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Commissioner of Central Excise, Kanpur Versus M/s L. Kant Paper Mills Ltd., Shri Laxmi Kant Agarwal, Director, Shri Sanjay Agarwal, Proprietor, Shri Suresh Chhabaria, Proprietor, Shri Anil Agarwal, Proprietor

2017 (11) TMI 874 - CESTAT ALLAHABAD

Confiscation - raw material - finished goods - excess of raw material - Held that: - only 8908 Mtrs. of Grey Cloth were not entered in statutory records in comparison to the quantity declared by the Respondent in RG23A Part -1, but such excess of raw material were within the factory and the same was not liable for seizure /confiscation under Rule 25 of the Central Excise Rules, 2002. There is no evidence that such non accountal of goods still in the factory was with an intent to evade payment of .....

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se Act and Rules made thereunder to confiscate raw-materials. - The goods seized at the trading premises and godown of M/s Om Textiles & M/s Sagar Trading Co. were returned to M/s Om Textiles & M/s Sagar Trading Co. by the representatives of Revenue on 13/10/2003. Therefore, we accept the contentions raised by the ld. Counsel for the respondents in respect of this issue. - Appeal dismissed - decided against Revenue. - E/3602, 3603, 3604, 3605 & 3606/2006-EX[DB] - A/71328-71332/2017-EX[DB .....

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e that the respondents M/s L. Kant Paper Mills Ltd. were engaged in the manufacture of M. S. Ingots, Poster Paper & Media Paper & Processing of Man Made Fabrics. The manufacturing premises were inspected by the Central Excise Officers on 25/09/2003. On the basis of investigation a common Show Cause Notice 22/03/2004 was issued to all the respondents. The said Show Cause Notice included proposals for confiscation of 59.701 MT of M. S. Ingots valued at ₹ 6,56,711/-, 8040 kgs. of Post .....

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at the trading premises of M/s Om Textiles & M/s Sagar Trading situated at 55/67 B Raja Market, Kahu Kothi, Kanpur should not be confiscated under Rule 25 of the Central Excise Rules, 2002 and why Central Excise duty amounting to ₹ 1,35,888/- BED & ₹ 33,972/-AED on 1009 lumps of processed fabric seized at these premises and Central excise duty amounting to ₹ 1,84,135/- BED & ₹ 46,034/- AED on 250 bales containing 1316 pcs. of processed fabrics seized at the a .....

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t be demanded and recovered from M/s L. Kant Paper Mills Ltd. under Section 11A of the Central Excise Act, 1944. 5. 81 bales of grey fabrics valued at ₹ 7,13,840/- seized at the godown of M/s Calcutta Express Transport Service situated at 133/213-A, T.P. Nagar, Kanpur and shifted to the factory premises i.e. M/s L. Kant Paper Mills Ltd., Rania, Kanpur Dehat for sale custody, should not be confiscated under Rule 25 of the Central Excise Rules, 2002. 6. Penalty should not be imposed upon the .....

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1962, as made applicable to Central Excise matters vide Notification No. 68/63-CE dated 04/05/1963 issued under Section 12 of the Central Excise Act, 1944. 3. The issue was adjudicated through Order-in-Original No. 05/Joint Commissioner/2006 dated 20/02/2006 The order of the Original Authority is reproduced below:- 1) I confiscate the 59.701 MT of Ingots valued at ₹ 6,56,711/-, 8040 kgs. Paper valued at ₹ 1,04,520/- & 3426 sqms. of Processed Fabrics valued at ₹ 54,816/- und .....

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6 pcs. of Processed Fabrics valued at ₹ 23,01,684/- & 1009 lumps of Processed Fabrics valued at ₹ 16,98,600/- under Rule 25 of the Central Excise Rules, 2002. However, I given an option to redeem the same on payment of redemption fine of ₹ 4,60,000/- & ₹ 3,40,000/- respectively. b) Further I also confirm the demand of duty amounting to ₹ 1,35,888/- BED + ₹ 33,972/-AED on 1009 lumps of Processed Fabrics & ₹ 1,84,135/- BED + ₹ 46,034/- AE .....

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otal ₹ 17,956/-) on M/s L. Kant Paper Mills. Ltd. and the same is to be recovered from them under Section 11A of the Central Excise Act, 1944. 5) I confiscate the 81 bales of Grey Fabrics valued at ₹ 7,13,840/- under Rule 25 of the Central Excise Rules, 2002 with an option to redeem the same on payment of redemption fine of ₹ 1,42,000/-. 6) I imposed penalty of ₹ 4,17,985/- on M/s L. Kant Paper Mills Ltd. under Rule 25 of the Central Excise Rules, 2002. 7) I confiscated t .....

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26 of the Central Excise Rules, 2002. 10) I impose a penalty of ₹ 25,000/- on Shri Sanjay Agarwal, Proprietor of M/s Om Textiles under Rule 26 of the Central Excise Rules, 2002. 11) I impose a penalty of ₹ 25,000/- on Shri Suresh Chhabariya, Proprietor of M/s Sagar Trading Co. under Rule 26 of the Central Excise Rules, 2002. 4. Being aggrieved by the said order, the respondents preferred appeals before Commissioner (Appeals). The ld. Commissioner (Appeals) decided the said appeals th .....

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sioner (Appeals) also reduced the redemption fine on Grey Fabrics found at the godown of the M/s Calcutta Express Transport Service and ordered to release cash of ₹ 7 lakhs seized from the residential premises of Shri Anil Agarwal. Being aggrieved by the said order, the Revenue preferred present appeals before this Tribunal. 5. The grounds of appeal preferred by Revenue are as follows:- 1. Commissioner (Appeals) has wrongly observed that the adjudication order dated 20/02/2006 was passed i .....

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submitted the defence reply nor attended the personal hearing despite repeated reminders as is evident by O-I-O No. 05/JC/2006 dated 20/02/2006. This aspect has been completely overlooked in the appeal proceedings while making the aforesaid observation. 2. Confiscation of Grey Fabrics in the factory premises was vacated in the appeal proceedings on the grounds that the same was accounted in the RG 23 A Part-I. At this juncture it is important to add that the discrepancy in the stock of the raw m .....

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said RG 23 A part-I register clearly shows that old consignments of Grey Fabrics were entered in RG 23 A part-I during the month of September in order to reduce the quantity of unaccounted Grey Fabrics. At this juncture it is also important to take cognizance of the statement of Shri S. K. Yadav tendered on 13/10/2003 wherein he confessed that the entries in the said RG 23 A part-I register was manipulated in order to justify the genuineness of the major portion of the stock of Grey Fabrics. It .....

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context it is stated that the search was conducted on 25/09/2003 and the said finished fabrics were seized in the following circumstances: (a) There were no supporting documents on the day of search i.e. 25/09/2003 in respect of the finished fabrics lying at the common trading premises of the two parties i.e. at 55/67 B, Raja Market, Kahu Kothi, Kanpur. (b) There were no supporting documents on the day of search i.e. 25/09/2003 in respect of the finished fabrics lying at the godown of M/s Om Te .....

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ics mainly from M/s L. Kant Paper Mills Ltd., Kanpur. He further added that they were receiving fabrics on payment of duty and also without payment of duty. From the statement dated 13/10/2003, 09/03/2004 & 25/09/2003 of Shri Sanjay Agarwal, Shri Suresh Chhabaria, it was evident that all the seized goods were not supported by any duty paying documents and were manufactured by M/s L. Kant Paper Mills Ltd., Kanpur. Hence the said stocks were rightly confiscated in the O-I-O. Such evidences wer .....

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proceedings citing reason of absence of the evidence that the said cash was sale proceeds of clandestinely removed excisable goods. At this juncture it is important to add that the said cash seized from the residence of Shri Anil Agarwal who was also present on the spot and he could not explain the said cash on the spot. Shri Anil Agarwal explained that ₹ 3 lakhs was withdrawn from the bank but it was found that the denomination of notes were different that the one given by the bank. Hence .....

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Agarwal, Sanjay Agarwal, Suresh Chhabaria and reduction of penalty on Shri Laxmi Kant Agarwal also does not appear proper because the vacation of confiscation of the excisable goods of Shri Sanjay Agarwal & Shri Suresh Chhabaria were improper. Further the vacation of the confiscation of seized cash was also improper. Hence, setting aside of the penalty on the aforesaid grounds is not proper. As regards the reduction of penalty of Shri Laxmi Kant Agarwal is concerned, he was the key person w .....

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ows:- 1. Refutation of Ground No. 1 and 2 of Revenue Appeal i) In respect of Ground No. 1 and 2 taken by the Revenue, it is submitted that in any view of the matter Raw material and Finished Goods within the factory cannot be held liable for seizer or confiscation. Reliance is placed on Final Order No. A/70434-70438/2017-EX[DB] dated 12.04.2017 in the case of Kashi Laminators Pvt. Ltd. & others ii) That only 8908 Mtrs. of Grey Cloth were not entered in statutory records in comparison to the .....

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of Grey Cloth has been ascertained on the basis of figure provided by the Respondent and no actual verification was done by the investigation. This fact has also been taken note in Adjudication Order, vide Para 4 of O-I-O. 2. Refutation of Ground No. 3 i) In respect of Ground No. 3, it is submitted that Commissioner Appeal has rightly held that Revenue could not correlate the goods with M/s L. Kant Paper Mills. Moreover, Ownership of goods had been admitted by the Revenue by way of provisionall .....

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nt Paper Mills Ltd. on cover of invoices or from open market supported with the Bills & Ledgers. Subsequently the goods were provisionally released to M/s Om Textiles & M/s Sagar Trading Co. vide Order dated 23.02.2004. In this regard, it is strange to observe that once the goods have been seized from the premises of M/s Om Textiles & M/s Sagar Trading Co. and have been provisionally released to them accepting their ownership, no Show Cause Notice has been issued to M/s Om Textiles & .....

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f the circumstances, I hold that in absence of any proof that the material was non-duty paid and in absence of any Show Cause Notice to M/s Om Textiles & M/s Sagar Trading Co. neither the goods seized from the godown / trading premises of M/s Om Textiles & M/s Sagar Trading Co. can be ordered to be confiscated nor the Appellant No. 1 can be held liable to duty on said 'goods & consequent equivalent penalty'. Accordingly, I set aside the confiscation of the goods seized from t .....

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arranted in the matter. Moreover, it is a settled principle of law that there are no estoppels against the law. ii) That it is also well settled law that that though an admission is extremely important piece of evidence, it cannot be said to be conclusive and it is open to the person who has made the admission to show that it is incorrect. Reliance is placed on the decision of Hon'ble High Court, Delhi in the case of Dhingra Metal Works reported in 2010-TIOL-693-HC-DEL-IT. iii) Although, Res .....

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lyzing the same. As such the Learned Commissioner Appeals has rightly set aside the confiscation. ii) That on the basis of assumption presumption and surmises the alleged cash has been seized and held liable for confiscation by the Adjudicating Authority without discharging the Burdon heavily cast upon the Revenue. 5. Refutation of Ground No. 6 of Revenue Appeal. i) That in absence of any contumacious conduct or deliberate violation of statute the penalty has rightly been set aside by the Learne .....

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