr. Kunal Indoria stated that the Appellant concern .....

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rch i.e. 10th October 2010 but retracted it the very next day i.e. 11th October, 2010. During the course of investigation the Department recorded the statement of Mr. Tek Chand, landlord of the premises, on 1st November 2011. He, inter alia, stated that that he had given the premises having area of 300 square yards out of Khasra No. 1000 to Mr. Kunal Indoria S/o Mr. Mohan Lal Indoria who resided at 4/2261 Gali No 3 Bihari Colony Shahdara, Delhi 32. He confirmed that the premises was rented to Sh .....

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cash; that these pouch packing machines were of no use and could only be melted after dismantling the machines. The Department also recorded the statement of Mr. Ajay Kumar Singh of M/s. Krish Marketing of Chennai who stated that goods purchased from the Appellant concern had been returned to it as a result of problems with quality. 6. The defence of the Appellant Assessee as noted in the order-in-original of the Commissioner that there was no electricity connection and there were no motors for .....

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session the seized goods were found was the concerned person to show cause as to why the goods should not be confiscated and (c) except in respect of the khaini of which it was the owner, Noticee No.1 is not concerned with the confiscation of those goods or the payment of any redemption fine. 7. It is urged by Ms. Anjali Manish, learned counsel for the Appellant, that the Commissioner in the order-in-original failed to deal with many of the above defences and that there was no detailed analysis .....

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though not demandable could at the most be for one month i.e. October, 2011. the deeming provisions of Rule 18(2) of the Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010 ('Rules') cannot be made applicable simply on the ground that noticee's attitude was non co-operative. She drew attention to the manner in which the point regarding the absence of motors at the time of search has been dealt with by the Commissione .....

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counsel for the Respondent, referred to Section 35 F of the Act and submitted that the Appellant had to satisfy the CESTAT, which it failed to do, that it would be subject to "undue hardship" on account of the order of the Commissioner. He repeatedly urged that in relation to the demand of nearly ₹ 4 crore towards duty, penalty and interest, as confirmed by the order-in-original, a direction to the Appellant to make a pre-deposit of ₹ 15 lakhs cannot be said to be causing u .....

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ed to the Appellant or that they were actually utilized in the manufacture of chewing tobacco. A foundational fact that would have to be shown to exist by the Department for attracting the deeming fiction under Rule 18 (2) of the Rules is that the goods were found to have been "manufactured in or cleared from" the premises searched. The CESTAT, when it hears the appeals on merits, will have to address itself to the central issue of whether the evidence on record demonstrates that the A .....

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lso have to be examined in detailed by the CESTAT. 10. Both learned counsel relied upon the decision of the Supreme Court in Benara Valves Ltd. v. Commissioner of Central Excise (2006) 13 SCC 347. In the said decision, while explaining the true purport of the expression "undue hardship" occurring in the first proviso to Section 35-F of the Act, the Supreme Court observed in para 8 as under: "8.It is true that on merely establishing a prima facie case, interim order of protection s .....

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