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TMI Blog2018 (2) TMI 1110X X X X Extracts X X X X X X X X Extracts X X X X ..... ged in the manufacture of Pan Masala containing Tobacco commonly known as Gutkha under the brand name Dilbagh . The goods manufactured were classifiable under Tariff Item No.24039990. The factory premises of M/s.Som Aromatics was inspected by officers of Central Excise on 27.08.2007. Officers physically verified the stock of finished goods as well as raw materials and also work in progress. Officers found some loose slips. It appeared to the officers of Central Excise department that said loose slips indicated clearances of 820 bags of Dilbagh Gutkha. It also appeared to them that said goods were removed without payment of duty. Further officers also collected gate passes issued by Shri V.K.Bansal, Authorized Signatory. The gate passes recovered from factory premises during the said search by the officers were bearing No.146 dated 13.08.2007 to 157 dated 24.08.2007. On 27.08.2007, statements of various persons were recorded such as Shri Vinod Kr. Bansal, Manager and Authorized Signatory, Shri Atul Kr. Agarwal, partner of the firm. Simultaneously searches were also conducted at a few premises such as M/s.Bimal Kr. & Bros., Moradabad. Statement of Shri Bimal Kr., partner of M/s.Bimal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tol Production Ass. Value Duty E.Coss Totol Duty 1 2 3 4 5 6 7 8 (3x6x7) 9 10 11 12 1 Des'06 81 6800 26.25 259 4800 100699200 50349600 33230736 995922.08 34227658.08 2 Jan'07 81 12000 26.25 457 4800 177681600 88840800 58634928 1759047.84 60393975.84 3 Feb'07 81 12000 26.25 457 4800 177681600 8840800 58634928 1759047.84 60393975.84 4 Mar'07 81 9000 26.25 343 4800 133358400 66679200 44008272 1320248.16 45328520.16 5 Apr'07 81 8400 26.25 320 4800 124416000 62208000 41057280 1231718.4 42288998.4 6 May'07 81 11500 26.25 438 4800 170294400 85147200 56197152 1685914.56 57883066.56 7 Jun'07 81 8400 26.25 320 4800 124416000 62208000 41057280 1231718.4 42288998.4 8 Jul'07 81 14000 26.25 533 4800 207230400 103815200 68386032 2051580.96 70437612.96 9 Aug'07 81 15000 26.25 571 4800 222004800 111002400 73261584 2197847.52 75459431.52 Totol 729 97100 3698 43200 1437782400 718891200 474468192 14234045.8 488702237.8 Totol Duty Payable 488702238 Duty Already (To Be Paid Appropriated) ANNEXURE-"B" DETAILS OF PRODUCTION OCTOBER-2006 & NOVEMB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tics stored the raw materials and the space occupied by M/s.Som Aromatics was sufficient for storage of such huge quantities of raw materials. He has also recorded that neither the documents in the form of private records, nor deficiency during the stock challenges was noticed by the officers to the effect that M/s. Som Aromatics had purchased the raw materials in excess of recorded balances. Therefore he has come to the conclusion that the investigation did not reveal illicit procurement of raw materials, transporation of said raw materials to the factory premises, storage and storage related documents at the factory premises in respect of such unrecorded procured raw material and payment details in cash or otherwise for such raw materials. He has further recorded that neither the excess raw materials nor the excess finished goods were found in the store of the factory of M/s.Som Aromatics at the time of checking. Reliance was placed on the decision of this Tribunal in the case of Vira Badran v. CCE, Chennai reported at 2005 (182) ELT 389 (Tri.-Chennai). He has held that the said show cause notice dated 21.01.2008 was presumptive. He has further held that there was no evidence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... romatics, Shri Atul Agarwal, Shri V.K.Bansal and Shri Nissar Hussain have filed present appeals. 5. The grounds of appeal filed by Revenue are as follows:- (i) The case of the department was already established on the basis of the statements and records. However, if the adjudicating authority were to give opportunity of cross examination to the appellant he has not given any reason why such opportunity was also not given to the Department. This appears to be so in the light of para 10 of Hon ble CESTAT s Final Order No.198-201/2010 EX(DB) dated 07.04.2010 that it will be in the fairness of the things for both the parties to allow the appellants to cross examine Shri Sharma. It is evident that the Hon ble CESTAT had held to be in the fairness of the things for both the parties to cross examine SHRI Sharma. (ii) During the course of search it was found that three DG sets were found installed in the factory premises out of which two DG sets were of 380 KVA while the third was of 275 KVA capacity. On inquiry it was revealed that the unit had a domestic Electricity connection and the manufacturing in the factory ran on the DG sets only and that fuel for the DG sets was purchased fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... traction and afterthought the adjudicating authority did not accept all the above facts put forward by the department and accepted the retracted statement of Shri Sharma despite the fact he had earlier stated categorically that Som Aromatics was one of the few parties who purchased HSD in bulk on credit and which was substantiated and corroborated by the Ledger. It was a grossly belated retraction against his own categorical records. Further, nowhere has Shri Sharma stated that the entries in his ledger folio in respect of M/s.Som Aromatics were false. There is no denial during cross examination that the entries in the Ledger folio in respect of M/s.som Aromatics were incorrect. Al he has stated is that he was engaged in the business of selling petrol, diesel and mobile oil and a number of customers came to his petrol pump to purchase the diesel in small quantity i.e. in drums and cans etc. He further stated that the sale of the entire quantity of diesel was shown in his accounts in the name of 2-3 persons only at the end of the day because it was not possible for him to show it in the name of all the small customers and he could not say about the places where the diesel was taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DG set of 380 KVA was verified in the presence of Shri V.K.Bansal, Manager and two independent witnesses and the per hour consumption was found to be 26.25 Lts. Per Hr. The proceedings were duly recorded under panchnama dated 31.10.2007. Similarly the consumption of HSD in 275 KVA DG set was verified on 02.11.2007 and was found to be 39.34 Ltrs. Per Hr. The fact was also recorded in the panchnama bearing the signatures of all the three parties namely the officers, the Manager of the party and the independent witnesses indicating therein that the verification was done to the complete satisfaction of the party as well as the witnesses. The adjudicating authority has ignored the consumption of HSD physically verified in presence of witnesses and party at that point of time, nor has adduced any credible reasons for ignoring the same while accepting the consumption as brought out in the affidavits filed by the party wherein they had taken an oath that the consumption of 380 KVA D.G. Set was taken as 26.25 Litres per hour by the officers while it was measured 78 litres per hour at that time. (viii) A diary had been resumed from M/s.Montage Enterprises, C20, 21 & 22, Sector 57, Noida, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpugned order. 6. Heard Shri Rajeev Ranjan (Joint commissioner)(AR) AND Shri Pawan Kumar Singh (Supdt.)(AR) on behalf of the Revenue, who has presented the said grounds as scripted above. He has also submitted that the period of show cause notice is prior to the issue of Notification under section 3A of Central Excise Act, 1944 notifying Gutkha as notified goods. 7. Heard Dr.Seema Jain (Advocate) and Shri Abhishek Srivastava (Advocate) on behalf of other appellants. They brought our attention to the said Annexure A and Annexure B to the show cause notice through which the quantification of demand was arrived at. They have submitted that the entire show cause notice is based on the presumption that for running of one DG set for one hour total high speed diesel required in litres was 26.25. Further each machine per hour produces 4800 pouches of Gutkha. Further there was another presumption that the appellant was running of 81 machines continuously. Further on the basis of inadmissible evidence, the quantity of high speed diesel allegedly consumed by the appellant for various months was stated in column 4 of the said Annexure A . On the basis of presumption of per hour consumption o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime. Further to run 80 machines 120 labourers were required and Revenue has not brought any evidence to show deployment of 120 labourers. She further submitted that there were no documents of transportation in respect of such huge quantity of HSD to the premises of M/s.Som Aromatics and that there was no evidence of payment of freight for transportation of HSD. Proprietor of M/s.Sharma Filling Station, in his cross-examination on 13.12.2011 stated that entire sale of diesel was shown in the account of 2 or 3 persons at the end of the day because it is not possible to show it in the name of all customers. She further submitted that the ledger of fuel stations and Bill books were never made available to the appellants and partner of M/s.Som Aromatics was never confronted with the so called evidence of sale of such huge quantity of HSD of fuel station to M/s. Som Aromatics and therefore evidence on the basis of which such huge quantity of HSD presumed to have been used by M/s.Som Aromatics as reflected in Annexure A is a third party evidence and therefore the same is not admissible in view of the provisions of Evidence Act as held by Hon ble Delhi High Court in the case of L.K. Advani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the demand have not been contested. 8. Diary of M/s.Montage Enterprises, Noida without statement of any person from M/s.Montage Enterpries, Noida explaining the entries is only an assumption that lamination was purchased clandestinely. 9. In respect of grounds of appeal on the basis of para 9 of Final Order of this Tribunal dated 30.03.2009 she has submitted that Revenue has quoted only part of the said para. Subsequent to the sentences quoted by Revenue subsequent sentence contains as follows: However, the fact remains that the allegation against the appellant regarding the clandestine manufacture and removal of the product is essentially based on the working of the factory for part hours during the relevant period and the capacity of the factory to manufacture the quantity of product during such work. The factory could not have worked in the absence of proper supply of the diesel and it is the case of the department that the diesel was supplied by Sharma Filling Station. Undisputedly Shri was not made available for cross-examination. In other words there was no fair opportunity given to M/s.Som Aromatics to verify the genuineness about the ledger Book and genuineness of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. It was held in para 97 of the said ruling as follows:- 97. In the present case there is no evidence against the petitioners except the diaries, note books and the loose sheet with regard to the alleged payments (vide Mr Nos.68/91, 72/91 and 73/91). The said evidence is of such a nature which cannot be converted into a legal evidence against the petitioners, in view of my above discussion. 10. We are, therefore, in agreement with the ld.Counsel for M/s.Som Aromatics that the entire show cause notice is presumptive. Revenue could not establish manufacture of 116582400 pouches of Gutkha during the period from October, 2006 to November, 2006 and Revenue could not establish manufacture of 1437782400 pouches of Gutkha for the period from December, 2006 to August, 2007 alleged in the said show cause notice. Central Excise duty is on manufacture. Unless manufacture is established Central Excise duty cannot be demanded. In the present case the burden to prove that above stated quantity of pouches were manufactured by M/s.Som Aromatics was on Revenue. We hold Revenue could not establish manufacture of above stated quantities of pouches of Gutkha during above stated period. We therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X
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