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M/s. P & J Auromatics, Shri Sandeep Kumar Mishra, Shri Rajesh Aggarwal @ Rajesh Goyal Versus CCE, Delhi-II

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 that except for the seized quantity of gutka along with evidence of parallel cl .....

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hers 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, DR ORDER PER B. RAVICHANDRAN: These three appeals which are filed against o .....

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estigation, 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 gutka and the motor vehicle and allowed them to be redeemed on payment of fines. .....

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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 is being made to confirm the demand. When there is no evidence to clandesti .....

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ion 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 Laminators, it is clear that the Director of the Company categorically state .....

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ort 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 corroborative evidence. 4. Ld. AR supported the findings of the Original Au .....

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nd 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 engaged in clandestine manufacture and clearance. Regarding the quantum of duty .....

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d 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 duty calculation for the period July, 2002 to 10.10.2002 payable by the main ap .....

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out 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 Annexure-A will make it clear that the whole demand is simply made on ficti .....

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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 adopted as above by the Original Authority is strange, to say the least. It .....

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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 clearance. We find that the whole case against the appellant started with r .....

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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 evidences. We are unable to appreciate the most reasonable estimate techniq .....

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rove 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 also does not arise in this case. The suspicion howsoever strong cannot substit .....

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