TMI Blog2018 (5) TMI 1054X X X X Extracts X X X X X X X X Extracts X X X X ..... rial will also have to be established to prove the clandestine removal of the cigarettes. But, in the instant case, it appears that the Department has not collected corroborative evidence to substantiate their claim of clandestine removal of cigarettes. Neither any incriminating material was found from franchisee factory at the time of search nor any statement even of single worker of the factory was recorded to prove allegation of clandestine removal. 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. Penalty u/r 209A of CER on various persons - Held that: - When there is no clandestine removal, then no penalty can be imposed under Rule 209A. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L), Hyderabad, which was used by M/s Kanpur Cigarettes Ltd. (KCL) to manufacture cigarettes which were clandestinely removed without payment of excise duty. Unaccounted cigarette tissue paper (CTP) was purchased from M/s Pamwi Tissue Ltd., Delhi, in cash which was used by KCL to manufacture cigarettes. It is the allegation of the Department that the cigarettes were removed from KCL s factory as per instructions of GTC, Mumbai/New Delhi to GTC who was selling cigarettes through wholesale buyers appointed by GTC. It is the further allegation of the Department that the goods were transported by M/s Juneja Transport Company to wholesale buyers. It is also alleged that the wholesale buyers were selling the unaccounted cigarettes to dealers in cash but without any accounting. Part of the sale proceeds received by the GTC from the sale of the clandestinely removed cigarettes were brought into the account of GTC and were legitimized by making entries of income from M/s Shaw Wallace Co., M/s NE-VA Finance Leasing (P) Ltd.; M/s Ferro Alloys Corporation Ltd. etc. So, the duty demand was raised and various penalties were imposed, as mentioned in the operative part of the impugned order. Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Abhushan Bhandar vs UOI, 2002 (143) ELT 25 (SC); (v) Shri P.K. Verma, GTC ors. Vs CCE ST, 2015- TIOL-1591-CESTAT-DEL; (vi) CCE, Bhopal vs Reliable Cigarettes Tobacco (P) Ltd., (2017) 82 taxmann.com 393 (New Delhi- CESTAT); (vii) Balbir Steel (P) Ltd. vs CCE, Kanpur, 1999 (114) ELT 561 (T); (viii) Ambika International vs UOI Anr (P H High Court) DoD 17.06.2016; and (ix) Shri Sita Ram vs CCE, Jaipur, 1994 (73) ELT 736 (CESTAT-Del.) 9. It is also the submission of the learned Chartered Accountant that, the entire case is made on the basis of statements of the Departmental witnesses by invoking the provisions of Section 9D of the Central Excise Act, 1944. He submits that there is abnormal delay caused by the Department in adjudicating the issue in hand by not supplying the relied upon documents (RUDs) in the show cause notice. At the relevant time all the witnesses were available, but no opportunity of cross- examination was provided. The Department cannot take the advantage of its own wrongs as per the ratio laid down by the Hon ble Supreme Court in the case of B.M. Malani, 306 ITR 196 (SC). 10. On merit, the learned Chartered Accountant submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finance from the manufacturing unit which was repaid on due date with interest. However, GTC did not physically dealt with the goods or was having knowledge that the goods were liable to confiscation. Thus GTC can in no manner be considered to be covered under the provisions of Rule 209A of the Rules. Penalty under Rule 209A cannot be imposed if the person has not physically dealt with the goods liable for confiscation. For the purpose, he relied upon the ratio of the following case laws : (i) Rakesh Kumar Garg vs CCE, 2016 (331) ELT 321 (Del-HC); (ii) CCE vs Bansal Steel Corporation Ors. (HC-Mum), dated 12.09.2017 www. taxscan.in (iii) MEK Slotted Angles (I) Ltd. vs CCE, Belapur, (2009) 247 ELT 364 (Mumbai-CESTAT); (iv) Broadway Textiles Ltd. vs CCE, Kanpur, (1999) taxmann.com 385 (CESTAT-New Delhi); and (v) Sujana Metal Products Ltd., 2016 (335) ELT 218 (Madras) 14. Lastly, he made a request that the impugned order may kindly be set aside. 15. On the other hand, the learned DR for the Department, heavily relied upon the impugned order as also the show cause notice. To justify the impugned order, he read out various paras and put emphasis on the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rettes. But, in the instant case, it appears that the Department has not collected corroborative evidence to substantiate their claim of clandestine removal of cigarettes. Neither any incriminating material was found from franchisee factory at the time of search nor any statement even of single worker of the factory was recorded to prove allegation of clandestine removal. 18. Regarding applicability of Rule 209A for imposition of penalty, it may be mentioned that, when the person has physically dealt with the excisable goods with the knowledge or belief that goods were liable to confiscation, the said Rule is applicable. Rule 209A of the Central Excise Rules reads as under : 209A. Penalty for certain offences - Any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or these rules, shall be liable to a penalty not exceeding the duty on such goods or ten thousand rupees, whichever is greater. 19. It may be mentioned that the Tribunal in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable to be confiscated under the Central Excise Act or the rules. 21. In the instant case, the lower authorities have observed that, the GTC did not have control over manufacturing of KCL and KCL cannot be said to be a sham, bogus or non-existent company. There is no allegation regarding the physical handling of the goods by GTC. No material has been brought on record to show that GTC is controlling KCL. It has only a franchisee of GTC which was allowed only to use the brand name. 22. Regarding Mr. Sanjay Dalmia and Mr. Anurag Dalmia, the Directors in the GTC, the allegation is that, the clandestine removal of the cigarettes was well within their knowledge. There is no allegation that they have acquired the sale proceed or has physically handled the clandestinely removed goods in the manner specified under Rule 209A. The learned DR could not point out any evidence to show that they have acquired confiscation of unaccounted cigarettes or have physically dealt with the same. In the absence of any allegation about physical dealing of such goods, penalty under Rule 209A is not desirable on Mr. Sanjay Dalmia and Mr. Anurag Dalmia. 23. Similarly, there is no allegation in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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