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TMI Blog2018 (5) TMI 1054X X X X Extracts X X X X X X X X Extracts X X X X ..... to the books of accounts and clandestinely removing the suppressed production. Accordingly, inquiry was made on the basis of the collected material for the period 14.11.1990 to 31.03.1995 and duty demand was raised from M/s Kanpur Cigarettes Ltd. (KCL) and M/s GTC Industries Ltd. Various penalties were also imposed on the employees/Directors of the Appellant Company M/s GTC. Being aggrieved, the assessee- Appellants have filed the present appeals, but M/s Kanpur Cigarettes Ltd. (KCL) has not filed any appeal. 3. From the record, it appears that it is the second round of litigation before the Tribunal. Earlier, the Tribunal vide Final Order dated 06.03.2014 had remanded the matter to the original authority with a direction to : (i) reach at a conclusion as to who is the evader of the duty instead of demanding the same jointly and severally by both KCL and GTC; and (ii) supply the requisite documents or exclude the same from consideration, if not supplied. 4. In pursuant to the direction of the Tribunal, the impugned order has been passed. 5. In the present appeals, the allegation of the Department is that, unaccounted cut tobacco (raw material) was purchased from M/s Deccan T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst GTC or Mr. Sanjay Dalmia, Mr. Anurag Dalmia and other assessee-Appellants, were found during the course of search and survey conducted by the DRI/Excise/Income Tax Departments. The Income Tax Department separately raised the demand which was set aside by the CIT (Appeals) and no second appeal was filed by the Income Tax Department. The present appeal was initiated at the instance of the Income Tax Department. In the Income Tax appeal, the additions were deleted. Similarly, the additions will have to be deleted in the instant cases, especially when the Department has neither supplied the relied upon documents nor provided opportunity to cross-examine the witnesses. In the absence of non-supply of relied upon documents, it can be very well presumed that these documents were not in existence and hence, the charges levelled are imaginary in nature which are not sustainable. For the purpose, he relied upon the ratio laid down in the following cases : (i) Andaman Timber Industries vs CCE, Kolkata-II, (2015) 62 taxmann.com 3 (SC); (ii) Commissioner of Customs (Import) vs Wings Electronics, 2015-TIOL-221-SC-CUS; (iii) Swadesh Polytex Ltd. vs CCE, Meerut, 2000 (122) ELT 641 (SC); ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se Officers posted in the diary XT-1 for movement of the goods which demonstrates that Departmental Officers were constantly present and closely supervising all the activities in the factory. So, allegation of clandestine removal cannot be levelled. 12. He also submits that in the case of M/s Purni Tobacco (P) Ltd., a franchisee of GTC, the Department issued a show cause notice on 21.03.1995. Vide order dated 31.03.2018, the adjudicating authority ultimately held that the available documents were insufficient to make out any charge of clandestine removal 13. As per the statement of learned Chartered Accountant, penalty under Section 209A cannot be imposed on corporate body and, therefore, GTC is not liable for the said penalty. In an alternative plea, he submits that, if the Excise Officers and Management of GTC were in any manner involved or engaged in clandestine removal of cigarettes, as has been mentioned in the show cause notice, yet no benefit of such removal came into the coffers of the company and any benefit, by way of profit on account of sale or purchase, was taken away by them to the entire exclusion of the GTC. At the most, what GTC got was short term finance from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Excise Department does not mean that the Excise Officers are present in the factory round the clock. Clandestine removal can be made when the factory is not working or on holiday or at night. It was also submitted that company is a juristic person and, therefore, liable for penalty under Rule 209A of the Rules. 16. Lastly, he justified the impugned order and prays to uphold the same. 17. We have heard both sides and perused the material available on record. From the record, it appears that the allegation of clandestine removal of cigarettes from the factory is not sustainable as the cigarettes were manufactured by undertaking, a process involving raw material of different types i.e CTP, cut tobacco etc. procurement of which are fully controlled under the supervision of the Excise Officers who maintains the XT- 1 diary. Further, the clandestine manufacture/removal of the goods requires use of extra machinery, extra consumption of power, employment of extra labour and transporter and/or buyer will also have to be identified. The supply of the extra raw- material will also have to be established to prove the clandestine removal of the cigarettes. But, in the instant case, it ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y issuing invoices wherein there is no movement of the goods, they cannot be visited with penalty under Rule 209A...." 20. For clandestine removal, which is a serious charge, the strict evidence is required like supply of the raw-material, consumption of extra-electricity, transportation of the confiscated goods and sale of the finished goods. Unfortunately, no evidence has been collected by the Department pertaining to these aspects. When there is no clandestine removal, then no penalty can be imposed under Rule 209A as per the ratio laid down by the Hon'ble Madras High Court in the case of Sujana Metal Products vs CESTAT, 2016 (68) taxmann.com 253 (Madras), wherein it was held that : "8. Rule 209A imposes three requirements to be satisfied before a penalty could be imposed. Those requirements are (1) that the person concerned should have acquired possession of or in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing or in any other manner dealing with the goods; (2) that such goods must be excisable goods and (3) that he must have knowledge or reason to believe that those goods are liable to be confiscated under the Central Exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts/evidence, especially when they stated that they never received unaccounted cigarettes from KCL at any point of time. They had no knowledge that the duty was paid on cigarettes or not. In the show cause notice, there was no allegation that they acquired the physical possession of unaccounted cigarettes or they had knowledge that the cigarettes were not duty paid and liable to confiscation. The assessee-Appellants specifically stated that whatever goods were received by them were accounted for, in their record. In the absence of any evidence to show that they have acquired possession or has physically handed the unaccounted cigarettes liable for confiscation, no penalty under Rule 209A can be imposed on them, especially when the adjudicating authority did not provide any opportunity for cross-examination of 34 Departmental witnesses in spite of repeated requests. 26. It may also be mentioned that the show cause notice was issued on 30.09.1995 and the impugned adjudication order was passed on 06.03.2014, almost after 19 years. It is the allegation of the assessee-Appellants that no relied upon documents (RUDs) or cross-examination were provided. They raised this issue before the T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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