TMI Blog2018 (7) TMI 1360X X X X Extracts X X X X X X X X Extracts X X X X ..... , which is untenable and is fit to be set aside. SCN not sustainable - appeal allowed - decided in favor of appellant. - APPEAL No. E/52640-52642/2014-EX[DB] - A/70992-70994/2018-EX[DB] - Dated:- 22-5-2018 - Mr. Anil Choudhary, Member (Judicial) And Mr. Anil G. Shakkarwar, Member (Technical) Shri Jitin Singhal (Advocate) Shri Pravesh Bahuguna (advocate) for Appellant(s) Shri Mohd Altaf (Asstt. Commr.) AR Shri Pawan Kumar Singh (Supdt.) AR for respondent ORDER Per: Anil Choudhary The issue in these appeals is whether the duty of ₹ 1,40,82,789/- have been rightly demanded on 8,17,75,733 pouches of Banarsi Ashiq Brand Deshi Pan Samigri, manufactured and removed without payment of appropriate Central Excise Duty under Section 11A(4) of the Act alongwith equal amount of penalty under Section 11AC of the Act read with Rule 25 of CER, 2002 on the appellant K.K. Tobacco Company. Further whether the penalty of ₹ 05 lakhs each have been rightly imposed under Rule 26 of CER, 2002 on the other two appellants. 2. The brief facts are that K.K. Tobacco Company situated at SA-2/415A-6, Premchand Colony, Varanasi was a registered manufacturer engaged i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upari masala, i.e., Deshi Pan Samigri in loose condition alongwith 63 KG of packing material (in seven roles of 9 KG each), raw material tobacco 1190 KG in 34 bags, perfume and chemicals 175 KG in 7 drums, Sweet Supari 8 Qtls, cuts supari 2430 KG in 54 bags of 45 KG each, Kari Supari 4200 KGs and 70 bags of 60 KGs each, Khari Dal Chini 240 KGs in 4 bags of 60 KGs each, powered Dal Chini 760 KGs in 19 bags of 40 KGs each, one drum containing 200 liters of paraffin Oil and perfume/chemicals mixed tobacco 1880 KGs in 47 drums containing 40 KGs each, were found in the premises. 4. On the reasonable belief that the goods are liable to confiscation, the same were detained and given in the supurdgi of K.K. Pandey as per the Panchnama and separate seizure memo. A separate demand cum show cause notice have been issued for seizure proposed. 5. Shri K.K. Pandey in his statement on 06 February, 2011 admitted that machines installed in the residential premises for manufacturing of Banarsi Ashiq brand of Deshi Pan Samigri and the manufacturing capacity of each pouch packing machine was 160 pouches per minute. Shri Krishna Kant Pandey accepted that in the residential premises the activity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther penalty was proposed. Further the other appellant Shashi Kant Pandey and Laxmi Kant Pandey were also required to show cause why not penalty be imposed under Rule 26 of CER, 2002. 8. The SCN was adjudicated on contest vide the impugned Order-in-Original by the learned Commissioner confirming the proposed demand against K.K. Tobacco alongwith equal amount of penalty under Section 11AC read with Rule 25 of CER, 2002. Further penalty was ₹ 05 lakhs each was imposed on the other appellants under Rule 26 of CER, 2002. 9. The learned counsel for the appellants urges that Central Excise Duty on Deshi Pan Samigri has been demanded by the Department on the basis of packing/production capacity of the packing machines. However, it is pertinent to note that Deshi Pan Samigri falls under CTH 24039920 of the First Schedule of CETA, 1985. Thus, it is not a notified goods as per Notification No. 29/2008-CE(NT) dated 01 July, 2008, and also Notification No. 10/2010-CE(NT) dated 27 February, 2010, issued under Section 3A of the Central Excise Act. On perusal of the provisions of the Central Excise Act, the excise duty can be demanded on the basis of packing/ production capacity of ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clusively in the manufacture and clandestine removal of Banarsi Ashique brand Desi Pan Samagri an excisable and dutiable material, Moreover, the party Shashi Kant Pandey, Proprietor of Surya Traders have produced evidence for sale of sweet supary and various raw materials also. There is nothing on record to challenge these submissions of the party. On investigations, the Range Superintendent vide his letter dated 25.10.2011 reported that the 7 rolls of seized packing material were of Uncle Brand Sweet Supari. Keeping in view the certificate of registration issued by the commercial tax department, activity of manufacturing and sale of sweet supari from the premises, sale of raw materials the claim of Sh. Shashi Kant Pandey Proprietor of M/s Surya Traders about their possession over the premises and ownership over the raw materials seized in the premises cannot be ruled out. 12. Thus, it is evident that the Assistant Commissioner had negated the stand of the Department that all raw materials found in the premises of Surya Traders cannot lead to conclusion that these raw materials were to be used for manufacture of Deshi Pan Samigri, and, thus, the same cannot be confiscated. Fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) Desi Pan Samagri under the brand name 'Banarsi Ahiq' was being cleared clandestinely by the appellant from the premises of M/S Surya Traders. No investigation whatsoever has been conducted to either bring on record the buyers of the said 'Banarsi Ashiq' pouches from the premises of M/s Surya Traders, or any supplier of raw material supplying raw material to the appellant at the premises of M/s Surya Traders, or any documentary evidence showing clandestine clearance of the 'Banarasi Ashiq' product from the said premises. Or (iii) there was enough demand in the market for 'Banarasi Ashiq' brand of desi pan samagri for effecting clearance of 8,17,75,733 number of pouches of the same, or (iv) the manner in which the Banarsi Ashiq brand of desi pan samagri was clandestinely cleared from the premises of M/s Surya Traders. 12. It is submitted that the premises of M/s Surya Traders is not a residential premises of Sh. K.K. Pandey which can be appreciated from the letter given by the owner Smt. Ratna Pandey. That, Sh. K.K. Pandey resides in the north portion of House No. SA-2/415 A-9, Premchand Colony Pandeypur, Varanasi (hereinafter ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri, as well as recovery of 2300 KGs of tobacco mixed supari (Deshi Pan Samigri) in loose condition are irrefutable evidence that prove that the said raw materials were being used in the unaccounted manufacturing and clandestine sale of Deshi Pan Samigri under the supervision of its proprietor - K.K. Pandey. This fact is also supported by the declaratory letter of Shri Ratna Pandey who have claimed with the owner of the premises at SA- 2/415 A-9 Premchand Colony, Varanasi, stating that the said premises used for residence of all the three namely K.K. Pandey, S. K. Pandey and L.K. Pandey and their parents and apart of the said premises was under possession of Shashi Kant Pandey proprietor of Surya Traders for his business. Further the unaccounted cash deposits in the account of L. K. Pandey ₹ 24,92,650/- before 06 February, 2011 (date of search) and sudden drop on deposits thereafter establishes that the unaccounted cash deposits were part of the sale proceeds of the clandestinely manufactured and cleared pouches of Banarsi Ashiq brand Deshi Pan Samigri. 16. It is further urged by the learned AR that the quantification of demand has been done on the basis of packing capacity ..... X X X X Extracts X X X X X X X X Extracts X X X X
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