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2016 (1) TMI 1009 - CESTAT ALLAHABAD

2016 (1) TMI 1009 - CESTAT ALLAHABAD - 2016 (333) E.L.T. 465 (Tri. - All.) - Shortage of raw tobacco and coloured tobacco - clandestine removal - demand under proviso to Section 11A(2) and also imposed a penalty of equal amount under Section 11AC along with interest - Held that:- Revenue has tried to prove the charge of clandestine removal merely on the basis of presumptions and assumptions and when the shortage has been explained with verifiable facts with regard to raw tobacco and coloured tob .....

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l) For the Petitioner : Shri S P Ojha, Consultant For the Respondent : Shri Rajeev Ranjan, AR ORDER Per: S S Garg: This appeal is directed against order-in-appeal passed by the Commissioner (Appeals) vide order dated 17.5.2007 upholding the decision of the adjudicating authority. 2. Briefly the facts of the case are that the appellant is engaged in the manufacture of branded chewing tobacco falling under sub-heading No. 2403 99 10 of the First Schedule to the Central Excise Tariff Act, 1985 and .....

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co which was not recorded in stock and 2793 kg. coloured tobacco found short was unaccounted and it appears that the same has been removed without accountal of the same in record and without payment of central excise duty. In this manner, the appellant has allegedly contravened the provisions of Rules 4, 6, 10, 11 and 12 of the Central Excise Rules, 2002. In reply to the show cause notice, the manager of the appellant, Shri Onkar Nath Gupta, in his statement recorded by the officers of the depar .....

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he appellant is before us by way of the present appeal. 4. The learned counsel for the appellant submitted that there was no shortage of raw tobacco and coloured tobacco which is manifested on record as the alleged shortage has been explained by the manager, Shri Onkar Nath Gupta. The learned counsel further submitted that Rule 10 of the Central Excise Rules, 2002 does not require an assessee to make as many entries as there are transactions. He also submitted that charge of clandestine removal .....

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sue slips i.e. chits in respect of cenvatable inputs issued for manufacture of final products. A copy of declaration under Rule 22(2) of the Rules is annexed by the appellant. All records are maintained on daily basis at the close of the day. Further, the Rules do not require that every time there is an issue of raw material, it should be recorded in statutory records. There is no provision under the law to issue slips for raw tobacco on which no cenvat credit has been taken. The learned counsel .....

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also taken into account all these materials i.e. raw tobacco and coloured tobacco continued to be in the premises and were verifiable by the officers on their visit on 2.12.2004, but the officers did not physically verify the same. 5. On the other hand, the learned AR reiterated the findings of the Commissioner (Appeals). 6. We have heard both the parties and perused the records. For better appreciation, Rule 10 of the Cenvat Credit Rules, 2004 reproduced below:- "(i) Every assessee shall .....

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nkar Nath Gupta, wherein he categorically explained with verifiable facts the reasons for shortage of raw tobacco and coloured tobacco stored in their respective store rooms. There cannot be any presumptions and assumptions contrary to verifiable facts. We have gone through the statement of Shri Gupta and we find that the alleged shortage of goods could have been verified as per the statement of Shri Gupta, but the department instead of doing the verification for determining the shortage, relied .....

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es involving unwarranted assumption. The finding is thus vitiated by an error of law." 6.2 The learned counsel also placed reliance on the decision of the Tribunal in the case of Kalvert Foods India Put. Ltd. vs. CCE, Mumbai reported in 2003 (152) ELT 131, wherein the Tribunal has held as under:- "10. It is well settled that the charge of clandestine removal/ manufacture of the goods by the assessee has to be established by the Department by producing cogent, convincing and tangible ev .....

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at the entire demand is barred by limitation. He further submitted that the extended period as envisaged under proviso to Section 11A(1) of the Central Excise Act, 1944 has been invoked on the ground that short found raw material has not been recorded in the account books/records maintained by the unit and dutiable goods have been cleared without issuing invoices etc. on the sole intention of evading duty. He also submitted that invoking the extended period is wrong because the entire raw tobacc .....

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he officers of the Revenue visited the unit of the appellant on 2.12.2004 and the entire facts including those explained by their manager were in the knowledge of the officers since then, but in spite of that the impugned show cause notice was issued on 6.12.2005 i.e. beyond the period of limitation of one year and therefore the entire demand is not sustainable being barred by limitation. In this context, the appellant relied upon the decision of this Tribunal in the case of Studio Line Interior .....

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