TMI Blog2018 (6) TMI 642X X X X Extracts X X X X X X X X Extracts X X X X ..... Continental Cement Company [] has held that clandestine removal is a serious charge against the manufacture and the same is required to be discharged by revenue by production of sufficient and tangible evidence -It further pointed out that revenue is required to prove about the excess raw material purchased, dispatch particulars from the regular transporters, realization of sale proceeds of finished products, and to find out receipt of finished products by the buyers. In the whole proceedings, there is no evidence produced by revenue in respect of procurement of other raw materials which were required for manufacture of alleged quantity of final products in addition to one single raw material i.e. catechu discussed throughout the proceeding - there is also no evidence in respect of dispatch of finished goods, realization of sale proceeds and receipt of the alleged finished goods by the purchasers. The conclusion drawn by original authority that alleged quantity of final products were manufactured on the basis of calculation of one single raw material i.e. catechu, is not sustainable. Appeal allowed - decided in favor of appellant. - E/MISC/70041/2018 In Appeal No. E/7038 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of any evasion did not arise at the threshold and entire show cause notice was based on assumption and presumption. Further, the appellant filed an application for settlement admitting an alleged excess quantity of 2000 Kg. of Kattha on the ground that a particular figure was not reconciled properly as the author of the document (Late S.N. Gupta), 106 pages recovered from whose residence had subsequently died. Settlement Commission settled the issue which was challenged before Hon ble Delhi High Court which remanded the matter to the adjudicating Authority. In an appeal by appellant before Supreme Court, Hon ble Supreme Court set aside the order of Settlement Commission and order passed by Delhi High Court and remanded the matter back to the Settlement Commission which through a subsequent motion, the order was further clarified that the matter was remanded to the Adjudicating Authority. Proceedings before the Learned Commissioner at Noida were accordingly held and cross examination of 18 suppliers was allowed, out of which 12 appeared for cross examination, one supplier sent his written submissions and the remaining 5 suppliers did not appear at all. During the cross examinat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss purchase and calculated a duty demand of ₹ 56,70,31,839.00 (Rs. 29,99,61,722.00 as per data in para 5.6 of SCN and ₹ 26,70,70,117.00 as per data in para 6 of SCN). Infact data of catechu supply as provided by suppliers to the investigative officers has been compared with both the records of the appellant and wherever it appears excess, demand has been raised, whereas where it appears negative or short supply it has been totally ignored. Details of explanations supported with the related documents, with regard to excess receipt of catechu was ignored while passing the impugned order, which is as follows- a. that DSL received unaccounted quantity of 1,36,430 kg of catechu from 18 catechu suppliers, the details of which are given in the table in para-3.3 of the SCN. The difference is allegedly based on comparision of the figures which have been supplied by DSL as per books of accounts and by the respective suppliers. b. Excess receipt of 48,700 kg of catechu, as per details given in the table in para-5.6 of the SCN, which is alleged to have been calculated on the basis of quantity shown in 166 loose papers recovered during search but not shown by 18 catechu suppli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner has gone tangentially on factors like delaying tactics, which is factually improper. Appellant always filed their replies etc in time. They requested for cross examination which is a statutory right under the provisions of the Act and which the Adjudicating Authority had granted. After cross examination, replies have been filed in time and there is no delay on the part of the appellant. Rather, the appellant itself got the case file prepared in the office of the adjudicating authority by re-submitting its earlier replies, additional replies and other documents as the adjudicating authority was not having any record of the case. Even the adjudicating authority took 11 months to inform the appellant regarding his appointment as a common adjudicating authority in the present case. 3.6 The Order-In-Original is based on a wrong premise that raw catechu is used as such in the manufacture of final products, whereas processed catechu is used in production of finished goods. The impugned Order proceeds on a wrong premise that raw catechu purchased by DSL from its catechu suppliers is used as such in the manufacture of final products, namely, pan masala, gutkha and mouth freshener. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly been ignored by the adjudicating authority. vi. The Show cause notice has been issued on the sole basis of purchase and consumption of catechu, without any investigation whatsoever in to other ingredients of the different final products, manufactured by DSL. vii. That there is moisture loss, (ranging from 9-11%) in conversion of catechu/kattha in powder form. viii. That while working out the receipt of catechu/kattha, reliance has been placed on documents without accounting for the full details. For example, return of certain quantities of raw materials (Catechu/Kattha) becomes inevitable on account of the fact that such goods are not in conformity with the quality of goods required and/or used in manufacture of final products. ix. It is an admitted position that each of the manufacturers of Pan Masala or Gutkah or Mouth freshener, has their own speciality (quality, taste)of the final branded products, which is distinguishable from the products made by other manufacturers, on account of differences in fragrances and taste etc. Therefore, wherever raw catechu/Kattha is not up to the mark, the same is returned to the suppliers. This happens in a few cases and even on d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and presumptions have been erroneously shifted to the appellant. The tenor of the entire order runs with the presumption that everything has to be proved by the appellant, whereas it is a settled law that for proving a case of clandestine removal, department must prove its case beyond doubt. 3.11 Order-in-Original is bad in law as it holds that there is no need to go into merits of the case. Ld. Commissioner have observed in Order-In-Original, that as the present case has already been investigated by DGCEI, hence there is no need to go into the merits of the case, is unreasonable and beyond the legal procedure and juris prudence. 3.12 Contemporaneous record produced by the appellant has been completely ignored without any basis or contra evidence on record.- That during the entire investigation, officers of DGCEI did not visit the factory/factories of the appellant even once to ascertain the facts. When the appellant produced material evidences from contemporaneous statutory records, like statement of accounts, record/ registers maintained, Balance Sheets, even these evidences have been ignored by learned Commissioner, while passing the order, thus vitiating the order. 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d received and used extra quantities of inputs, other than catechu. (ii) That no excess or shortage was found in the stocks of any of the raw materials during physical verification. (iii) That the allegation is not supported by any statement either of production or of dispatch staff of the appellant. (iv) That no extra consumption of electricity and other raw materials was noted by the officers during their investigation. (v) That during investigation no evidence was found from the transporters or the drivers hinting towards any clandestine removal. (vi) That the seized documents too, do not give any indication of clandestine manufacture. Legal requirement of evidence of procurement of raw materials, labour employed, electricity consumed, transport of such goods to their dealers/buyers and collection of payments and flow of funds relating to such transactions not met and hence allegation of clandestine manufacture and sale of goods is unsustainable.- Ld. Adjudicating Authority failed to appreciate the clear principle of law laid down by different Courts in the matter of proof for clandestine manufacture and removal. Therefore all the allegations contained in the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Betel nut 42,54,295.910 2. Cardamom 60,868.960 3. Lime 2,41,476.110 4. Perfume 1,07,443.210 5. Menthol 381.800 6. Tobacco 2,58,296.730 7. Quiwam 11,611.540 8. Ghan NES 00 1,41,097.590 9. Ghan 00 1,31,701.920 10. Ghan zarda 000 royal 1,555.160 11. Ghan betel nut royal gold 2,768.090 12. Baba zarda 276.810 13. Sugar 24,794.370 14. Fennel 49,035. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zation of sale proceeds. (v) To find out finished product receipt details from regular dealers/buyers. (vi) To find out the excess power consumptions. 13. Thus, to prove the allegation of clandestine sale, further corroborative evidence is also required. For this purpose no investigation was conducted by the Department. He has further submitted that Hon ble Allahabad High Court has ruled in the case of Commissioner of Central Excise, Meerut-I Vs R.A. Castings Pvt. Ltd. reported at 2011 (269) ELT 377 (All) that under Rule 173E of erstwhile Central Excise Rules, 1944 there was mandatory requirement of fixation of norm for consumption to notify the same and arrived at manufacture on the basis of such consumption. He has submitted that there was no norm fixed for calculation of goods manufactured by use of catechu as raw material. Therefore, the quantity of final product alleged to have been manufactured by the appellant has not been arrived at on the basis of any principles laid down in the law. He has further submitted that challenging the above stated ruling by Hon ble Allahabad High Court in the case of M/s R.A. Castings, Commissioner of Central Excise, Meerut f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the company; 4.8 On recovery of Cash from residence of Shri Subhash Chand Gupta- did not turn up as he was abroad. The claim of Shri Subhash Chand Gupta that the amount of ₹ 47 lakhs had been taken on loan from M/s Mansa Trading Company and M/s Surya Kiran Trading Company respectively, was not established. 4.9 On recovery of Cash from residence of Shri Vipul Gupta:- no tenable submission and an afterthought. 4.10 In case of clandestine manufacture and removal, it would be futile to expect that all the documents duly authenticated by the evaders shall be up for grabs by law enforcing agencies. 4.11 In view of the facts and circumstances of the case, evasion of duty has been planned and carried out by four persons of M/s DSL i.e. Sri Subhash Chand Gupta, Shri Ajay Kumar Gupta, Shri Puesh Kumar Gupta and Shri Vipul Kumar Gupta and the factories owned and controlled by them. Shri Ajay Kumar Gupta in his statement dated 09.06.2009 had undertaken to locate and contact the elusive sixteen suppliers of catechu and to produce them before the DGCEI. In another statement dated 18.06.2009 he again undertook to produce the suppliers of Catechu. Finally, in his statement dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u used by the appellant for manufacture of their final product. We also find that appellant had submitted that various other raw materials were required for manufacture of final products such as pan masala, pan masala containing tobacco, mouth freshener and meethy mazza for which no evidence was produced by revenue in the show cause notice nor the original authority has given any reasonable finding for such absence of evidence. We further find that Hon ble High Court of Allahabad in the relied upon case of M/s Continental Cement Company (supra) has held that clandestine removal is a serious charge against the manufacture and the same is required to be discharged by revenue by production of sufficient and tangible evidence. It further pointed out that revenue is required to prove about the excess raw material purchased, dispatch particulars from the regular transporters, realization of sale proceeds of finished products, and to find out receipt of finished products by the buyers. In the whole proceedings we do not find any evidence produced by revenue in respect of procurement of other raw materials which were required for manufacture of alleged quantity of final products in additio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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