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2019 (4) TMI 175

main objection raised by the Ld. AR this Tribunal is functus officio as the appeals have already been dismissed by this Tribunal for non compliance of the stay order and the order of this Tribunal have been merged with the order of the Hon’ble High Court. the appeals of the appellants have already been restored by this Tribunal vide its order dt.27.8.2018 and the said order has not been challenged by the Revenue. Therefore, the objection raised by the ld.AR is not sustainable and accordingly, the same is discarded. - During the relevant period in terms of Rule 6 of Central Excise Rules, 2002, the factory of the appellants was under physical control of the Superintendent or Inspector of Central Excise, wo were required to assess the duty payable before removal by M/s. Pelcan. However, as per Chapter 4, cigarettes would have been removed only on invoice which shall be countersigned by the Central Excise Superintendent. When the department itself is controlling manufacturing process of the appellant, in that circumstance, without hand in gloves with the Central Excise officers, the clandestine removal cannot take place - Moreover, in this case, no incriminating documents received .....

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elican without any accountal and record. Modus operandi of the above firms were that they used to purchase cut tobacco from the manufacturers namely M/s. Hilton Tobacco and M/s. Imperial Tobacco on their factory gate on cash payment basis and subsequently cleared to the M/s. Pelican without any accountal and record. There is no evidence in the record to prove this allegation. Even if it is presumed that such a modus operandi is done by M/s. Pelican to procure unaccounted cut tobacco from M/s. J.S. Enterprises, Surya Tobacco Products then the transportation of such a huge quantity of tobacco from their premises used in the manufacture of cigarettes which were cleared without payment of duty. As the appellants are before us run the firms under the supervision and control of the appellants being directors of M/s. Pelican. Therefore, a show cause notice was issued to demand duty on account of clandestine removal of the goods without payment of duty and to impose penalty on both the appellants under Rule 26 of Central Excise Rules, 2002. The matter was adjudicated, the demand of duty was confirmed vide Order-in- Original dt.23.8.2011 against M/s. Pelican and equivalent penalty under Sec .....

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to M/s. J.S. Enterprises was actually being used by M/s. Pelican for manufacturing of cigarettes which were cleared without payment of duty. For this, the sale records of M/s. Hilton Tobacco were relied upon and where there is sale of cut tobacco from M/s. J.S. Enterprises, it was presumed that the same was cleared to M/s. Pelican without any documentary evidence and on the basis of statements of the owner of M/s. Hilton Tobacco and M/s. J.S. Enterprises, it was concluded that the entire quantity which was cleared by M/s. Hilton Tobacco to M/s. J.S. Enterprises were actually consumed by M/s. Pelican. There is no single piece of evidence except the statements to prove that the said cut tobacco were actually received by M/s. Pelican. The appellants have never admitted the same. Their statements were recorded by the department on number of occasions which simply explained the working of M/s. Pelican and denied the allegation that they have ever received cut tobacco from M/s. J.S. Enterprises and M/s. Surya Tobacco Products. The whole allegation is based on the statements which were obtained on the back of the appellants. 5. He further submits that it is alleged in the SCN that the CK .....

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admitted fact that in the said bank accounts not only cash amount was deposited but credit entries were also reflected. It is mere assumptions and presumptions that all these bank accounts were used by the appellant company to receive the payment of clandestine removed goods as well as making payment to the suppliers. 7. He further submits that the entire case of the Revenue is based on third party document or on the basis of the oral statements which were obtained from various employees of the appellant company as well as the owner of the J.S. Enterprises, M/s. Surya Tobacco Product and M/s. Aman Enterprises. The appellants have not been allowed to cross examine the persons whose statements relied upon by the Revenue. Therefore, there is gross violation of the provisions of Section 9D of the Act and the statements cannot be relied upon. The documents recovered from third party cannot be relied upon in the absence of cogent evidence. 8. He further submits that as per provisions of Rule 6 of Central Excise Rules, 2002, the manufacturing of cigarettes is under the physical control of the department. Further, as per para 2.2. of Chapter 4 of CBEC s Supplementary instructions in respec .....

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al s order was not challenged for 5 years, wherein all appeals were dismissed for non compliance. It is only in 2018, when prosecution proceeding were launched, the appellants are seeking recourse by circumventing the law. They seek restoration of appeal in 2018. The counsel for the appellant has falsely quoted that that the bench had been provided and followed case laws submitted in this regard. However, it is re-ascertained that no case law was relied upon, submitted or mentioned in the restoration order dt.27.8.2018. 12. Further, this is case of serious proportion of clandestine removal of sensitive goods prone to evasion. The duty demand is above ₹ 63 crores. The appellant has sought to deflect the issue with malafide intentions by trying to allege connivance by departmental officers. 13. She further submits that Shri A.K. Singh, director of M/s. Pelican was the main brain behind hatching the conspiracy to procure raw materials in such a way where no need of account arises as the same were procured in different fictitious firm names and by this way, they could hide the actual procurement of raw materials from the department and the appellants themselves made arrangements .....

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espect of those clandestinely removed cigarettes. She, therefore prayed that the penalties have been rightly imposed on both the appellants. 15. Heard the parties and considered the submissions. 16. On careful consideration of the submissions made by both sides, we find that the main objection raised by the Ld. AR this Tribunal is functus officio as the appeals have already been dismissed by this Tribunal for non compliance of the stay order and the order of this Tribunal have been merged with the order of the Hon ble High Court. To support this contention, she relied upon the decision of this Tribunal in the case of Lindt Exports (supra). We find that in this case, the appeals were dismissed by this Tribunal for non compliance by M/s. Pelican. In fact, the stay order was never approved by the Hon ble High Court. In fact, M/s. Pelican approached Hon ble High Court as well as Hon ble Apex Court against the order of stay wherein M/s. Pelcan to make deposit 50% of duty in dispute. Further, the appeals of the appellants have already been restored by this Tribunal vide its order dt.27.8.2018 and the said order has not been challenged by the Revenue. Therefore, the objection raised by th .....

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not been considered judicially. 19. In view of above, we hold that during adjudication, the adjudicating authority was required to first examine the witness in chief and also to form an opinion that having regard to the facts and circumstances of the case, the statements of the witness are admissible in evidence. Thereafter, the witnesses were offered to be cross-examined. In the absence of examination-in-chief, allowing the cross-examination, the adjudication is a futile exercise. As the said procedure has not been followed by the authority below and the appeal of M/s. Pelican has already been dismissed. In that circumstance, the statements of witnesses on the basis it has been alleged that the appellants are engaged in the activity of clandestine removal without payment of duty are not admissible. Nod corroborative evidence have been brought on record to support the statement of witnesses and the whole case is based on third party documents, the penalties on the appellants are not imposable. Therefore, we set aside the penalties imposed on the appellants. 20. In these terms, we set aside the impugned order imposing penalty on both the appellants. Consequently, the appeals filed b .....

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