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2016 (7) TMI 891 - CESTAT ALLAHABAD

2016 (7) TMI 891 - CESTAT ALLAHABAD - TMI - Validity of Confiscation of material under Rule 25 of CER when the appellant is paying duty under Section 3A of the Central Excise Act, read with Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008. - Held that:- The appellant was obligated to explain the licit source of purchase of the packing materials lying in stock. It is evident that the appellant have not made any attempt to explain before the Courts below nor .....

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cise Rules, 2002, is concerned, I set aside the same as the same have been imposed without any notice to the appellant and/or opportunity of hearing. - Decided partly in favor of assessee. - Excise Appeal No. 55427/14 - Final Order No. 70179/2016 - Dated:- 9-5-2016 - Mr. Anil Choudhary, Member (Judicial) Shri Rupesh Kumar & Shri Aditya Kumar, both Advocates for the Appellant Shri Pawan Kumar Singh, Supdt. (A.R.) for the Respondent ORDER The appellant, being a manufacturer of pan masala and g .....

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ts including that of this appellant, M/s K.P. Pan Products Pvt. Ltd., Lucknow and one M/s Kanan Graphics (P) Ltd., Kanpur. The physical stock of raw material/inputs was taken at the time of search in the premises of the appellant. A total stock of 13,440.55 Kgs. of Rajshree brand laminates and outers carry bags and laminated pouches were found in the factory. As there was no responsible person present in the factory to explain the licit source of purchase and entry in the stock records, the stoc .....

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e the authority to explain the licit purchase of packing material. Under the reasonable belief that the detained goods are liable for confiscation, the same was seized on 21/8/09. Show cause notice dated 22/12/2009, was issued stating therein that the Director of the appellant, Mr. Manish Agarwal, have failed to appear and to explain the licit source of purchase of the packing materials valued at ₹ 17,35,244/- and accordingly, the same appears to be liable for confiscation under Rule 25 of .....

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s Pvt. Ltd., Kanpur in the name of BKG Enterprises, Kanpur and after receipt of the material by the appellant, the said invoices were returned and the same were destroyed by M/s Vinay Wires & Poly Products Pvt. Ltd., Kanpur and/or used for issue of duplicate invoices under the same invoice numbers for removal of granules as such. Further, it appeared to Revenue that the whole stock detained and seized, valued at ₹ 17,35,244/- is liable for confiscation being packing materials which wer .....

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(Capacity Determination and Collection of Duty) Rules, 2008. It was further contended that provisions of Rule 25 of CCR are not applicable in the appellant s case since Rule 17 (1) of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008, contains the provision for confiscation. Further, the Rule 18 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008, clarifies that the provisions of the Act & Central Excise Rules shall .....

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n of a warehouse or a registered dealer of the product concerned. It was also further contended that Rule 25 relates to output or the goods manufactured and the same is not attracted on inputs of the appellant. Further, it is contended that the revenue have not brought on record to prove that he goods seized have actually been manufactured and cleared by M/s Vinay Wires & Poly Products Pvt. Ltd. and further the same have been cleared without payment of duty. The whole case is made only on pr .....

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estigation by DGCEI, show cause notice have been issued to M/s Vinay Wires & Poly Products Pvt. Ltd. and in that show cause notice, this appellant has not been made a party or implicated by the Revenue. In this view of the matter also, no case is made out against the appellant. The SCN was adjudicated vide OIO dated 31/1/13conforming the proposed confiscation of the packing materials valued at ₹ 17,35,244/- granting option to redeem on payment of redemption fine being 25% of the value .....

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Vinay Wires & Poly Products Pvt. Ltd.. It was further observed that after receipt of the raw materials by the appellant, the invoices were returned and the same were destroyed by M/s Vinay wires & Poly Products Pvt. Ltd. and they generated the same invoice number either for unaccounted sale or showing cash sale of granules for stock adjustment of granules, the raw materials of laminates. Further, adverse view was taken in view of non-cooperation of the appellant and its Directors in the .....

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e before this Tribunal is - whether penalty have been rightly imposed under Rule 26 by Id. Commissioner (Appeals) and whether when penalty under Rule 25 have been held to be unsustainable, whether the confiscation of the packing materials have rightly been upheld. 6.1 The Id. Counsel for the appellant has reiterated the grounds raised before the court below and further stated that it is evident from Annexure A-SCN that the packing materials detained and subsequently seized includes both the mate .....

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and is only based on presumption of clandestine purchase by the appellant. It is further contended that Id. Commissioner (Appeals) in observing that as the appellants have not given any explanation of the stock of packing materials, the same has been procured from M/s Vinay Wires & Poly Products Pvt. Ltd. without invoices. It is further contended that as the records had been resumed by the Department it was not possible for the appellant to produce the documents relating to the licit purchas .....

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ustice. As the findings in the case of M/s Vinay Wires & Poly Products Pvt. Ltd. will have a direct bearing on the adjudication in the case of this appellant. It is further contended that the case of revenue is based on computer printout alleged to have been taken out from the computer of one - M/s Anand Sales, Kanpur, whose premises was also searched on 30/6/09 along with M/s Vinay Wires & Poly Products Pvt. Ltd.. On the basis of the print outs, a number of show cause notices were issue .....

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on the rulings in the cases of (i) Kashi Laminators (P) Ltd. Vs. Commr. of Central Excise, Lucknow : 2014 (314) ELT 327 (Tri.-Del.), wherein it was held that for excess stock of inputs, penalty under Rule 25 was not sustainable ; (ii) A. Tajudeen Vs. Union of India : 2015 (317) ELT 177 (SC), wherein it was held that the retracted statement is not reliable, without independent corroboration. 7. The Id. AR for revenue relies on the impugned order. He further states that the appellant being a regis .....

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that statement recorded by Revenue Officer is admissible in evidences as the same is not recorded before the police and not hit by Sections 34 or 30 of the Indian Evidence Act, 1872. Moreso, as the contentions regarding coercion and threat had been considered and rejected. 8. Having considered the rival contentions, in view of the provisions of Rule 25 read with Rule 10 of CER, it is evident that the appellant being a manufacturer and a registered dealer, is required to maintain proper account .....

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