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2016 (3) TMI 667 - CESTAT NEW DELHI

2016 (3) TMI 667 - CESTAT NEW DELHI - 2016 (334) E.L.T. 675 (Tri. - Del.) - Clandestine manufacture and clearance of dutiable gutka - duty demand against the main appellant - Held that:- Even the statements given are not giving any categorical details of the quantum of manufacture and clearance of non-duty paid items. Annexure-A to the show cause notice which stands confirmed in toto, cannot be considered as an admissible way of calculating duty liability under any provisions of law. We find tha .....

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above analysis and findings, the appeals filed by the main appellant and others are allowed except to an extent of duty liability of ₹ 1,73,043/- and equal amount of penalty - Decided partly in favour of assessee - Excise Appeals Nos.1767, 1814 and 1815 of 2007-EX(DB) - Final Order Nos.50236-50238/2016 - Dated:- 19-2-2016 - SHRI S.K. MOHANTY, MEMBER (JUDICIAL) AND SHRI B. RAVICHANDRAN, MEMBER (TECHNICAL) For the Petitioner : Shri K.K. Anand, Advocate For the Respondent : Shri R.K. Grover, .....

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gutka by the main appellant. (M/s. PNG Auromatics). On conclusion of the investigation, show cause notice dated 28.05.2004 was issued to demand central excise duty of ₹ 1,31,51,268/-. Penalties under various provisions of Central Excise Act were proposed on various persons. After due process, the impugned order was passed. The ld. Commissioner confirmed the duty demand, imposed equal amount of penalty and further penalties on various individuals. He also ordered confiscation of seized gutk .....

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record to indicate that the appellant had manufactured such huge quantities of gutka. No buyers were at all identified. The demand as well as its confirmation is based on the certain fictional calculation shown as most reasonable estimate. There is no authority in law to have any demand raised or confirmed without a proper quantification. (ii) The reasoning followed by the Original Authority is that the appellants failed to provide details of clandestine removal and hence, a reasonable estimate .....

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nal Authority that two of the employees are not available for cross-examination as the letters sent to them have returned un-delivered. However, it is seen that two of the three witnesses, whose cross-examination could not be held on 24.01.2007 have participated in the adjudication proceedings. (iv) The retractions made by the persons, who gave earlier statements have not been considered and analysed by the Adjudicating Authority. (v) Regarding procurement of packing materials from M/s. Sandeep .....

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ers through transport companies viz. Harsh Transport Company and G.G. Transport Company, but no documents of such transport could be recovered or produced. Thus, the whole case is based on the statement and no evidence of corroboration. The clearance of 100 consignments without payment of duty is pure assumption with no evidence. (vi) Various case laws are relied upon to reiterate that the present case of clandestine manufacture and clearance could not be sustained in the absence of any tangible .....

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tured and cleared the goods without payment of duty. There were 24 workers and 9 machines. It has also been admitted that they are using the name of M/s.S.R. Packers for clearing the goods. They destroyed these bills after clearance. It is admitted by the proprietor that the same number is used in two bills and they used 100 such bills to effect clearance without payment of duty. The statements of Proprietor and Manager of the appellant company will clearly establish that the appellants were eng .....

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rity in demanding and confirming duty against the appellant. 7. We have heard both the sides and examined the appeal records. 8. The point for decision is the sustainability of duty demand against the main appellant on the charge of clandestine manufacture and clearance of dutiable gutka. It will be proper to start the analysis from the method of quantification of the duty presently confirmed by the impugned order. We have perused Annexure-A to the show cause notice, which is a chart showing dut .....

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ce and the same is multiplied by 100 bills. Thus, a clandestine removal without payment of duty amounting to ₹ 1,29,78,225/- has been arrived at. To this, the duty liability on Bill No.51 dated 9.10.2002 and Bill No.51 dated 10.10.2002 (seized goods) were added to arrive at the total demand of ₹ 1,31,51,268/-. The said amount has been confirmed against the appellant. Without going into any detailed analysis of other aspects of the case, a preliminary look at the contents of the above .....

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supportive evidence, reason or logic or legal principle can stand scrutiny as per law. 9. The reason followed for above mentioned summary calculation of duty demand is indicated by the Adjudicating Authority as the party had failed to provide the details of goods clandestinely removed by them . Hence, he observed that the only option left with the Department is to calculate the duty evaded on the basis of admissible statements coupled with the most reasonable estimate techniques. The reasoning .....

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nation. Hence, the question of using admissible statements to arrive at most reasonable estimate of duty demand is itself not sustainable. There is no details of procurement of raw materials (except statement of the Director of Sandeep Laminators) or details of clearance to various buyers, money payment, etc. Even the statement of one of the suppliers of raw materials, which was later retracted, and the quantity mentioned in the earlier statement is no way attributable to such a huge clandestine .....

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bills would have been used for clearance without payment of duty, the whole calculation of duty demand has been made. 10. As already mentioned, such admission even taken as true reflection of the events does not throw light on whether 25 bags or 40 bags of gutka covered by each bill; whether JEET or ANDAZ brand was cleared and with what price; how many such unaccounted bills were cleared on various dates. Even if these details were available, they require at least minimum corroboration by other .....

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rmull - 1983 (13) ELT 1546 (SC) to the effect that the Department need not prove the case with mathematical precision. He further added that what is required is to accept a degree of probability and there is no need to produce threadbare evidences in all cases. We find that this reasoning is mis-conceived and without any legal merit. The method adopted for calculating duty and the basis of such calculation will not fall under any reasonable basis. The question of preponderance of probability als .....

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o bills to 100 such bills, without semblance of evidence will amount to arbitrary action not sustainable under law. 11. We have also perused the various case laws referred to by the appellants. In Kuber Tobacco Products Ltd. - 2013 (290) ELT 545 (Tribunal-Delhi), the Tribunal held that the requirement is cogent evidence of unaccounted receipt and consumption of basic raw materials and packing materials required for manufacturing alleged quantity of unaccounted finished goods. The decision of the .....

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