TMI Blog2022 (6) TMI 1259X X X X Extracts X X X X X X X X Extracts X X X X ..... is evidence of manufacture and removal of goods. The charges of clandestine manufacture and removal has to be shown by adducing evidence of receipt of unaccounted raw/packing material in factory, use of raw material for unaccounted manufacture of finished goods, installed capacity, consumption of electricity, labour employed and payment made to them, clandestine removal of goods with reference to entry of vehicle/truck in the factory premises, loading of goods therein, security gate records, receipt of sale proceeds. We find from the records that not a single evidence to the above effect has been led either in the show cause notice or the impugned order. The show cause notice and the impugned order even fails to show manufacture of excess cigarettes. The statement of the director of M/s ETCL Shri Shyam Khemani is exculpatory. No evidence of production staff or labour/ loading person is on record which can show that cigarettes were manufactured and cleared clandestinely. No excess raw material or any evidence was found. The adjudicating authority has heavily relied upon the records and statements of traders, godown owners, railway agent and transporter staff, and the alleged inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rod, cigarette papers, CFC Cartons or raw material and finished goods storage at factory. There are no evidence of transportation of goods from factory. No person from the transporter firm or railway has named any person from ETCL who might have booked the consignments. No person from the statements makers has named any person connected with ETCL who has dealt with them. The demands on the basis of calculation of transport records and railway receipt is derived on assumption basis since these are private records. Further in respect of finished goods allegedly cleared by M/s ETCL, no investigation nor any primary or secondary evidence such as transporters statement, truck drivers statements, loading or unloading evidences or statement of persons handling goods at Itarsi Station or taking the goods to Lucky Bagga Transport is on record. Neither there is evidence of sale or receipt of any consideration by M/s ETCL. The revenue has not brought on record even the primary evidence of any nexus of ETCL with alleged Railway Receipts or Lorry Receipts of Lucky Bagga Transport carrying description of goods as poly bundles, PP, or packaging materials. All the purported documentary evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andestine production and removal has to be established against any person by independent and tangible evidence in the form of receipt of raw material in factory and non accountal thereof, use of such raw material in clandestine manufacture of finished goods, consumption of electricity, labour employed and payment made to them, packing material used, discrepancy in stock of raw materials and finished products, security gate records, independent evidence of transportation of goods and its linkage from removal from factory, transport documents, receipt of goods by the buyer and receipt of sale proceeds by the consignor. No such evidence has been brought on record. The show cause notice and the impugned order has not found any evidence from factory showing contravention of law. No evidence of clandestine removal of goods from the factory or any instance is on record. Hence there is no reason to demand duty. Demand is set aside - appeal allowed - decided in favor of appellant. - Excise Early Hearing Application No.50502 of 2021 in Excise Appeal No.50834 of 2020 (DB), 50081 of 2020 (DB), 50835-50837 of 2020 (DB), 50661 of 2021 (DB), 50121-50132 of 2020 (DB) - FINAL ORDER Nos. 50531- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gro Trading Company Rs.10,00,000/- 7 E/50121/2020 R. S. Gogia Inspector of Central Excise (Now retired Superintendent) Rs.50,000/- Rs.1,00,000/ - 8 E/50122/2020 P. F. Raut Inspector of Central Excise (Now retired Superintendent) Rs.50,000/- Rs.1,00,000/- 9 E/50123/2020 J. C. Solanki Superintendent (Retired) Rs.50,000/- 10 E/50124/2020 K. C. Mandal Inspector of Central Excise (Now retired Superintendent) Rs.50,000/- Rs.1,00,000/- 11 E/50125/2020 Kishore Uikey Inspector of Central Excise (Now retired Superintendent) Rs.50,000/- Rs.1,00,000/- 12 E/50126/2020 Kailash Verma Inspector of Central Excise (Now retired Superintendent) Rs.1,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k. As it appeared to Revenue that such cigarettes were lying unaccounted in the factory with intention to remove them clandestinely, thus, the same were seized and were handed over to the Director of the appellant Mr. Shyam Khemani, for safe custody. Further, it appeared from Form IV and raw-material issue register that there are no entry for receipt or issue of raw-material after 28.04.2010. 4. It further appeared from the de-sealing report dated 14.05.2010, that only two cigarette making machines were de-sealed. Further, as per Annexure F submitted by appellant dated 13.05.2010, the production of cigarettes per machine was 72,000 cigarettes per hour. It appeared that from the two de-sealed machines at the start of the shift at 10 hours, a maximum of 2,88,000 cigarettes could have been manufacture by 12 (noon) on 14.05.2010, at the time of stock taking. However, the physical stock reflected 9,80,000 cigarettes at 12 hours. There appeared to be unaccounted stock of 6,92,000 cigarettes. It further appeared that as only two machines were working from 10.00 A.M. on 14.05.2010, appellant could have produced cigarettes of two brands, one on each machine. Whereas the excess stock a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce excess stock. It further appeared that Mr. Devendra Parmar, Inspector of Central Excise, posted at the factory had facilitated the excess found unrecorded production of cigarettes. 7. Follow-up search was conducted in the premises of dealer(s) of cigarettes, namely, M/s. Shekhawati Trading Co. at Chandpol Bazar, Jaipur on 22.07.2010. The Officers found 7 boxes containing 50 packets of 10 cigarettes and 35 packets of 10 cigarettes totaling 3850 cigarettes of Globus brand manufactured by ETCL valued at Rs.7,123/- which were put under seizure. As per Panchnama, these cigarettes were manufactured in the month of March, 2010. The statement of Proprietor Mr. Rajesh Kumar Tibra was recorded on the same day. He stated that he has purchased the cigarettes found and seized of Globus brand, without any bill from Tulsiji, who was running his office at Opp. Sinddhi Camp, Jaipur. Mr. Tibra in his further statement recorded on 10.01.2011 and 15.01.2011 stated that Globus brand cigarettes were received by them under scheme (Trade Promotion) from M/s. Rajasthan Trading Company, Jaipur Distributors of Shimla brand gutkha. He also stated that he sold the cigarettes at the rate of Rs.100 pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... packet of 10 cigarettes each. He further sold these at the rate of Rs.3.50 per packet. As per his understanding, the cigarettes had come from North India without payment of excise duty. 12. Further, in follow up search the officers searched the go-down of Maheshwari Agency, R.G. Street, Coimbatore on 21.02.2011 where they found Globus and Harbour brand cigarette packets bearing the name of manufacture as ETCL, Indore. As no documents/ bills/ invoices were produced, the cigarettes were put at seizure valued at Rs.16,477/-. 13. Further, follow up search was conducted at M/s. Sri Samunda Trading Co., Coimbatore Proprietor Shri Mangal Ram Raj Purohit on 21.02.2011 wherein the officers found cigarettes packets of Harbour/ Opera House and Impact brands bearing the name of manufacturer as ETCL, Indore. As the Proprietor did not produce supporting documents, the total cigarettes found 76,500 were put under seizure valued at Rs.1,38,525/-. Further search was done on the same day at the Godown of Sri Samunda Trading Co. located at Richwell Complex R.G. Street, Coimbatore, where also the officers found 34,71,000 cigarettes of brands belonging to the appellant i.e. ETCL totally valued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hyderabad 12. 4. M/s. Venkatesh Traders, 51/104, Lal Phatak, Sakarpatti, Nayaganj, Kanpur 5. M/s. Prem Agency, 51/104, Lal Phatak, Sakarpatti, Nayaganj, Kanpur. 6. M/s. Babu Brothers, 51/104, Lal Phatak, Sakarpatti, Nayaganj, Kanpur 7. M/s. Khurana Brothers, 52/44, Nayaganj, Kanpur 8. M/s. Ajay Zarda, 78/268, Pan Dariba, Latouche Road, Kanpur. 9. M/s. Pawan Gupta, 51/104, Lal Phatak, Sakarpatti, Nayaganj, Kanpur. 10. M/s. Harshin Enterprises, at 9/419-K, Poonthala Building, Pan Bazar, Mavumkunnu Road, Tirur. 16. In the course of investigation the statement of Shri K. Venkateswarlu the Proprietor of M/s. Sri.Gopala Krishna General Stores, Vijayawada was recorded on 25.02.2011 who inter alia stated that apart from the cigarettes of ITC, he was also dealing in cigarettes of brands- Forever, Harbour, Opera House etc. and most of which are the brands manufactured by ETCL, Indore, which is owned by Shri Kishore Wadhwani. It is further informed that ETCL sent the cigarettes through Lucky Bagga Transport Company to Hyderabad, and from Hyderabad the delivery of required cigarettes is arranged by Shri Jagannath through M/s. GVR Kaleswari Transport, Hyderabad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pera House, K- 10, Budget, Globus, Forever, etc. 27.02.2011 Godown at Plot No. 165/A, Sector-F, Industrial Area, Indore 1,21,83,390 Raw Materials 16.03.2011 19. Similarly, DGCEI, Hyderabad also inspected the premises of Shri Ram Traders, Hyderabad and residential premises of Proprietor Shri.K. Venkateshwarlu. They found cigarettes stored therein, alleged to be manufactured by ETCL. 20. From the aforementioned search and seizures, it appeared to Revenue that appellant ETCL was involved in manufacture and clandestine clearance of cigarettes by suppressing the actual production. Accordingly, Revenue issued Show Cause Notice to the dealers / distributers a common Show Cause Notice No. 574/CE/182/2011/ I B dated 12.08.2011 proposing confiscation of the seized goods with proposal to impose penalty. 21. Further, search was done in the premises of M/s.Lucky Bagga Transport Company, Hyderabad on 21.02.2011, incriminating records were resumed which indicates that cigarettes have been transported under the description, such as, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of search and seizure of cigarettes from traders viz. M/s. Mahalakshmi Enterprises, Mateshwari Agencies, Sri Samunda Trading owned by Shri Mangal Ram Rajpurohit and from office of the Chief Parcel Supervisor Railway, Coimbatore; Shanthi Guru Marketing, Trichy, Goutam Fancy Store Tirunveli, Sri Ram Traders, Hyderabad; M/s Venketesh Traders, Prem Agency, Babu Brothers, Khurana Brothers, Ajay Zarda, Pawan Gupta all situated at Kanpur; M/s Harshin Enterprises, Tirur, M/s Shri Gopal Krishna General Stores Vijayawada proprietor Shri KothaVenkatleswarlu and statements of some of the above persons. The show cause notice also relied upon the seizure of cigarettes and raw/ packing material of cigarettes from godown of M/s Kushwaha Agro Trading Co. and one godown situated at Sanwer Road from where the ECTL brand cigarettes and raw material/ packing material were seized, documents seized from office of transporter M/s Lucky Bagga Transport Co. which allegedly showed transportation of cigarettes under the description of goods as 'Aalu Papdi and 'Pop from Indore to Hyderabad and the GRs issued by the Kaleshwari Mail Lorry Service showing transportation from Hyderabad to Vijaywada. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LBTC Indore and Hyderabad office. Demand of Rs. 28,39,43,195/- alongwith interest and penalty was proposed against M/s ETCL on the basis of records viz. challan/ kaccha slips and records of transporter M/s Lucky Bagga Transport Co. and private records as well as documents seized from Railway Agent Shri CSM Althaf. The statements of clerks of M/s Lucky Bagga Transport and Shri CSM Althaf were relied upon to allege that cigarettes were transported under the cover of such documents describing the goods as 'Pop/ Allu Papdi . Penalty was also proposed on director Shri ShyamKhemani and other co-appellants viz. transporter Shri Charanjeet Singh Bagga, proprietor of Lucky Bagga Transport, Shri Andela Krishn Yadav, proprietor of M/s Kaleswari Mail Lorry Service and Shri CSM Althaf, Railway Agent. The Inspectors who were having physical control over factory i.e Shri R.S. Gogiya, R.S. Gogiya, Devendra Parmar, Kailash Verma, K.K. Uikey, K.K. Patel, M.S Damor, P.F. Raut, S.R Parate, K.C. Mandal, S.K. Mandal and C.K. Patley were also proposed for penalty under Rule 26 (1) of C.E. rules. 24. The appellants filed reply to show cause notices contesting the allegations made in show cause n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was imposed under Rule 26 and of Rs. 1 lakh each on the Inspectors Shri R.S. Gogiya, Devendra Parmar, Kailash Verma, K.K. Uikey, K.K. Patel, M.S. Damor, P.F. Raut, S.R Parate, K.C. Mandal, S.K. Mandal and C.K. Patley under Rule 26 (1). 26. Being aggrieved, the appellants are in appeal before this Tribunal. 26.1 Learned Senior Counsel Shri V. Nankani appearing for Appellant M/s ETCL urges that as far as case of confiscation of 692000 cigarettes and imposition of penalty is concerned the impugned order is erroneous as there was no excess stock on the day of visit on 14.05.2010. At the time of visit of the officers on 14.05.2010 i.e 1200 Hrs, the production was going on from 10am and continued throughout the day till 6 PM, which is an accepted fact. No production for 12.00 noon to 6 PM has been shown separately either in panchnama or in SCN and the fact is that the alleged excess shown stock of 692000 cigarette, is the production from 1200 Hrs to 6 PM on 14.05.2010. As per SCN the production of each machine is 72000 pieces per hour and hence the production of two machines from 10 Am to 1200 Hrs was 288000 cigarettes. The production of 6 hrs i.e. 1200 hrs to 6 PM comes to 8,6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en submission. He submitted that it was alleged that both the officers had de-sealed filter cigarette manufacturing machine whereas in stock the plain cigarettes were also found. He submits that this is lame reason to allege or find their fault. The filter attachment can be mounted or dismounted within minutes. It is an absurd proposition to penalize them as if non mention of the filter attachment points out any wrong doing on the part of Appellants. Considering the recorded fact that cigarettes were being manufactured and packed in the presence of the full team of visiting officers who wrongly recorded the manufactured stock as pre- existing and overlooked the fact of production of filter and non- filter cigarettes on 14/05/2010, there is no excess stock. The officers posted at the factory has not shown any carelessness or failed to act diligently. Even if the intimation letter of M/s ETCL did not have number and type of machine to be opened or de-sealed, but the fact remains that the de-sealing report of the Appellant officer always had number of machine de-sealed by them. Shri J.C Solanki, Superintendent has responsibly carried out his duty of sealing and de-sealing and submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en manufacturing cigarettes in the brand name of 'Red Rose also, which have been treated as manufactured by M/s ETCL, Indore in the SCN. The demand is based upon third party statements without any corroboration and hence not sustainable. The duty of Rs. 3844/- is merely on basis of presumption/ assumption and hence not sustainable. 28. As regard demands confirmed against the Appellant M/s ETCL in show cause notice 16.02.2012 and 16.07.2013, the Ld. Counsel submitted that the demand in show cause notices dt. 16.02.2012 has been confirmed by the adjudicating authority by relying upon the statements of traders from whom cigarettes were seized, seizure of documents from office of transporter M/s Lucky Bagga Transport Co. and statements of its clerks; Records seized from Railway Agent Shri CSM Althaf and his statement; statement of godown owners from where the cigarettes and raw/packing material of cigarettes was seized. The demand was computed on cigarettes seized from traders at Coimbatore, Vijaywada, Trichy, Tirunelveli, Hyderabad, Kanpur and Tirur and godowns of M/s Kushwaha Agro Trading, Indore and another godown at Sanwer Road Indore. He submitted that none of the traders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of the CESTAT was challenged by the revenue before Hon ble High Court, which vide order dated 18.05.2017 upheld the Tribunal s order and later by the Hon ble Apex Court vide order dt. 19.02.2018, 09.03.2018 07.03.2018 in four different SLPs. That subsequently they had requested that Shri Kotha Venkateswarlu, Proprietor of M/s Gopala Krishna General Stores, Shri Mangalram Raj Purohit of M/s Samunda Trading Company, Shri CSM Althaf-Railway Agent, Shri K. Devendrappa, Shri Balbeer Singh Thakur who are Office Clerk of M/s LBTC, Shri Andela Krishna Yadav, , Proprietor of M/s Sree Kaleshwari Mail Lorry Service, Shri Radha Mohan Pandey-Clerk of M/s LBTC, Shri Rajendra Prasad Kothari, Clerk of M/s LBTC, Shri Charanjeet Singh Bagga, Partner of M/s LBTC, Panch witnesses of the Panchnama proceedings dated 21.02.2011 and 24-02-2011 and Central Excise Officers who visited the transport on 21.02.2011 and 24.02.2011 be allowed to be cross examined with reference to their statements. However only Shri Mangal Ram Rajpurohit, Proprietor of Shri Samunda Trading, Railway Agent Shri CSM Althaf and three godown owners were summoned for cross examination. The adjudicating authority in gross violat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s affirmation of facts, without even attendance of the witnesses. There are no applications or reasons on record for grant of exemption from attendance under Sec 132 or 133 of CRPC, 1908. There is no determination on these submissions. Contrary to examination-in-chief, during cross examination, the persons were asked specific question and the answers are in direct confrontation with the contents of the original statements. The impugned order placing reliance on such statements is fit to be set aside on this ground alone. The adjudicating authority has confirmed demand by holding that cigarettes bearing brand name was seized from the traders. No trader except the two named above have stated to have received cigarettes from ETCL or any person connected with them. There is no evidence that such cigarettes were manufactured and cleared by the Appellants. With reference to cigarettes and raw materials seized from different godowns, the adjudicating authority and the SCN has placed reliance upon statements of godown owners and held that the cigarettes and raw material/ packing material was kept by Shri Shyamlal Khemani, the director of M/s ETCL. These statements have no evidentiary value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement. The Appellant also submitted that in any case the seizure of raw material on 16/3/2011 is in any way irrelevant with the alleged clearances which are up to January 2011 only, and hence no case is made out. The Appellant submitted that it is apparent from the cross examination of the above persons that M/s ETCL or its director Shri Shyam Khemani has no concern with the seized goods and the statements of above persons are not sustainable in view of no cross examination. 28.2 In case of SCN dated 16.07.2013, duty demand of Rs.28,39,43,195/- has been demanded from ETCL on the basis of cryptic entries found in uncorroborated third party records, which were in the form of kaccha slips/ challans/ slip pads or loose sheets of following persons : (i) Transport documents of M/s Lucky Bagga Transport Co, Hyderabad / Indore (LBTC) for transport of Alu Papdi/ POP. (ii) Loading- Unloading Charges entered in private diaries of Railway Agent Shri CSM Althaf (iii) The reference to selected Railway receipts mentioning goods as POP / Packaging Materials; (iv) statements of the third parties, such as the clerks of the Transporter M/s LBTC The duty has been worked out mere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing in East West and North- South railways. 28.3 The records of transport firm M/s Lucky Bagga was retrieved in presence of its clerks and their statement were recorded to the effect that cigarettes were transported under false description of goods as Pop/ Allu Papdi on challan and transport document. Similarly the Railway booking Agent Shri CSM Althaf from whom the seizure of his personal record and other documents were made had stated that the said records contained details of transportation of cigarettes. The adjudicating authority did not summon any of the clerks of transport company for cross examination in-spite of the fact that the statements and the records seized from their offices were made basis to compute the quantum of cigarettes allegedly transported on the basis of number of bundles transported. It is also on record that Shri Charanjeet Singh Bagga, Partner of M/s Lucky Bagga Transport Company in his statement dt. 03.12.2011, has clearly refused knowing about M/s ETCL and stated that the goods were transported as per description given in challans. In such case, the statements of the transport clerks who were not called for cross examination and the records up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Ram Wires, M/s Chaurasia Abrasive and Steel Pvt. Ltd., Shri Ram Chandra Jaiswal, M/s Maa Durga Wire Vs. CCE, Raipur; 2017 (4) TMI 1288 - Delhi High Court- CCE Delhi-II Vs. Balajee Perfumes ;GTC Industries Limited Vs CCE, New Delhi - 1997 (7) TMI 125 - supreme court; Surjeet Singh Chhabra Vs UOI 1996 (10) TMI 106 - Supreme Court; Superintendent of Customs Vs Bhanabhai Khalpabhai Patel - 1992 (3) TMI 89 - Supreme Court; Jethamal Pithaji Vs Assistant Collector of Customs, Bombay and Another - 1973 (9) TMI 55 - Supreme Court; Kanungo Co. Vs Collector of Customs, Calcutta and others - 1972 (2) TMI 35 - Supreme Court; Commissioner of Central Excise, Delhi-1 Versus Vishnu Co. Pvt. Ltd. Others, G.G. Carriers, Laxmi Freight Carriers (P) , Ltd., Mohammed Kayum Khan, R.K. Tripathi, Santosh Tobacco, Gopi Road Lines, H. Sunder, Harsh Transport Pvt. Ltd., Singhal Transport Co., Paramjeet Singh Kakkar, Delhi Indore Transport Co., Paramjit Singh Kakar, Gopi Road Lines, Laxmi Paraksh Gupta, Sh. Gopal Krishan Parashar - 2015 (12) TMI 593 - Delhi High Court; Flevel International Versus Commissioner of Central Excise - 2015 (9) TMI 1151 - Delhi High Court; Aswani Co. Vs. CCE, Delhi-I - 2014 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rands of M/s ETCL, which was later on settled by M/s Maa Santoshi before settlement Commission accepting their duty liability. The Appellant also cited the police complaints made by them regarding manufacture of fake/counterfeit cigarettes in name of M/s ETCL. 31. No record/ document was recovered from factory of M/s ETCL which can show clandestine receipt of raw material and clandestine manufacture and removal of cigarettes. There is no evidence of sale of cigarettes. No primary evidence of receipt of consideration by M/s ETCL. Only basis of the demand is the number of bundles contained in Railway Receipts or Lorry Receipt records, multiplied with assumed quantities. The demand is merely based on Railway Receipts and vague records. They relied upon judgments in case of M/s Arya Fibres Pvt. Ltd, M/S Nova Petrochemicals Ltd. and Others Vs CCE Ahmedabad-II 2014 (311) ELT $29 (Tri.- Ahmd.), Oudh Sugar Mills Ltd. v Union of India, 1978 (2) ELT (J172) (SC), Deena Paints v CCE: 2001 (43) RLT 805, Brims Products v CCE: 2001 (130) ELT 719, CCE v Laxmi Engg. Works, 2001 (134) ELT 811 (Tri-Delhi), Hilton Tobacco v CCE, 2005 (178) ELT 378, Vishwa Traders Pvt. Ltd v CCE, 2012 (278) ELT 362 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umptions and assumptions. He relies upon judgment in case of CCE., Meerut-I Vs. R.A. Castings (P) Ltd., reported in 2011 (269) E.L.T. 337(All.) as upheld by the Allahabad High Court and Hon ble Supreme Court as reported in 2011 (269) E.L.T. A-108 (S.C.). The demand is based upon assumption/ presumption and hence not sustainable. They relied upon orders in case of Oudh Sugar Mills Ltd v Union of India, 1978 (2) ELT (J172) (SC), Flevel Int. Vs. CCE- 2016 (332) E.L.T. 416 (Del.), Arya Fibers Pvt. Ltd. Vs. CCE, Ahm.-II, 2014 (311) ELT 529 (Tri.- Ahmd.), Kuber Tobacco. Pro. Ltd. Vs. CCE, Delhi 2013 (290) E.L.T. 545 (Tri. - Del.) confirmed by Apex Court 2015 (317) E.L.Y. A159 (SC) and T.G.L Poshak Corp. v CCE, 2002 (140) ELT 187. 33. The private record of transporters and railway agent are mere entries in notebooks or diaries of third parties and cannot be concluded as evidence of removal of goods clandestinely by M/s ETCL. The private records do not even refer to quantity of cigarettes. Such agents handle multiple commodities and consignments and cannot be assumed to be relevant to alleged transportation. Except the third party records, there is no material to show that cigarettes h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of HP. Vs. Pirthi Chand - 1995 (11) TMI 433 - Supreme Court, Naresh j. Sukhawani Vs. Union of India - 1995 (11) TMI 106 - Supreme Court, Parle Beverages Pvt. Ltd. Vs. Collector of Central Excise, Bombay - 1995 (2) TMI 85 SC, KTMS Mohammed And Another Versus Union of India - 1992 (4) TMI 6 SC and Oudh Sugar Mills Ltd. Vs. Union of India - 1962 (3) TMI 75 SC. 35. He submits that there is no evidence of manufacture of cigarettes and hence no demand can be made. He relied upon following judgments in case of Flevel International Vs. Commissioner of Central Excise - 2015 (9) TMI 1151 - Delhi High Court, Atul Bansal, Bansal Castings Pvt. Ltd., HimanshubhaiNandlalJagani Vs. C.C.E. S.T. -Rajkot, Bhavnagar - 2019 (8) TMI 959 - Cestat Ahmedabad, Sunshine Corporation Vs. Commissioner of Central Excise - 2019 (8) TMI 379 - CESTAT Ahmedabad and M/s. Kuchchal Light Metals Pvt. Ltd. Othrs Vs. Principal Commissioner of Central Excise And Service Tax, Madhya Pradesh Others 2019 (7) TMI 101 - Cestat New Delhi and Ganpati Structures Private Limited and Ashok Joshi Vs. Commissioner of CGST, Central Excise, Indore - 2019 (6) TMI 869 - Cestat New Delhi and Lucky Tobacco Company Pvt. Lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tenure and nothing incriminating was found. No attempt was made to compare the packing of seized cigarettes with those manufactured by M/s ETCL. There is no knowledge on the part of the person from whom cigarettes were seized or the railway agent Shri CSM Althaff as to who is the actual manufacturer. Further it is not forthcoming from their statements as to how they dealt for cigarettes with M/s ETCl. The cryptic entries found in third party possessed documents, cannot be made basis for demand. He relies upon the cross examination of Shri Mangal Ram Rajpurohit, Shri CSM Althaf and godown owners at Indore that none of them has dealt with M/s ETCL or its director Shri Shyam khemani. The allegation in show cause notice dt. 16.02.2012 and 16.07.2013 is based upon third party records and statements which are inconclusive. They have performed their duties in good faith and the action against them is barred by Section 40 (2) of the Central Excise Act, 1944. The allegations against them are on assumption only, without even a single cogent evidence They have neither any knowledge nor any involvement so as to attract penalty under Rule 26 of CER, 2002. Section 40 is squarely applicable in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... try in Form IV register for receipt, issue and consumption and closing stock of raw material after 28.04.2010, and no entry for issue of raw material issued till 14.05.2010 was found. The De-sealing report dt. 28.04.2010 reflects two filter attachment cigarettes manufacturing machines, but sealing report of same day do not reflect the type of machine sealed. That if it is presumed that same types of filter machine were sealed on same day, there could not be any production of filtered cigarette from 28.04.2010. During search on 26.02.2011 at godown of Shri Gopal Goyal, cigarettes worth Rs. 96,20,000/- and on 27.02.2011 at another godown of Gopal Goyal raw material and packing material duly printed with details of ETCL, valued at Rs. 48,17,414/- were found. On 14.03.2011 during search at Godown of M/s. KushwahAgro Trading Co., of Shri Shiv Narain Kushwaha, 15400 Nos Harbour brand cigarette manufactured by ETCL and large quantity of raw material packing material duly printed with brand names and name of manufacturer as ETCL, valued at Rs 23,97,097/- were found. On 16.03.2011 raw material packing material duly printed with brand names and name of manufacturer-ETCL valued at Rs 1,21 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterprises, Tirur and from Premises of Prop. Shri Venkateswarlu Kotha of M/s Shri Gopala Krishna General Stores, Vijaywada. 42. The search was conducted at M/s Lucky Bagga Transport Co. (LBTC) Hyderabad office and it was found that transportation of cigarettes from Indore to Hyd and onwards was made under Kaccha Slips having false description such as POP/AalooPapdi. The consignor copies of two GRs recovered at Indore office of LBTC, having description of POP/Allu Papdi, which shows that cigarettes were transported from Indore to Hyderabad and which were further transported to Vijyawada under the cover of separate GRs prepared by Shri Kaleshwari Mail Lorry Service. The staff of M/s LBTC Shri Rajendra Prasada Kothari in his statement dt. 24.02.2011 stated that he was preparing GRs for transporting Cigarettes under description of POP and Aloo Papdi. Shri K. Devendrappa, Office clerk of M/s LBTC, Hyderabad dt 21.02.2011 stated that some of kaccha slips recovered were scribed by him and that Kaccha slip dt 12.12.2009 was for 70 cartons of cigarettes which he has written as POP. This consignment was sent to Vijaywada through Shri Kaleshwari Mail Lorry Service. Shri Balbeer Singh Thak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. The seized cigarettes having details of manufacture were linked with the production in the factory and found that factory was in operation during the months shown on the seized packets of the cigarettes, and this production was then linked with the duties of officers during the month of production. 42.1 Shri K.N. Shabu, Authorized Signatory of M/s ETCL in his statement dt 25.06.2010 stated that cash sale and purchase was looked after by Shri Shyam Khemani, Director of ETCL. Shri Shyam Khemani, Director of M/s ETCL, Indore in his statement dt 09.12.2010 agreed with the proceeding of Panchnama dt 14.05.2010 and stated that they have issued invoice as per name and address given by the buyer and cash sales were made. He did not appear on summons and did not co-operate and gave evasive answers. He sent his retraction in the form of affidavit on 17.05.2011. The Registrar of Trade Mark Authority of India, Mumbai vide their letter dt 09.02.2012 forwarded details of brands owned and registered in the name of ETCL. This proves that ETCL was brand owner of cigarettes which were seized at different places. That in his statement dt. 22.02.2011, Shri Tikamchand, owner of M/s. Mahalakshmi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operation during the months shown on the seized packets of the cigarettes. This production was then linked with the duties of officers during the month of production and they were charged under Rule 26 of the CER, 2002. That charges against Superintendent Shri J C Solanki and Inspector Shri Devendra Parmar are on ground of ignoring the available stock at the time of visit, which is evidence of connivance, aiding and abetting the clandestine clearance; they have not followed Trade Notice No. 7/2009 dt 25.11.2009 in letter and spirit and in sealing report they did not specify the type of machine sealed i.e. whether filter or non-filter. That they avoided answers to question put to them on pretext of absence of records. Shri J C Solanki, Superintendent was made co-noticee for the purpose of penalty only. However, Shri J C Solanki along with other officers- noticees proceeded to cross examine the witness by himself. When any of statement was not recorded against their role and none have alleged about their role, the cross examination by them is beyond the purview of Section 9D of CEA and shows that he acted for or on behalf of the assessee. That only an assessee has the opportunity to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case include only on 708 cartons of cigarettes in year 2008 and the maximum demand pertains to the period 2010. There was no complaint filed by ETCL to any authority for counterfeiting other brands, like K-10, Opera House, Globus, which were also claimed to have manufactured illegally. No follow up of FIR and action on the FIR was not revealed. No further FIR lodged. It means that there was no complaint of counterfeiting of brands after 2008. No civil suit filed under Trademarks Act, 1999 (effective from 15th Sept 2003). As per this Act, the owner of a registered trademark may commence legal proceedings for trademark infringement to prevent unauthorized use of that trademark. 42.4 In case of seizure of brands manufactured by other manufacturer i.e. Seizure Report at customer places viz. M/s Mahalakshmi Enterprises, Coimbatore wherein the panchnama states that the officers came to search for clandestine purchases from units in North India and brand of ETCL along with other 4 brands cigarettes were seized; In case of Panchnama/Seizure Report at M/s Sri Samunda Trading Co., Coimbatore which states that consignments have been received from various factories from North India; Pan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Samunda Trading Co., Coimbatore; Sh. KothaVenkateshwarlu, Prop. of M/s Sri Gopala Kishna General Stores Vijaywada returned undelivered. 42.7 That during Examination-in chief all statement makers affirmed their statements. The answers given by the witness during cross examination were not matching with any evidence/proof. The cross examination by officers is not legal. The cross examination had been sought by Shri J C Solanki, officer-Noticee and other Noticee-officers, who were not an assessee in the case, but co-noticees. Statement was recorded on their role of aiding and abetting in the evasion. On the contrary, the assessee defended their case among many grounds including the ground that there was no connivance between officers and ETCL. In view of the provisions of Section 9D and law laid down by Hon ble HC, any cross examination by a person which is not admitted, in evidence, against him do not qualify admittance and considered null and void. In such a case, the statement of statement maker duly supported and admitted during Examination-in-Chief are admittable, in evidence, as such. In view of law laid down, all cross examination sought and conducted by Shri Solanki and ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e also relied upon orders in case of CCE, Salem Vs. CESTAT, CHENNAI 2019 (366) E.L.T. 647 (Mad.) as upheld by Apex Court in Special Leave to Appeal (Civil) Nos. 12880-12882 of 2019, SUDHIR SHARMA Versus CCU 2015 (319) E.L.T. 450 (Del.), HARIKA RESINS PVT LTD AND SAMA RAJASEKHAR Vs. CCU CE, GUNTUR 2021 (7) TMI 891 - CESTAT HYDERABAD, GULABCHAND SILK MILLS PVT. LTD. Versus CCE, HYD.-II 2005 (184) E.L.T. 263, POWER CONTROL CORP. Vs. C.C.E. S.T., JAIPUR-I 2019 (369) E.L.T. 471 (Raj.), N.R. SPONGE PVT. LTD. Vs. CCE, RAIPUR, 2020 (372) E.L.T. 321 (Chhattisgarh High Court). He submits that confessional statements are out of the ambit of Section 9D as held in case of SILICONE CONCEPTS INTERNATIONAL PVT. LTD. Vs. CCU, ICD, TKD (IMPORT), NEW DELHI 2019 (368) E.L.T. 710 (Tri. - Del.). That demand based on confessional statement is justified as held in case of CCE, MUMBAI-V VS. NIPON ZIP INDUSTRY PVT. LTD. 2009 (236) E.L.T. 554 (Tri. - Mumbai) and JJ. K.I. PAVUNNY Versus ASSTT. COLLR. (HQ.), C. EX. COLLECTORATE, COCHIN 1997 (90) E.L.T. 241 (S.C.). Reliance has also been placed on case of CCU, MADRAS OTHERS Versus D. BHOORMULL 1983 (13) E.L.T. 1546 (S.C.), N.S. MAHESH Versus CCU, COCHIN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his means that the remaining production from these two machines for the period 1200 Hrs. till 6 PM would be 864000 cigarettes. The total stock alleged to be in excess was 692000 cigarettes. The production of 6 hrs i.e. 1200 hrs to 6 PM comes to 8,64,000 cigarettes which is far in excess of 6,92,000 cigarettes. When in Panchnama there is no mention of stoppage of production on 14.05.2010 after 1200 Hrs, nor the adjudicating authority has held otherwise, it is to be construed that the production was continuing and the alleged excess production pertains for the period from 1200 Hrs to 6 PM. We find that during cross examination, Shri Ravidutt Shankar who was heading the visiting officers, in answer to questions has stated that the goods produced on 14.05.2010 might have been seized. We also find that signatures of the Inspector Shri Devendra Parmar who was deputed for physical supervision of factory and was present throughout the proceedings, were not obtained on Panchnama proceedings nor his statement was recorded. Further the investigating officer himself is of the view that the production of 14.05.2010 might also have been seized. In such view of facts it cannot be said that there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hed Settlement Commission, New Delhi accepting manufacture of cigarettes bearing brand names of M/s ETCL, Indore and accepted duty liability on the cigarettes seized from them. Vide Final Order No. F-1406-1409/CE/13-SC (PB), dt.16-08-2013 of the Settlement Commission, the matter was settled. It is also on record that some other manufacturers were making counterfeit cigarettes under brand name of M/s ETCL and for which M/s ETCL had filed police complaints. Even the department was in knowledge of the said facts. This clearly shows that some cigarettes manufacturers were engaged in clandestine manufacture and clearance of cigarettes bearing brand name of M/s ETCL. Further the cigarettes were found in open market and without any investigation of source of such cigarettes demand could not have been confirmed. These evidences were not appreciated by the adjudicating authority. In the light of above facts the duty demand against M/s ETCL is not correct. 45. In case of demand of Rs. 1,03,74,648/- made in show cause notice dt 16.02.2011, the demand is on cigarettes seized from South India traders viz. from traders at Coimbatore, Vijaywada, Tirur and also from traders of Kanpur. The adju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16.07.2013 was confirmed by the adjudicating authority by relying upon Railway receipts containing name of other goods, lorry receipts of other goods, kaccha slips and other records of transporter M/s Lucky Bagga Transport Co., Hyderabad and Indore, statements of clerks of Lucky Bagga Transport Co, private records seized from Railway clearing agent Shri CSM Althaf and his statement. 46. We find from the facts on record that the sole reason for confirming the above demands and imposing penalties on Appellants is alleged incriminating papers/ records seized from third parties viz. traders, railway agent and transporter and their statements. None of the alleged incriminating documents and papers were seized from M/s ETCL or person connected with the said firm. The central excise duty is on manufacture and removal of goods and it can be recovered from the manufacturer when there is evidence of manufacture and removal of goods. The charges of clandestine manufacture and removal has to be shown by adducing evidence of receipt of unaccounted raw/packing material in factory, use of raw material for unaccounted manufacture of finished goods, installed capacity, consumption of electricit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidence has been adduced to establish that seized goods were manufactured in the factory of the appellants and were clandestinely cleared and transported to the alleged places. There cannot be a demand of duty of central excise without establishing manufacture of excisable goods. The CBEC in its Circular No. 1063/2/2018-CX dated 16/2/2018 while placing reliance upon the judgment of Hon ble High Court of New Delhi in Para 8 has observed that : 8. Decision of the Hon ble High Court of Delhi dated 02.12.2015 in the case of M/s Vishnu Co. Pvt. Ltd Others in CEAC 62/2014 with 73-90/2014. 8.1 Department has accepted the aforementioned order of the Hon ble High Court of Delhi where the Hon ble High Court dismissed the departmental appeal holding that there is no substantial question of law involved. 8.2 In the case, the Assessee was engaged in the manufacturer of 'Vimal' Gutkha/ Pan Masala. DGCEI issued two SCNs alleging suppression of production and clandestine removal. Adjudicating authority confirmed the said demands. On party's appeal, CESTAT confirmed demand, interest penalty in respect of one order, setting aside the other order observing inter ali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arette papers, CFC Cartons or raw material and finished goods storage at factory. There are no evidence of transportation of goods from factory. No person from the transporter firm or railway has named any person from ETCL who might have booked the consignments. No person from the statements makers has named any person connected with ETCL who has dealt with them. The demands on the basis of calculation of transport records and railway receipt is derived on assumption basis since these are private records. Our views are also based upon judgments in case of CCE, Delhi Vs. Balaji Perfumes 2017 (4) TMI 1288 (Del HC), Mahavir Metal Industries Vs. CCE CU, Daman, Vapi 2012 (2) TMI 469 Cestat Ahmedabad, Vishwa Traders Pvt. Ltd. Vs. CCE Vadodara 2011 (10) TMI, CEs.- Ahm., Kothari Pouches Ltd. Vs. CCE, New Delhi 2000 (9) TMI 177 CEGAT Delhi that the third parties records and statement, in absence of any corroboration are not evidence of clandestine removal. We also find that the revenue has not produced a single evidence of purchase of raw material and production of cigarettes on which duty demand has been made. 49. The duty amounting to Rs. 28,39,43,195/- demanded in SCN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remises, loading of goods therein, security gate records, transporters documents, such as L.Rs, statements of lorry drivers, entries at different check posts, forms of the Commercial Tax Department and the receipt by the consignees; (v) Amount received from the consignees, statement of the consignees, receipts of sale proceeds by the consignor and its disposal. In the instant case, no such evidences to the above effect have been brought on record. The above order of the Tribunal has been upheld by the Hon ble High Court of Allahabad as reported in Commissioner of C.Ex., Meerut-I Vs. R.A. Castings (P) Ltd., reported in 2011 (269) E.L.T. 337(All.) and by the Hon ble Apex Court as reported in 2011 (269) E.L.T. A-108 (S.C.). The revenue has submitted that the seizure of raw material and packing materials, (third party godown) shows that the above procurement is evidence of manufacture. We find that no evidence to link such seized goods with M/s ETCL is on record. No evidence of storage of such goods by Appellant has been put-forth by revenue. Merely on the basis of retracted statements and without any corroborative evidence M/s ETCL cannot be alleged to have stored suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shyama Papers Ltd vs. CCE, Luck now - 2004 (168) ELT 494 (Tri. - Del), Shree Sidhbali lspat Ltd vs. CCE, Nagpur 2017 (357) ELT 724 (Tri. - Mumbai). In case of Centurion Laboratories v CCE, Vadodara, 2013 (293) ELT 689, it was held that reliance on private records maintained by private persons for their own use cannot be the sole basis for demand. There should be corroborative evidence by way of statements of purchasers, distributors or dealers, record of unaccounted raw material purchased or consumed and not merely the recording of confessional statements. 52. Coming to the reliance placed in show cause notices on statements and documents of third parties viz. trader, transport clerks, and railway agent which is sole basis for demand, we find that the Appellant during adjudication had sought cross examination of persons and panchas/witnesses and traders/transport employees whose statements were relied upon in the show cause notices. The adjudicating authority did not permit the cross examination against which M/s ETCL filed appeal before the CESTAT which vide Order No. A/52550/2016-SM(BR), dated 23-6-2016 reported in 2017 (347) E.L.T. 614 (Tri. - Del.) by relying upon the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s examination only of Shri Mangal Ram Rajpurohit, Proprietor of M/s Samunda Trading Co., Shri CSM Althaf, Railway Agent and Godown owners of Indore. Even though all the above persons during cross examinations refused their statements (during investigation) and stated that the statements were recorded as per the say of the officers, but still the adjudicating authority considered their statements as reliable holding that these persons during their examination-in-chief have affirmed their statements. We find that during investigation, statements of many traders of Kanpur, Coimbatore, Tirur and Vijaywada were recorded. On perusal of statements of traders we find that only Shri Mangal Ram Rajpurohit of Samunda trading Co. and Shri Kotha Venkatleswarlu stated to have procured cigarettes from ETCL. All other traders in their statements stated that they have purchased cigarettes from hawker/ salesman or from Delhi etc. Shri Mangal Ram Rajpurohit in his statement has stated to have received goods through Shri CSM Althaf from M/s ECTL owned by Shri Kishore Wadhwani. The proprietor of M/s Gopal Krishna General Store - Shri Venkateswarlu Kotha in his statement has stated to have received good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refused knowing about M/s ETCL and has clearly stated that the goods were transported as per description given in challans. We find that since the persons who were called upon for cross examination have refused/retracted from their statement and there is no corroboration of their statements from M/s ETCL, hence the statements and their record cannot be made basis to demand duty from M/s ETCL. 53. We also find that though M/s ETCL had requested for cross examination of Shri Mangal Ram Rajpurohit and Shri Kotha Venkatleswarlu but only Shri Mangal Ram Rajpurohit was summoned. The adjudicating authority has contended that during examination in chief of Shri Mangal Ram Rajpurohit, has confirmed his statement. Taking such examination-in-chief as basis not only of Shri Mangal Ram Rajpurohit but also of other persons viz. Godown owners at Indore, the adjudicating authority has sought to nullify the result of cross examination and held that the statements are admissible. From the examination-in-chief proceedings undertaken by the adjudicating authority, we find that during examination-in-chief, the adjudicating authority himself did not undertake any exercise to verify the facts or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be recorded as dictated by officers otherwise, they will book entire case against me. Therefore, he gave those statements under the fear of such threats. The other person is Shri Mangal Ram Rajpurohit - trader whose statement was made basis for alleging that the cigarettes were supplied by M/s ETCL whose owner is Kishore Wadhwani. In his cross examination dtd. 22.08.2019 with reference to his statement dated 31.05.2011, he answered that he does know ETCL and he has not purchased ETCL branded cigarette from Indore or MP. We also note that the show cause notice and the impugned order has vehemently relied upon the statement of Railway Agent Shri CSM Althaf and Shri Kotha Venkateswarlu. We find that Shri CSM Althaf in his statement dated 12.04.2011 and Shri Kotha Venkatleswarlu in his statement dt. 25.02.2011 as appearing in Para 15 of the impugned order had stated that the brands are manufactured by ETCL whose owner is Kishore Wadhwani. The show cause notice on this basis had proposed penalty upon Shri Kishore Wadhwani. The adjudicating authority has though relied upon the statements and seizure from such person to demand huge amount of duty from M/s ETCL but at the same time did no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is no mention of Shri Shyam Khemani in the agreement. He has never met any Shyamlal Sindhi nor Shri Shyam Khemani and signatures on said agreement do not match with shown signatures of Shri Shyam Khemani. Shri Ashish Ajmera during his cross examination affirmed before the Adjudicating Authority that he gave his shed no. 2 on rent to Shri Shyamlal Prakash Chand Sindhi and only as per the understanding given in Panchanama dated 16/3/2011 he has referred Shyamlal Sindhi as Shyam Khemani. He further stated that the amount of rent and agreement was received from some broker and he has never met any Shyamlal Prakashchand Sindhi nor any Shyam Khemani. He also confirmed that shown signatures of Shyam Khemani do not match with signature of Shyamlal Sindhi as on the agreement. We also find that in the show cause notice, no evidence has been adduced to show that the cigarettes seized either from the traders located at different places and godown were cleared by M/s ETCL. The traders and others who were allowed to be cross examined has refused having dealt with the alleged goods rendering their statements otiose. Even otherwise the statements of third parties cannot be made the stand-alone b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hanabhai Khalpabhai Patel - 1992 (3) TMI 89 - Supreme Court; Jethamal Pithaji Vs. Assistant Collector of Customs, Bombay and Another - 1973 (9) TMI 55 - Supreme Court; Kanungo Co. Vs. Collector OF Customs, Calcutta and Others - 1972 (2) TMI 35 - Supreme Court; Commissioner of Central Excise, Delhi-1 Versus Vishnu Co. Pvt. Ltd. Others, G.G. Carriers, Laxmi Freight Carriers (P) , Ltd., Mohammed Kayum Khan, R.K. Tripathi, Santosh Tobacco, Gopi Road Lines, H. Sunder, Harsh Transport Pvt. Ltd., Singhal Transport Co., Paramjeet Singh Kakkar, Delhi Indore Transport Co., Paramjit Singh Kakar, Gopi Road Lines, Laxmi Paraksh Gupta, Sh. Gopal Krishan Parashar - 2015 (12) TMI 593 - Delhi High Court; Flevel International Versus Commissioner of Central Excise - 2015 (9) TMI 1151 - Delhi High Court; Aswani Co. Vs. CCE, Delhi-I - 2014 (12) TMI 1213 - Cestat New Delhi ; Jagdish Shanker Trivedi Vs. Commissioner of Customs, Kanpur - 2005 (7) TMI 250 - Cestat, New Delhi; Jagmohan Singh Sawhney Vs. Collector of Customs, Delhi - 1994 (10) TMI 163 - CEGAT, New Delhi; Lakshman Exports Limited Vs. Collector of Central Excise - 2002 (4) TMI 66 SC; Swadeshi Polytex Ltd. Vs. Collector of Central Exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is under physical control of the Department. The statement of Shri K. N. Saboo along with the Police Complaints dt. 24-12-007, 4-4-2008 and 20-5-2008 are enclosed for necessary action at your end. The Joint Commissioner also informed that if any further investigation are needed the DC, Vijaywada may provide few sample packets of Harbour brand cigarettes seized by them, so that the batch no., month of manufacture etc. could be verified. That also O.P No./ Carton No. mentioned on CFC/ Cartons may be mentioned so that the same may be matched from the products at the manufacturers end. From the above communication it is clear that even the department knew that fake cigarettes in name of M/s ETCL were being manufactured. It is also on record that cigarettes showing M/s ETCL as manufacturer were also manufactured at Rajasthan. We also find that M/s ETCL has been selling their cigarettes to one M/s Shiv Supari Centre Indore who was the bulk buyer of cigarettes from them. However no investigations were conducted as whether the said concern supplied the cigarettes purchased from M/s ETCL to the persons from whom cigarettes were seized. It was necessary to ascertain as to from where the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... naras whose number is 9839057132, 9889307705 who sometimes calls me on phone and accordingly I place order. From such instance, we find that it is evident that the seized cigarettes were received from different places and persons, and were being manufactured at multiple locations. No relation with such supply originating from ETCL have established by Revenue. 58. We also find that there is no evidence of manufacture of excess cigarette by M/s ETCL. The allegation of clandestine production and removal has to be established against any person by independent and tangible evidence in the form of receipt of raw material in factory and non accountal thereof, use of such raw material in clandestine manufacture of finished goods, consumption of electricity, labour employed and payment made to them, packing material used, discrepancy in stock of raw materials and finished products, security gate records, independent evidence of transportation of goods and its linkage from removal from factory, transport documents, receipt of goods by the buyer and receipt of sale proceeds by the consignor. No such evidence has been brought on record. The show cause notice and the impugned order has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ettes seized from traders or godowns were bearing packing/manufacturing date, when these officers were deputed for physical supervision of the factory of M/s ETCL, it cannot be concluded that they were involved in helping M/s ETCL in alleged evasion. It is also coupled with the fact that when the factory of M/s ETCL was lying closed during June and July 2010, even then the cigarettes allegedly manufactured in those periods were found in market, the officers posted at factory were not made noticee on the ground that factory was lying closed. This itself gives credence to the contention made by the Appellants that fake cigarettes were being sold in market. It is noteworthy to mention that the revenue has not been able to even show that the seized goods were manufactured or removed from factory of M/s ETCL, as we have found in above paras. In such case no case is made out against the Appellant officers. No evidence in the form of communication or pecuniary benefits availed by the officers from M/s ETCL is on record, which can indicate any alliance between the Appellant officers and ETCL for any clandestine manufacturing. Further in case of officers who were penalized on allegation of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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