TMI Blog2017 (3) TMI 987X X X X Extracts X X X X X X X X Extracts X X X X ..... tobacco (Orcha) is required and accordingly, the appellant’s contention is that no duty demand can be made on the basis of the shortage of 141033 kgs. of unmanufactured hookah tobacco and the duty demand based on the shortage of 725 kgs. of Orcha tobacco would be only about around ₹ 15,000/-. Held that: - We find that the demand for excise duty stands confirmed on the basis of allegation that the shortage of unmanufactured Hookah Tobacco has been diverted for manufacture of spit tobacco. Contradictory claims have been made by both sides before us, as to whether spit tobacco can be made using Hookah tobacco. The entire demand hinges on this fact. On going through the impugned order, we find that the ld. Adjudicating Authority have not dealt with this plea made by the appellant in detail. We are of the view that unless this fact is settled either by means of documentary evidence or by means of expert or by technical literature opinion, the demand becomes questionable. During the course of search on 8/6/2009 at the premises of M/s Mittal Trading company and godown of M/s Praveen Tobacco at Sonipat on 12.06.2009, samples of unmanufactured Hookah Tobacco were drawn for testi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Tobacco at G.T. Karnal Road, Industrial Area, Delhi and the premises of M/s. Mittal Trading Company at Village Sanoth, Bawana Road, Delhi were searched, in the course of which, the stock of finished goods and raw material was checked. In the premises of M/s. Praveen Tobacco Co. Ltd., shortage of 74,988 kgs. of unmanufactured hookah tobacco was found. Besides, there was shortage of 725 kgs. of orchha leaves, which are used for manufacture of spit tobacco. In the premises of M/s. Mittal Trading Company, a shortage of 66045 kgs. of unmanufactured hookah tobacco was found. According to the appellant, in the course of search on 8.6.2009 of the premises of M/s. Mittal Trading Company and godown of M/s. Praveen Tobacco at Rai, Sonepat on 12.06.2009, samples of unmanufactured hookah tobacco were taken for testing but neither copies of the search panchnama of these places has been made available nor the chemical test reports of the samples of unmanufactured hookah tobacco have been given to the appellants. 1.2 The allegation against the main appellant, M/s. Praveen Tobacco Company Ltd. is that 74988 kgs. of unmanufactured hookah tobacco and 725 kgs. of leaves tobacco (Orchha) was fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esent appeals to the Tribunal. 2. With the above background, we heard Shri J.P. Kaushik, advocate for the appellants and Sh. GR singh, DR for the respondent. 3. Shri J.P. Kaushik, Advocate, ld. Counsel for the appellants pleaded that- (a) the impugned order has been passed without application of mind inasmuch as while the last hearing in this matter was held on 27.02.2013, the Commissioner s order running into 80 pages and with fair copy signed has been issued on 28.02.2013, (b) the stock taking reports in respect of the stock of M/s. Mittal Trading Company on 8.6.2009 and stocking taking of the godown of M/s. Praveen Tobacco at Plot No.1277, Ph-V, HSIDC, Rai, Sonepat on 12.06.2009 and also the test reports of the samples of unmanufactured hookah tobacco drawn during stock taking had not been given to the appellants and even if the same had not been relied upon, copies of the stock taking reports and the test reports must be supplied; (c) if the stock taking done in the premises of M/s. Mittal Trading on 8.6.2009 is taken into account, after adjustments of purchase and sale, there would not be any shortage of unmanufactured hookah tobacco on 29.05.2009 in the premise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leged that this huge quantity of raw tobacco was used by M/s. Praveen Tobacco for manufacture of unmanufactured Praveen Spit Tobacco. He pleaded that the allegation of the Department is that 141033 kgs. of unmanufactured hookah tobacco found short in the premises of Praveen Tobacco and Mittal Trading had been used in the manufacture of Praveen Chhap Tobacco. But though a plea specifically was made before the Commissioner that unmanufactured Hookah tobacco consisting of dust, rawa, tobacco, stems, kampala, nus (veins of the leaf), etc. cannot be used for manufacture of Spit /Chewing tobacco but still the Commissioner, without considering this plea, has confirmed the demand by treating the unmanufactured hookah tobacco as cut tobacco. He, therefore, pleaded that duty demand of ₹ 1,44,55,063/- confirmed against the appellant is without any basis and, therefore, there would also be no case for imposition of penalty on Shri Praveen Kumar, Directors and Rajender Kumar Mittal. 4. Shri G.R. Singh, ld. Departmental Representative defended the impugned order by reiterating the findings of the Commissioner. 4.1 The order running into 80 pages was passed on 28.02.2013 after the hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y at Narela. There was no invoice accompanying the goods and according to the Driver, he was bringing two such consignments every day. 4.6 Unmanufactured hookah tobacco referred to in para-24 of the show cause notice was found short in the premises of Praveen Tobacco and Mittal Trading and is same as unmanufactured cut tobacco and can be used for manufacture of spit chewing tobacco (Khaini). This is clear from the statement dated 7.6.2011 of Shri Krishna Kumar Agarwal of M/s. Krishna Kumar Agarwal and Brothers. Shri K.K. Agarwal is a supplier of cut tobacco. Shri G.R. Singh referred to para 21 of the show cause notice and pleaded that from the scrutiny of the Sale Purchase Orders of the Praveen Tobacco Company, it was found that while M/s. Praveen Tobacco showed the rate of unmanufactured hookah tobacco as ₹ 120/- per kg., all the purchase invoices for the financial year 2009-2010 show the rate of Orcha Tobacco between ₹ 42/- per kg. to ₹ 46/- per kg. Therefore, their plea that unmanufactured hookah tobacco is inferior quality tobacco, which cannot be used for manufacture of chewing tobacco, is false. 4.7 The unmanufactured hookah tobacco was being used by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recovered. From the premises of their dealers, i.e. M/s. Tarun Goel Tobacco House, M/s. Brijwasi General Store, M/s. Ashok Kumar Company, M/s. Chander Kumar Soni Store, certain quantity of unaccounted Praveen Chhap chewing tobacco had been recovered which had been placed under seizure. From the premises of these dealers, certain documents had been recovered, which indicated receipt of the Praveen Chhap tobacco from Praveen Tobacco Company in respect of which there were no central excise invoices. According to the Department, this indicates that M/s. Praveen Tobacco Company were indulging in evasion of duty. The duty demand in the present case, as mentioned in para 24 and 25 of the show cause notice, had been determined on the basis of the assumption that 74988 kgs.of unmanufactured hookah tobacco and 725 kgs. of Orcha Tobacco, which are found short in the premises of M/s. Praveen Tobacco on 29.05.2009 and 66045 kgs. of unmanufactured hookah tobacco which was found short in the premises of M/s. Mittal Trading Company, has been used for manufacture of Praveen Chhhap spit tobacco (6 gms. pouches) of MRP of 1.80/- per pouch. Accordingly, the Department has alleged that 141758 kgs. of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 33 kgs. of unmanufactured hookah tobacco and the duty demand based on the shortage of 725 kgs. of Orcha tobacco would be only about around ₹ 15,000/- . 7.1 We find that on this point, no finding has been given by the Commissioner. He has simply concluded that the demand is based on the shortage of raw cut tobacco . In our view, para-24 of the show cause notice itself mentions, the shortage of about 1,41,033 kgs. of unmanufactured hookah tobacco at the premises of Praveen Tobacco Company and M/s. Mittal Trading Company and shortage of 725 kgs. of Orcha Tobacco in the premises of M/s. Praveen Tobacco Company and the Commissioner s finding that the entire shortage is in respect of cut tobacco, prima facie, does not appear to be correct. Moreover, the Commissioner has not taken into consideration the appellant s plea that if the result of the stock taking on 8.6.2009 in the premises of M/s. Mittal Trading Company and the result of the stock taking at godown of M/s. Praveen Tobacco at Village Rai, District-Sonipat on 12.06.2009 is taken into account, there would be no shortage in the stock of unmanufactured hookah tobacco, has not been considered. 8. Against the argument of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany and godown of M/s Praveen Tobacco at Sonipat on 12.06.2009, samples of unmanufactured Hookah Tobacco were drawn for testing. The relevant test reports have not been made available to the appellant. We are of the view if such test reports are available, the same may throw light on the question, whether such unmanufactured Hookah Tobacco can be used for making spit Tobacco. 13. As explained in the above paragraphs, we note that the impugned order has not discussed, some of the serious arguments raised by the appellant, even though these were made before the adjudicating authority. We also note that these arguments are central to the demand of Central Excise duty raised in the Show Cause Notice. 14. In view of the above, the case is remanded to the Original Authority for denovo decision, after giving specific findings on the above points raised by the appellant. No doubt, before finalizing the case, the adjudicating authority is directed to give an effective opportunity of hearing to the appellants to plead their arguments. Additional evidences, if necessary, may be admitted, as per law. [ Pronounced in the open court on 28.02.2017 ] - - TaxTMI - TMITax - Central E ..... X X X X Extracts X X X X X X X X Extracts X X X X
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