TMI Blog2022 (7) TMI 229X X X X Extracts X X X X X X X X Extracts X X X X ..... llenged the impugned order on the ground that factory was rented out to Shri Abdul Salam, and hence the demand of duty from him is wrong, since the Gutka was manufactured by Shri Abdul Salam and hence Mr. Salam is the manufacturer. That the statements relied upon by the adjudicating authority are not reliable and that the duty demand itself is not sustainable, as on merits also there cannot be any duty demand. Ownership of factory premises of M/s Mahadev as on 18.02.2011 i.e on the day of the visit of the officers and demand of duty and penalty - HELD THAT:- After considering the facts we find that first it ought to be seen as to whether the Agreement was signed with the consent of both the parties and the fact to be taken into account is whether the contracting parties intended to make it effective from 11.02.2011, and whether it was signed after 11.02.2011, which was not verified or doubted. The Adjudicating Authority failed to consider that the said contract was for transferring the unit making sweet supari. There is no scrutiny on point of the intention of Shri Abdul Salam to enter into contract for taking factory on rent, so as to determine that whether he was allured to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and clearance of Gutka pouches before 18.02.2011 by M/s Mahadev is on record, in that case no demand before February, 2011 can be made from M/s Mahadev. Demand and penalty made against M/s MSS - Corroboration of statements - HELD THAT:- There is no evidence of receipt of manufactured tobacco from M/s Shiv Udyog or procurement of other raw material such as supari, kattha and lime which are required to manufacture Zarda masala by M/s MSS. The show cause notice and the impugned order has relied upon the retracted statement of Shri Anmol Mishra, terming him as Manager of M/s Mahadev and owner of Bhourasala premises, as well as by Supervisor of M/s Mahadev - Shri Ramesh Dammani, that Zarda masala was received from M/s MSS. Though such statements has been retracted, but we find that even there is no corroboration of such statements with even a single evidence. Only on the basis of retracted statements and coupled with fact that there is no procurement of raw material/ packing material, manufacture, clearance and transportation and receipt of consideration or identification of buyers, no duty demand can be made against M/s MSS. No discrepancy in stock was noticed on 19.02.2011, whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e impugned order has not brought any evidence that Shri Anmol Mishra has earned any amount from alleged manufacture and removal. In such case there is no reason to implicate him as manufacturer. Not a single supplier of raw material or buyer of finished goods has been identified. Only on the basis of call records and assumption, he cannot be burdened with duty demand. Consequentially no duty can be demanded or penalty can be imposed upon him. Also there is no reason to impose penalty on Shri Sunil Sadhwani or Shri Amarchand Upadhyay. The impugned order has held that Shri Sadhwani was instrumental in storing the seized goods being partner in a firm producing gutkha and pan masala. We find that no physical/ material evidence in relation to procurement, storage, transportation, unloading, godownkeepers etc in relation to seized goods by Shri Sunil sadhwani or M/s MSS is on record. The Appellant and its partners were regularly complaining that duplicate products of their brands are being sold in the market. Even then no attempts were made for any forensic test or visual comparision or chemical analysis of the seized / abandoned materials with the goods of the appellants. In absence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are Shimla, Vansh, Malik chand, Mama, Kargil. Appellant Sh. Bahadur Singh is working in M/s MSS Food Processors as electrician. Appellant - M/s Mahadev Shiv Shambhu Freshners Processors is Proprietorship firm of Shri Omprakash Talreja engaged in manufacturing and packing of sweet supari in pouches and claiming benefit of SSI exemption. Their factory is located at 231-B, Sector-F, Sanwer Road, Indore. Appellant, Sh. Ramesh Dhammani is the Supervisor in M/s Mahadev Shiv Shambhu Freshners Processors. Shri Omprakash Talreja had given the factory premises with machinery on lease of Rs. 30,000/- per month for manufacture of sweet supari to Sh. Abdul Salam w.e.f. 11.02.2011. The appellant Shri Anmol Mishra is alleged to be employee of M/s Mahadev Shiv Shambhu Freshners Processors and also alleged to be the occupier / manufacturer of Gutka at 12A, Private Industrial Area, Village Bhorusala, Indore. 3. Brief facts of the case are that based upon searches and statements recorded during investigation and seizure of vehicles alongwith goods loaded therein, following show cause notices were issued: (i) A Show Cause Notice C. No. IV (16)11/SIC/2011/23061 dated was issued on the basis of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upplied by M/s MSS, and has also provided them their vehicle No. MP09 KC-5789 for transportation of the clandestine manufactured Gutkha. He has apparently not received the rent amount from Shri Abdul Salam, as he could not show the accounting of said amount. Statement of Shri Abdul Salam was recorded on 15.11.2011 wherein he accepted the Rent agreement and hiring of factory. He also stated that he was in factory on 18.02.2011 but went for having refreshment between 11 - 11.30 Hrs., and when came to know of the visit of the officers at 12.30, he ran to Ajmer and other places and came back on 03.11.2011. He refused knowing Shri Ramesh Kumar Damani or Shri Anmol Mishra. In his statement dt. 16.11.2021 he declined to state anything about statement of Notary Shri Pujari, but stated that the agreement was prepared by him and Shri Omprakash Talreja, and had paid an amount of Rs. 90,000/- in cash towards rent. Based on investigation and statements recorded, the Show Cause Notice alleged that the agreement dt. 11.02.2011 between Shri Talreja and Shri Abdul Salam is farce, as the same is ante dated as per statement of the Notary Shri Pujari. No rent was paid by Shri Abdul Salam to Shri Ompra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng machines were found which were connected to the power point and the power supply was through 125 KVA Diesel Generator, which was filled with diesel. Three outer packing-sealing machines, two weighing machines, one bag stitching machines, finally packed Gutka pouches of SHIMLA and MALIKCHAND Pan Masala/ gutka bearing name and address of MSS, Gutkha Masala weighing 595.07 Kg (for packing of Gutkha Pouches) were also found. It was alleged that Pan Masala Gutkha was manufactured in said machines clandestinely by Shri Anmol Mishra. The witnesses of rent agreement Shri Jitesh Joshi and Shri Ghanshyam Pawar has confirmed the said rent agreement. The hand writing expert in his report has indicated that pattern of disputed signature on rent agreement (of A. Mishra) were matching with accepted signatures and therefore it appeared that the signature on rent agreement are of Shri Anmol Mishra. M/s MSS has provided the raw material (Gutka for packing), laminations and other logistic support to Bhourasala premises for clandestine manufacture and clearance of Gutkha pouches of various brands of M/s MSS. Shri Anmol Mishra has taken on rent the said premises from Shri Dinesh Mehta and is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds were stored and being supplied to the unregistered factory of M/s Mahadev and at Bhourasla, for clandestine manufacture of Gutkha/ Pan Masala. The show cause notice proposed confiscation of seized goods viz. 72115 Kgs of Printed lamination rolls valued at Rs. 1,80,28,750/- and 18160 Kgs of Outer pouches valued at 32,56,750/- and imposition of penalty on Shri Sunil Sadhwani, M/s MSS Food Processors and Shri Liaqat Ali (Godown Owner). (vii) A show cause notice C. No. IV (16) SIC/08/2011/5622-5628 dt. 13.02.2012 was issued based on seizure of Truck No. UP-78-AN-4940 on 23.02.2011, which was found in abandoned condition and loaded with 4275 Kgs of lamination rolls of SHIMLA brand gutkha and pan masala bearing name and address of M/s MSS Food Processors. The truck was found to be owned by Shri Shiv Bahadur Singh Chouhan, an employee of M/s MSS, as accepted by Shri Sunil Sadhwani, Partner of M/s MSS. The show cause notice proposed confiscation of seized truck and seized goods viz. 4275 Kgs of Lamination and 678.60 Kgs outer packing, having Shimla brand printed on them and proposed penalty on Shri Shiv Bahadur Singh, M/s MSS Food Processors and Shri Sunil Sadhwani. (viii) A Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he unit and the retail sale price of the pouches manufactured with the aid of such packing machines (FFS) and unless evidence to the contrary is provided to the satisfaction of the Central Excise officer, such machines shall be deemed to have been in operation since the 1st day of April of the financial year in which the unit was found to be not registered, and shall be construed as operating packing machines for the purpose of Rule 7 and dealt with accordingly. That on the day of search on 18.02.2011 at the factory of M/s Mahadev, the Pan Masala packing machines were engaged in clandestine manufacture and removal of Gutkha Pouches and thus according to Rule 17 (2) of Pan Masala Rules, the machines shall be deemed to have been in operation since the 1st day of April 2010, as there is no evidence that such manufacturing was going on since 01.06.2007. The adjudicating authority placed reliance on the judgment of Tribunal in case of Shri Krishna Gopal Lawania and Others reported in 2018 (7) TMI 1278. Accordingly demand of Rs. 56,37,50,000/- was confirmed for recovery from M/s Mahadev Shiv Shambhu Freshner Processor for the period 01.04.2010 to 18.02.2011 alongwith equivalent penalty. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing authority ordered confiscation of Truck No. MP09 KC 5789 valued at Rs. 2,19,966/-, and absolute confiscation of goods found to be loaded viz. Gutkha and Pan Masala pouches of Malikchand and Shimla brands alongwith lamination rolls, secondary and outer packing valued at Rs. 6,73,460/-, Cotton box of acetate valued at Rs. 1,79,850/-, Gutka mix valued at Rs. 3900/-. He also imposed penalty of Rs. 3,00,000/- under Rule 25, penalty of Rs. 2,00,000/- under rule 26 of CER, 2002 and of Rs. 1,00,000/- under Section 112 (2) of Customs Act, 1962 on M/s Mahadev. The above order was passed on the ground that the vehicle was registered in the name of M/s Mahadev and was used for transportation of clandestinely manufactured gutkha/ pan masala pouches. Shri Omprakash Talreja during enquiry gave vague replies and did not submit any bill/invoice showing payment of central excise duty on seized goods and hence the same are liable for confiscation under the provisions of Rule 25 of Central Excise Rules, 2002 readwith Rule 17 (1) of Pan Masala Rules. In case of acetate, no documents showing bill/ invoice of custom duty payment was produced and hence the same is liable for confiscation under the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority ordered absolute confiscation of lamination roll and outer packings, confiscation of vehicle. He also imposed penalty of Rs. 3 Lakhs each on Shri Shiv Bahadur Singh Chauhan and M/s MSS. The order was passed on the ground that Shri Shiv Bahadur Singh Chauhan is the owner of said vehicle and did not turn up for enquiry even after issue of summons. Shri Shiv Bahadur vide letter dt. 07.07.2011 informed, that on 02.10.2010 he had sold the truck to one Shri Shambhu Singh, and enclosed photocopies of some documents namely Bikri kray Saudaraseed, delivery note, Form 29, Form No.30 (under C.M.V. Rules) affidavit letter of seller and purchaser which was notarised by Notary Shri K.M. Jaiswal. On enquiry it was revealed that Shri Shambhu Singh had expired in the month of March 2011 and never visited Indore in October 2010. He has never purchased any vehicle in his life time. The officers obtained his signatures from Micro financing organisation and the signatures were different from that made on vehicle purchase documents. Shri K.M. Jaiswal in his statement stated that although the document has been entered in his notary register on 02.10.2010 but actually the said document was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he seized goods at aforesaid locations. M/s MSS was aware that such laminations and outer packings found in vehicle no UP78-AN-4940 were not duty paid excisable goods and were liable to confiscation. Therefore M/s MSS found to be dealing with excisable goods which were liable for confiscation and is liable for penalty under Rule 26 of CER, 2002. (ix) In case of show cause notice IV (16) SIC/15/2011/24996-25000 dt. 24.08.2011 issued to Shri Sunil Sadhwani, M/s MSS and Liaquat Ali owner of Godown at 28-A, Sector C , Sanwer Road, Indore on seizure of 72,115 Kgs of printed lamination rolls and 18610 Kgs of outer pouches, the adjudicating authority ordered absolute confiscation of the goods and also imposed penalty of Rs. 25 Lakhs each on Shri Sunil Sadhwani and M/s MSS. He held that during visit on 27.02.2011, the goods were found to bear name and address of M/s MSS. The landlord Shri Liaqat Ali informed that premises was rented out to Shri Sanjay Ajwani resident of 212, Bholenath Colony w.e.f. 01.07.2007 on monthly rent of Rs. 13,000/-. That rent was paid by one Shri Shyam, who was introduced to him by his neighbour Shri Mohd. Niyaz Khan. On enquiry with Shri Niyaz Khan it was r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and was unavailable to confirm the status on 18.02.2011, when the visit was made to the factory by the officers. It was alleged that two persons namely Shri Anmol Mishra and Shri Ramesh Dammani were employed by the Appellant as Manager and Supervisor. Shri Omprakash Talreja on 16.05.2011 during recording of his statement submitted his affidavit alongwith agreement dt. 11.02.2011 with Shri Abdul Salam. The statements of Abdul Salam were recorded on 15 and 16.11.2011 and he has clearly stated that he was in the factory of M/s Mahadev on 18.02.2011. At the time when the Raid team arrived, he was outside the factory at tea stall, but due to raid he escaped without informing anyone. He got transferred Rs. 60,000/- in his account from the bank account of Shri Paras Jain in the month of July 2011 so that he can pay rent by cheque to Shri Omprakash Talreja. The Adjudicating Authority has wrongly contended that appellant devised a plan to escape the central excise duty liability by putting up Shri Abdul Salam, as if he was running the factory on 18.02.2011 or that the Rent Agreement dt. 1.02.2011, Notarized by Notary Shri D.B. Pujari was ante dated in his notary register. The Appellant had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... support the deeming fiction of section 3A read with Rule 17(2) of P.M. Rules applied. The adjudicating authority has relied upon the statement of Shri Suresh Katiyar, Supervisor at M/s Shiv Udyog to canvass that M/s MSS were getting the manufactured tobacco produced at M/s Shiv Udyog, and then supplied to M/s Mahadev as Gutka Mix. Shri Katiyar has retracted his statement during cross examination and hence cannot be considered as evidence. The Ld. Counsel relies upon decision of Tribunal in case of Rohit Vashishtha, Narendra Kumar, Director, Safe D cor Pvt. Ltd, Vs. CCE ST. JAIPUR I reported in 2019 93) TMI 517 CESTAT NEW DELHI. He submitted that the Ld. Commissioner in impugned order in paras 90.5 has relied upon the statements of Shri Anmol Mishra, Shri Ramesh Dammani and other workers of M/s Mahadev viz. Shri Ram Avatar Sangle, Shri Surendra kumar Jain, Shri Amar Verma, Shri Ramakant Mishra and Shri Pintu Sharma. However during cross examination Shri Vinod Shukla stated that he is illiterate labour and has never taken name of MSS as source of raw materials. Shri Ramesh Dhammani, Supervisor confirmed that he does not know Anmol Mishra and mentioned the name of Appellant in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant was not given opportunity by the adjudicating authority, in that case the contention of the adjudicating authority, that examination-in-chief and cross examination after eight long years has no meaning, is erroneous. That for retracted statements of Shri Anmol Mishra, the impugned order ignores details of property transactions brokered by him in past years. Merely non compliance of accounting or taxation by a third party cannot be construed against the Appellant M/s Mahadev in any manner. Onus to prove clandestine removal cannot be discharged by unconnected, uncorroborated and retracted statements and uncertified records which are even otherwise inadmissible as evidence. The Appellant relied upon order in case of CCE Vs. Vishwa Traders Pvt. Ltd. 2013 (287) ELT 243 (GUJ), Commissioner Vs. Swati Polyster 2015 (321) ELT A217 (SC), Flevel International Vs. CCE 2016 (332) ELT 416 (GUJ.). Arya Fibers Pvt. Ltd. Vs CCE 2014 (311) ELT 529 (T), TGL Poshak Corporation Vs. CCE 2002 (140) ELT 187 (T). He submitted that Agreement is a document under section 36A of the Central Excise Act and the agreement dt. 11.02.2011 has been challenged by the department without any forensic examinati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd agreement between Appellant - Mr. Talreja and Shri Abdul Salam executed on 11.02.2011, and the premises including machines were given on rent by the Appellant. As such it is clear that the factory premises cannot be held to be manufacturing notified goods prior to 11.02.2011. He placed reliance on this Tribunal order in case of Shri Krishna Gopal Lawanaia Vs. CCE Kanpur 2018 (7) TMI 1278 CESTAT Allahabad. He submits that there is no evidence of manufacture and the theory of preponderance of probability would be applicable only when there are strong evidences leading only to one conclusion of clandestine activities. The said theory cannot be applied in case of weak evidences of a doubtful nature. He also submits that no penalty is applicable for the goods seized from different places nor there is any evidence to establish any commercial link of appellants with manufacturing activity or vehicles or the goods seized therefrom. Hence there is no reason to demand duty and impose penalties u/s 11AC or Rule 25 or 26 of CER, 2002. He also submits that no evidence of any relation of Shri Omprakash Talreja with Gutka Pouches, packing material and Gutka Mix is on record, and hence no pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of duty) Rules 2008 PMPM Rules. Also duty on 10 machines installed at 12-A, Private Industrial Area, Village Bhourasala, Sanwer Road, Indore from M/s MSS and others Jointly and severely under Pan Masala Packing Machine (Capacity determination and Collection of duty) Rules 2008. That on the basis of cash sales of manufactured Tobacco of M/s Shiv Udyog, presumptive calculations were made on the basis of VAT return(s) filed by M/s Shiv Udyog, to determine the duty on gutkha mix allegedly supplied by M/s MSS to factory of M/s Mahadev and factory at Bhourasla Premises and duty was demanded from M/s MSS. The demand from M/s MSS is fully based on presumption and assumptions relying on third party statements. It is presumed that the said quantity of manufactured tobacco of M/s Shiv Udyog was received and used by M/s MSS for the alleged clandestine manufacture of Zarda masala, which was further supplied to M/s Mahadev and the factory at Bhorasla for the clandestine manufacture and clearance of gutkha without payment of duty. There is no evidence on record to show as to how and when and by which mode the said manufactured tobacco was transported to M/s MSS or any evidence of receipt of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts, hence there cannot be any demand. There are no evidences, oral or otherwise, for fresh start of another opinion for period w.e.f 01.04.2010, to allege manufacturing and clandestine removal of alleged Gutkha mix. The deviation in determination and the opinion is merely to support the deeming fiction of Section 3A, applied on M/s Mahadev and Shri Anmol Mishra. Import of such analogy and cross application of Sec 3A is unsustainable. Shri Suresh Katiyar who deposed as supervisor of M/s Shiv Udyog on 24-25.02.2011 has retracted his statements regarding the nexus of brands of the appellants with coded words, and has in his retraction dated 02.03.2011, has complained of his statements being unvoluntary and given under pressure. It is not known as to why he was not enquired about his role and terms of employment at M/s Shiv Udyog. The appellants rely upon the decision of this Tribunal in matter of ROHIT VASHISHTHA, NARENDRA KUMAR KHEMKA DIRECTOR, SAFE DECOR PVT LTD VERSUS C.C.E. S.T. -JAIPUR- I reported 2019 (3) TMI 517 - CESTAT NEW DELHI. The third party retracted statements of Anmol Mishra, Ramesh Dammani and workers of M/s Mahadev are not reliable. The impugned order in Para 90. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one could hold with slightest probability that there have been clandestine manufacture and clearances. That in Pan Parag India v CCE, 2013 (291) ELT 81, it has been held that the theory of preponderance of probability would be applicable only when there are strong evidences heading only to one and only one conclusion of clandestine activities. The said theory cannot be adopted in cases of weak evidences of a doubtful nature. M/s MSS are neither related with the goods seized at different places nor is there any evidence to establish any commercial link of the appellants with the vehicles, godown or the goods seized therefrom. In such a case, no penalty is imposable upon them under Rule 25 or 26 of the Central Excise Rules, 2002. It is also contended that since demand of duty of Rs. 3,48,16,871/- does not survive, hence there is no basis for any penalty under Section 11AC of the Act. 8. The Ld. Counsel appearing for Appellant Shri Anmol Mishra submits that he is a Freelance Real Estate Broker earning livelihood through brokerage. As the brokerage was mostly in cash, the savings were often deposited in banks and used when needed. The non-uniform pattern of income and savings are r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artment ought to have obtained a Chartered Engineers Certificate for the fitness of the wreckage portrayed as Packing Machines as to whether such machines were complete packing machines and whether if not all such machines required at least one hopper etc., for packing of any goods or whether without such hoppers such machines be said to be a functional machine. That immediately after the search and seizure, the officers had taken possession of the alleged wreckages and shifted to Central Excise Office. They made repeated requests for appointment of a Chartered Engineer for inspection of seized machines and to confirm whether in all such equipment there was no hopper, and whether in such a case the seized equipment could be termed as packing machine. The Appellant also placed reliance on CESTAT order in case of Goyal Tobacco Co, Pvt Ltd Vs. CCE Jaipur 2017 (3) TMI 57- CESTAT New Delhi, confirmed by Hon'ble Rajasthan High Court 2017 (XI) TMI 1103 - Rajasthan HC. He submits that they were constrained to obtain an expert's opinion dated 19.08.2019 who certified that the equipment seen in the visuals cannot be used for packing any commodity. That such incomplete machines did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - SUPREME COURT wherein Hon'ble court held that every taxing statue including charging, computation and exemption clause (at the threshold stage) should be Interpreted strictly. That in case of ambiguity in a charging provisions, the benefit must necessarily go in favour of subject/assessee, but the same is not true for an exemption notification, wherein the benefit of ambiguity must be strictly interpreted in favour of the Revenue/State. The denial of cross examination of Panch witness, Photographer and Videographer who were eye witness to status of machines at the time their seizure is erroneous, as the same would have easily reconfirmed the status of machines being incomplete, if the Appellant would have been allowed to cross examine them. There has been deliberate holding of Appellant to represent himself, on the date of visit of the officers on 22.02.2011. There is no determination by the adjudicating authority in his submissions that on 22.02.2011 during search by the officers, why inspite of the appellant being available with the department, was neither intimated nor included in the proceedings. The appellant had all the right to be present and contest the proceedings w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de documents during search is in violation of Section 18 of CEA 1944. The Adjudicating Authority has not considered the procedure and manner of search as contained in Cr. PC 1898. Section 18 of CEA refers to CrPC as to how searches are to be made. During the search it is the duty of the officers to maintain sanity of search proceedings in a cordoned environment, and any unrecorded external or internal breach of such cordoning renders the panchanama stale/void. 10. There is no determination on submissions before the Adjudicating Authority that as per the prevalent law the name and address/details of the tenant is compulsorily required to be reported to the jurisdictional Police Station, and Shri Dinesh Mehta did not do so. There are no findings whether the report obtained by appellants from the Station Officer, Police Station, Banganga, should have any weightage. The adjudicating authority has not appreciated that Shri Dinesh Mehta during search on 22.02.2011, did not mention that he rented it for packing of mithi supari . Just before closing of proceedings he produced the disputed Rent agreement, but no questions were asked. Shri Mehta was not questioned as how is it possible f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esh specimen signatures for comparison, he stated that admitted signatures are adequate. He admitted that in disputed signature only letter A is clear and subsequent letter are neither identifiable nor readable, whereas in admitted signatures subsequent letters are identifiable. He admitted to have compared only initials of Anmol Mishra with his full signatures without having any admitted initials. On being asked for his failure to obtain admitted initials of Anmol Mishra, he stated that people change their signatures during such sampling. He refused the signatures available on PAN card and Driving License as admitted signatures. He admitted that he has not compared all available A in the admitted signatures with A in disputed initials. He also admitted that there is no indication on the disputed document, as to which signature relates to whom. He compared the signatures with a presumption that all signatures starting with A must be that of Anmol Mishra, as none other signature starts with A . He said that the rough notes prepared in the matters are destroyed by him after preparing final report. He admitted that initials cannot be compared with full signatures. He admitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c Document Hand Writing Kothari Market, Indore. (Trained at Central Forensic Science Laboratories (C.B.I.), New Delhi, and Life Member- Indian Academy of Forensic Sciences, Kolkata) and Shri Brijesh Ram Shankarlalji Sharma, 134, Nanda Nagar Stadium Ground, Indore - 452 Oil (M.P.). The adjudicating authority has erred in placing reliance on retracted statements of Appellants, as such statements have no evidential value in eyes of law. He relied upon orders in case of Suntrek Aluminium P. Ltd. Vs. CCU CE, ST 2013 (6) TMI 3 GUJ HC, 2013 (288) E.L.T. 500 (Guj.). The entire case against Appellant has been made against him on the basis of statements. Except for interested third parties, all such third parties statements have been retracted. He relies upon the judgment of the Hon'ble Punjab Haryana High Court in the case of M/s Jindal Drugs Pvt Ltd. Vs. Union of India reported in 2016 (40) E.L.T. 67 (P H) and in case of M/s Ambika International Vs. Union of India reported as 2018 (361) ELT 90 (P H) to submit that not only cross-examination but examination-in-chief is also required to be undertaken during adjudication. The appellant has no nexus with the Pan masala manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances mentioned therein. Similarly, penalty under rule 17(1) of the Pan Masala Rules is also imposable only on the manufacturer of notified goods. Appellant is not the manufacturer of the goods under seizure and does not have any relation with the seized goods. Therefore, penalty cannot be imposed on him under the said rules. Penalty under rule 26 of the CER, 2002 can be imposed on a person only when it is proved beyond doubt that the person dealing with excisable goods knew or had reason to believe that such excisable goods were liable to confiscation. In the instant case, there is no evidence on record to prove that Appellant has acted in a way to attract the penalty provisions of rule 26 of the CER, 2002. The Ld. Counsel has also filed written submission which were taken on record. 13. The Counsels appearing for Shri Amarchand Upadhyay, Shri Sunil Sadhwani, Shri Ramesh kumar Dammani, Shri Shiv Bahdur Singh Chauhan adopted the submission made by the Ld. Senior Counsel and the submissions made in the appeal memo. They submitted that penalty is not imposable on them as no violation of central Excise Rules, 2002 and Pan Masala Rules has been made by them. They prayed for s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le. Though they have retracted their statements but did not give reason to deny the statements after 8 long years. Further they confirmed that earlier Dillagi Supari was packed occasionally, raw material and packing material used to come from M/s MSS. No facility of manufacture of Gutka Mix. No employee, supervisor stated regarding ownership of Shri Abdul Salam. Finished Gutka pouches of Kargill brand valued at Rs. 13,54,640/-, Gutka Mix valued at Rs. 2,26,500/-, Packing material viz. PVC Bags outer packs, pouch laminates of Rs. 1690/-, Rs. 8100/- and Rs.2,00,500/- were found. That the duty as per Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008, based on number of machines installed was made. Shri Anmol Mishra and Shri Ramesh Dammani on 19.02.2011 confirmed their statement dt. 18.02.2011. In case of demand against M/s Mahadev (Proprietor Shri Omprakash Talreja), it was found that though Shri Omprakash Talreja stated that the factory was rented out to one Shri Abdul Salam on 11.02.2011 for Rs. 30,000/- per month, but during investigation it was found that the Rent agreement with Shri Abdul Salam was ante dated from 11.02.2011, to escape from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2011 in Private premises at 12A, Private Industrial Area, Bhourasala Village, Sanwer road, Indore in presence of Dinesh Mehta, the premises was stated to be taken on rent by Shri Anmol Mishra, and 10 Gutka pouch packing machines were found in operative condition to which the power supply was made by 125 KVA generator, and the fuel tank was found to be filled. Three outer packing sealing machines, two weighing machines and one stitching machine were found. Gutka pouches of Shimla and Malikch - and brand and Gutka Mix weighing 595.07 Kgs were found stored. No facility of manufacture of Gutka Mix was found. Shri Dinesh Mehta. Owner of the premises in his statement stated that he used to contact Shri Anmol Mishra. The rent amount of Rs. 30,000/- was paid in cash through wife of Shri Anmol Mishra. Shri Anmol Mishra also appeared as representative of Shri Nitesh Wadhwani in investigation before CBI. Though he refused to know Shri Sunil Sadhwani, but accepted to have made several calls to him. The witness to rent agreement for Bhourasala premises, in their statements recognized the photograph of Shri Anmol Mishra as the person who signed the rent agreement. Shri Anmol Mishra was using m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner of M/s MSS. Shri Shiv Bahadur Singh did not appear for recording of statements and the sale-purchase letter of truck (few months earlier) to one Shri Shambhu Singh was found to be not genuine. The sale/ purchase letter was notarized by Notary Shri K.N. Jaiswal, who in his statement dt. 28.07.2011 stated that the documents were notarized ante dated and the signature of Shri Shambhu Singh was not put before him. The hand writing expert Shri H.S Tuteja in his report also confirmed that the signature of Shri Shambhu Singh were forged. In view of above seizure it is clear that the lamination and packing material for manufacture of Shimla brand were to be used by M/s MSS and hence the confiscation of goods and truck and penalty on M/s MSS is correct 16.5 Shri Sunil Sadhwani, Partner of M/s MSS in his statements confirmed production of Gutkha and Pan Masala in M/s MSS till 16.02.2011 and he used to inform production orally to his accountant Shri Navneet Agarwal. He confirmed his calls with Shri Anmol Mishra but denied relation with seized Pan Masala and Gutkha of Shimla and Malikchand brand. The inter relationship and seizures are collaborative of the modus operandi. The statements ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it of Section 9D and the demand based on confessional statement are justified. He relied upon orders in case of National Boards Vs. CCE, Calicut 2014 (313) ELT 113 (TRI), CCE, Salem Vs. CESTAT Chennai 2019 (366) ELT 647 (Mad.), Sudhir Sharma Vs. CC 2015 (319) ELT 450 (Del.), Harika Resins Pvt. Ltd., and Sama Rajasekhar Vs. CC,CE ST 2021 (7) TMI 891 CESTAT Hyd., Abbas Haji Vs. GOI Othrs 1984 (15) ELT 129 (KER), Power Control Corporation Vs. CCE ST, JAIPUR I 2019 (369) ELT 471 (RAJ.). He further relied upon orders in customs case of Collector of Customs, Madras Othrs Vs. D. Bhoormull 1983 (13) ELT 1546 (SC), that there is no mathematical precision required to show violations, and that the co-noticee cannot be directed to be apart of proceedings, that may incriminate him as held in case of N.S. Mahesh Vs. CC, COCHIN 2016 (331) ELT 402 (KER). That in case of R.S. Company Vs. CCE, Indore 2017 (351) ELT 264 (M.P) it was held that the proof of receipt of scented tobacco, statement of transporter, receipt of lorry receipts are cogent, clear and clinching evidence for clandestine manufacture and removal of tobacco product. FINDINGS 17. Having considered the rival content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es by M/s Shiv Udyog, and as shown in their VAT return. Similarly the finished goods and packing material found from different premises and vehicles has been confiscated and penalties has been imposed upon M/s Mahadev, M/s MSS and Shri Anmol Mishra and other Appellants holding that the goods belong to M/s MSS. We find that Mr. Omprakash Talreja, Prop. of M/s Mahadev has challenged the impugned order on the ground that factory was rented out to Shri Abdul Salam, and hence the demand of duty from him is wrong, since the Gutka was manufactured by Shri Abdul Salam and hence Mr. Salam is the manufacturer. That the statements relied upon by the adjudicating authority are not reliable and that the duty demand itself is not sustainable, as on merits also there cannot be any duty demand. 19. Coming to the ownership of factory premises of M/s Mahadev as on 18.02.2011 i.e on the day of the visit of the officers and demand of duty and penalty, we find that the Appellant M/s Mahadev Shiv Shambhu Freshner processors (Prop. Shri Omprakash Talreja) has contested the duty demand on the ground that the factory was given on rent to one Shri Abdul Salam w.e.f 11.02.2011, who started manufacturing G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugned order is absolutely silent on these material issues and thus highly erroneous. The Agreement is a documentary evidence for the purpose of Rule 17 of PMPM Rules 2008, and when the contracting parties accept the agreement, it cannot be doubted. We also find that the Examination -in- chief of Notary - Shri D.B. Pujari was conducted on 06.12.2018 by the Adjudicating Authority, wherein he stated that he has already filed his retraction from his statement given to the investigating officer. Going by the contents of cross examination and examination-in-chief, we find that since the statement given by Notary Shri D.B. Pujari (during investigation) stands retracted during his cross examination and also during his examination-in-chief and there are no evidence contrary to both above, hence the statement of Shri D.B. pujari cannot be relied upon. Further we find that Shri Abdul Salam during his examination-in-chief on 07.03.2019 has also stated that he has operated the factory of M/s Mahadev from 11.02.2011 till 18.02.2011 and during this period he packed the Gutka pouches. He has also stated these facts in his statements dt. 15.11.2011, 16.11.2011, and in his affidavit dt. 04.02.2014 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for cross examination after issue of show cause notice dt. 06.07.2012, which was not granted and the Appellants being aggrieved had filed appeal before CESTAT against such refusal. It was only after the Final Order No. A/52551/2016 SM (BR) dt. 23.06.2016 passed by the CESTAT and subsequently upheld by the Hon ble High Court and dismissal of SLP filed by the Department, that cross examinations were permitted. In such circumstances when the Appellants had no opportunity to test the veracity of the statements due to refusal of the revenue, it cannot be said that the examination-in-chief and cross examination after eight years, will not serve any purpose. No fault can be attributed to the Appellants and the cross examinations answered by the workers and others are admissible. The adjudicating authority has also relied upon the statement of Shri Anmol Mishra, Shri Ramesh Dammani - Supervisor of M/s Mahdev and workers viz. Shri Ram Avatar Sangle, Shri Surendra Kumar Jain, Shri Amar Verma, Shri Ramakant Mishra, Shri Pintu Sharma. We find that Shri Anmol Mishra on his release on 23.04.2011 from jail, filed retractions of his statements recorded by the officers during the intervening peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Pan Masala Packing Machines (Capacity Determination and Collection of Duty), Rules, 2008 (Pan Masala Rules). In show cause notice the duty demand from M/s Mahadev was proposed for the period June 2007 to 18.02.2011. However the adjudicating authority confirmed the demand only for the period April 2010 to 18.02.2011 for the reasons given in Para 90.12 and 90.16 holding as under : Para 90.12 - In view of above discussion and judicial pronouncements, I find that in the instant case, since the investigations could not provide any evidence that clandestine clearances of Gutka Pouches from the factory of M/s Mahadev and clandestine clearances of Gutka Mix from the factory of M/s MSS was going on since June 2007, I therefore do not accept the proposal in SCN that duty on aforesaid clearances be demanded from 01.06.2007. Para 90.16 I find that investigation has established that manufactured Tobacco and roasted supari from M/s Shiv Udyog was cleared to M/s MSS under the cover of invoices issued in the name of fictitious customers. Further, it is established that raw material received from Shiv Udyog was utilized for manufacture of Zarda Masala (Gutka Mix) of various brands ow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmined on the basis of number of packing machines found available in the premises of the unit and the retail sale price of the pouches manufactured with the aid of such packing machines and unless evidence to the contrary is provided to the satisfaction of the Central Excise Officers such machines shall be deemed to have been in operation since the first day of April of Financial Year in which the unit was found to be not registered. And shall be construed as operating packing machines for the purposes of Rule 7 and dealt with accordingly . 21. The Adjudicating Authority when himself found that there is no evidence of manufacture of gutka mix/ masala by M/s MSS and manufacture of pouches by M/s Mahadev before 01.04.2010 and also recorded the fact that there is no evidence of clandestine manufacture, transportation, sale and applied Rule 17(2) of Pan Masala Rules from 01.04.2010. In said case the application of 01.04.2010 as cut off date is devoid of any reasoning. We find that even after 01.04.2010, no new evidence or change of facts is on record till 18.02.2011 which can attract duty demand under Rule 17(2) of Pan Masala rules. No evidence contrary to the facts/ situation as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... awania Vs. CCE Kanpur reported in 2018 (7) TMI 1278 CESTAT ALLAHABAD wherein it was held as under: 8. After hearing both the sides duly represented by Shri Aalok Arora advocate with Ms. Rinki Arora advocate and Shri Rajeev Ranjan Additional Commissioner, we find that there is no dispute about the fact that the appellants were operating illegally from premises located at Rehan Kala Village, Agra and were indulging in clandestine manufacture and removal of Pan Masala, without obtaining the registration and without paying the duty. The only dispute required to be resolved in the present appeal is as to whether duty is required to be paid by the appellant for the period during which actual manufacture of Pan Masala took place or the same would be required to be paid from 01/04/2010. The appellant's contention is that even in terms of Rule 17(2) of Pan Masala Packing Machines (Capacity of Determination and Collection of Duty) Rules, 2008 which provides for a deeming clause to the effect that if the unit is found to be manufacturing and clearing Pan Masala without registration, then the duty liability was to be determined on the basis of number of packing machines found availabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s customers towards clearance of manufactured Tobacco, whereas the same was received by M/s MSS for manufacture of Zarda Masala i.e., Gutka Mix for onwards supply to M/s Mahadev and another premises at Bhourasala allegedly owned by Shri Anmol Mishra, without payment of central excise duty. The show cause notice alleged that at both the above places, the goods of Appellant M/s MSS i.e. Gutka pouches were being packed and duty is demandable on BulK Pan/ Zarda Masala from M/s MSS; On 41 machines from M/s Mahadev Shiv Shambhu and others jointly and severally under Pan Masala Rules and on 10 machines installed at Bhourasala from m/s MSS and others jointly and severally. To arrive at the quantum of Zarda Masala for the purpose of demand of duty, the quantity of manufactured Tobacco cleared from M/s Shiv Udyog was computed on basis of their VAT Returns and on that basis the presumed quantity of Zarda masala which could have been manufactured was derived. On such assumed quantity the rate of Rs. 300/- per Kg. of Zarda was taken for arriving at value of total assumed Zarda masala allegedly cleared by M/s MSS and duty was demanded. We find that the computation of demand on basis of such assu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sala cleared i.e., 1082,479 Kgs. has been calculated on the basis of VAT returns of M/s Shiv Udyog, without any corroborative evidence at the end of M/s MSS. Hence the allegation of clearance of Zarda Masala by M/s MSS is not sustainable. The show cause notice and the impugned order has also placed reliance on statement of Shri Suresh Katiyar who deposed as Supervisor of M/s. Shiv Udyog on 24/25.02.2011, that the manufactured tobacco was manufactured for supply to M/s MSS and that the tobacco bags has coded words for brand name of M/s MSS. However we find that Shri Suresh Katiyar retracted his statement on 02.03.2011 and complained that his statement was not voluntary and was recorded under pressure by the officers. The adjudicating authority has also relied upon the statement of Shri Anmol Mishra, Shri Ramesh Dammani - Supervisor of M/s Mahadev and workers viz. Shri Ram Avatar Sangle, Shri Surendra Kumar Jain, Shri Amar Verma, Shri Ramakant Mishra, Shri Pintu Sharma. We find that during cross examination all above persons have retracted their statements as under: (i) Shri Vinod Shukla stated that he is illiterate labour and he has confirmed that he has never taken the name of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption in the required manner. They have been regularly filing their ER-1 Returns and have also been subjected to audit. Moreover the appellants were operating under PMPM Rules 2008 since June 2008. It cannot be the case that for three continuous years, such officers failed to note any objectionable or unaccounted stock of raw materials. In view of above there is no possibility of any clandestine manufacture and clearance of Gutkha Mix. Our view is also based upon order in case of Ghodavat Pan Masala Products Ltd. 2004 (175) ELT 182 (TRI) as under : 14. After hearing rival submission, perusal of the records and the case laws relied on by both the sides, we find that the demand of the department is based only on theoretical calculation of PLR which is not the main input of the appellants. The main product of appellant is Star Gutkha and as mentioned in the preceding paragraphs for preparation of Gutkha the main raw materials such as Supari, Katha, Tobacco, Menthol, Cardamom, lime etc. are needed. As contended by the ld. Consultant of the appellant, the wastage was claimed around 22% as against 14.69% allowed by the department. Though there is no statutory permissible limit fixed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) Gurpreet Rubber Industries, 1996 (82) E.L.T. 347 (T) = 1996(63) ECR 68 (T) Clandestine production and removal not proved by any evidence such as installed capacity purchase utilization of raw materials labour employed, power consumed, etc., demand set aside. (iv) Ambica Metal Works - ECR Vol. 29 page 549 Evasion of duty must be based on solid and acceptable evidence (v) D.S. Screen Pvt. Ltd. - 1990 (50) E.L.T. 475 (Tri.) In the absence of any corroborative of circumstantial evidence fraudulent removal not inferable. (vi) V.K. Thampy - 1994 (69) E.L.T. 300 Investigation not done to ascertain whether the parameters like electricity consumed - Raw materials used. (vii) K. Harinath Gupta - 1994 (71) E.L.T. 980 Clandestine removal burden on dept - Sources of raw materials not contacted buyers not contacted - Receipt of sale proceeds not established. (viii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other documents - Gap in power consumption - No sufficient materials for establishing clandestine removal. (xvii) 2000 (117) E.L.T. 659 (T) -RLT 35 p. 654 (T) Pepsico India Holding V. CCE Meerut All other parameters as laid down in Rule 173E should also have been taken into consideration. The legal position as brought out in the cases mentioned above leaves no doubt that the demand cannot be sustained on the ground of presumption. 15. From the replies to the show cause notice dated 9-10-97, 6-1-97, 2-2-97, 17-2-97 on pages 120 to 211, it is crystal clear that the appellants have submitted specific replies to the points raised by the department and as such it was incumbent on the department to prove their case beyond reasonable doubt. In the absence of any strict, tangible, direct, positive and corroborative evidence, we do not find any justification to sustain the demand raised in this case. We, therefore, set aside the impugned order and allow the appeals filed by the appellants with consequential relief, if any. 24. Further when the revenue has made allegation of clandestine rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / packing material themselves or were concerned with the transportation of same. The demands and penalties are totally based upon assumption and presumption by stating the same as circumstantial evidence. Such assumption/ presumption are not to be considered as material evidence so as to demand duty and penalize the Appellant. Further we find that the vehicle was seized in February 2011 and during this period the factory of M/s Mahadev was rented out by the Proprietor Shri Omprakash Talreja to Shri Abdul Salam. No evidence of linking M/s Mahadev or M/s MSS with said goods was found. There is no acceptance on the part of the Appellants that the goods were owned by them. The revenue did not cause any enquiry with the supplier regarding purchaser/ recipient of said goods nor tried to ascertain the same. Only for the reason that the vehicle had some quantity of Gutka Mix and lamination roll, outer packing and gutka pouches bearing name of M/s MSS, it cannot be said that the seized goods had ownership of M/s Mahadev or M/s MSS. None of the persons from M/s Mahadev or M/s MSS have owned the goods or accepted the transportation. In case of lamination and outer packing or acetate, neither ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eo (recorded during inspection) that such equipments cannot be used for packing of any goods. Ld. Commissioner observed that the said machines were seized on 22.02.2011 and the videography and photography of the entire operation was conducted. I therefore find that a long period of eight years has passed since the seizure of machine and there is every possibility of corrosion and other adverse conditions might have affected serviceability and I therefore decide that verification by the Chartered Engineer after lapse of eight years would not be fruitful. I have gone through the still photographs and video of search operation conducted on 22.02.2011 at Bourasala premises all machines are visible. Pouch packing machines were available and some of them are connected to the power points. However, the Commissioner observed that feeding hopper (a detachable part of the machine) was missing from all the machines. Further most of the machines were opened and internal parts were exposed. I notice that some of the parts, chains, nuts bolts etc were lying near some of the machines. It appeared to me that maintenance or repairs might be going on said machines, as some of these were in dismantle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as rent ledger produced by Shri Dinesh Mehta is not supported by any evidence. Investigation has not placed any evidence to establish manufacture of Gutkha pouches from 2009 with regard to manufacture and clearance of Gutkha pouches, source of funds, sale of such gutkha pouches to customer and receipt of consideration. The rent agreement dt. 02.04.2010 will hold good and the Bhourasla premises was functional and engaged in clandestine clearances of Gutkha pouches from 02.04.2010 only under rule 17 (2) of Pan masala Rules, 2008. In case of show cause notice IV (16) SIC/14/2011/119-125 dt. 22.02.2011 on seizure of goods valued at Rs.8,87,774/- the adjudicating authority on the above grounds ordered for confiscation of goods and also imposed penalty under rule 25 on Shri Anmol Mishra. We find that the Appellant was detained on 18.02.2011 and arrested on 19.02.2011 in connection with investigation at M/s Mahadev. On 22.02.2011 the officers visited premises situated at 12-A, Private Industrial Area, Village Bhourasla, Sanwer Road, Indore belonging to one Shri Dinesh Mehta. The lock was break open by Shri Dinesh Mehta and during search ten pouch packing machines and other packing stitchi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the photos of complete pouch packing machines as shown below- 28. The Appellant in their reply had questioned the fitness of the machine contending that it is wreckage or incomplete machine portrayed as Packing Machines and cannot be considered as complete packing machines. That the machines did not have even hopper and the machines are lying in dismantled condition. The Appellant since very beginning had been requesting for technical inspection of machines. The machines were removed from the premises on 22.02.2011 by the department and shifted to central excise office and are in possession of the department. The adjudicating authority refused inspection on the ground that after lapse of eight years the serviceability of the machines may have been affected and thus verification by chartered engineer is not warranted. We find that this observation of the adjudicating authority is against the principles of natural justice. Even otherwise also at the time of visit at factory, the officers should have conducted testing to show that the machines were able to pack gutka pouches or were in workable condition. Either the adjudicating authority should have got the mach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced by the Appellant, nor he has refuted that the machines were not found in workable condition as vital parts were missing. He himself has observed that feeding hopper was missing in all the machines and presumed that repairs might be going on. However we find that in panchnama or the show cause notice there are no facts or evidence that the machines were under repair nor there is any statement to this effect. From perusal of photographs and above facts, we are of the view that the machines cannot be said to be packing machines. We find that if the machines are being made basis of demanding duty liability under PMPM Rules, in that case the first and foremost primary requirement is presence of a packing machine. In absence of feeding hoppers, and given the fact as recorded by the adjudicating authority that some parts were missing, we are of the view that seized equipments do not fit into the definition of Packing Machines as provided in Rule 2(c) of PMPM Rules 2008. The levy is on installed packing machines and it cannot be on dismantled and/or incomplete equipment. Hence on this ground alone the proceedings against the appellants are liable to be set aside, as PMPM Rules for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in case of M/s. GOYAL TOBACCO CO. PVT. LTD. Vs. COMMISSIONER OF C. EX. S.T., JAIPUR-I, 2017 (348) E.L.T. 720 (Tri. - Del.), the CESTAT has set aside the demand by holding as under : 6. We have heard both the sides and perused the appeal records. 7. The whole case of the demand against the appellant is on the basis of the availability of three machines in the premises verified by the Central Excise Officers. The demand was confirmed by considering these machines as having been used for illicit packing of excisable goods which were later cleared resulting in non-payment of duty. Admittedly, no other corroborative evidence has either been collected or presented by the officers in confirmation of such demand. In such situation, the actual condition of the machine at the time of detention of the said machines has become crucial. We note that the appellant on various occasions (25-2-2011, 18-3-2011, 19-5-2011, 4-7-2011, 8-7-2011, 14-7-2011) repeatedly requested for examination of the machines by the experts. The same was not accepted by the Department. We are not able to understand as to why such a vital aspect of investigation, that too on repeated requests of the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acturer. Rule 5 stipulates that the quantity of goods shall be determined to be as per the table appended therein. Rule 18(2) stipulates that if it is found that the goods have been manufactured or cleared from a unit, which is not registered with the jurisdictional Central Excise Officers, then the duty liability of such unit shall be determined on the basis of number of packing machines found available in the premises of the unit, unless evidence to the contrary is provided to the satisfaction of the central excise officers, such machine shall be determined to have been in operation. Keeping in view the above provisions of the Rules, we find that the non-functional scrap condition of the machines have been repeatedly asserted by the appellants on many occasions during the course of investigations. No verification or technical examination of the machines have been carried out by the department to establish the functional capability of the machines. Since the machines were detained and were under custody of the department, the repeated prayer of the appellant for technical examination is the only rebuttal the appellant could make in terms of Rule 18(2). Admittedly, the machines wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... beyond the scope of the charging provisions. 10. Apart from the physical availability of three packing machines, the Revenue relied on the statements of Shri Rajesh Goyal (second appellant), Shri Rakesh Kumar, Shri Pramod Kumar Sharma, Shri Deepak Sharma, Shri Dinesh Jogi and Shri Babu Lal Meema. Shri Rajesh Goyal retracted his statement immediately at the earliest possible occasion. Though the other persons did not retract their statements, their cross-examination was sought by the appellant, which was not allowed by the Adjudicating Authority. However, reliance was placed on these statements as a corroborative evidence to conclude that these machines were in fact used for packing dutiable items. As such, in terms of 2010 Rules, duty liability was determined. In this connection, we note that denial of cross-examination and relying on the statements, put the impugned order in legal jeopardy. The provisions of Section 9D of the Central Excise Act, 1944 is very clear. By now, it is well-settled legal position that the Adjudicating Authority, if he intends to rely on the contents of any statement recorded under the Central Excise Act, 1944, then the procedure, as prescribed under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n one reason as recorded above. 12. Accordingly, we set aside the impugned order. The appeals are allowed . 29. The above order has been upheld by the Hon ble Rajasthan high Court as reported in 2018 (360) E.L.T. 477 (Raj.). COMMISSIONER OF C.G. S.T., JAIPUR Vs. GOYAL TOBACCO CO. PVT. LTD., In view of facts narrated above, we hold that the machines found in the factory being found in dismantled and incomplete condition cannot form basis for demand of duty under PMPM Rules. We also find that the Appellant had been requesting for cross examination of Panch Witness, photographer and videographer, as they were witness to seizure of machine. Despite repeated requests for several years, they were not allowed to cross examine the eye witnesses of panchanama, the photographer and the videographers. Also when the investigating officers are of the view that the factory belongs to the Appellant, he should have been included in the proceedings as he was available in custody. No evidence except the rent agreement on which his signatures are disputed is on record can show that he was in possession of said factory. He was not even found to have keys or possession of said place. No evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind from the letter of the Station Officer, Police Station, Banganga, Indore, that no such information to the Police Station was given by Shri Dinesh Mehta. We find that during cross examination when Shri Dinesh Mehta was questioned that when earlier agreement was made in 2009, then what was the need of making new agreement in April 2010, he replied that it was for increasing the rent. However, when shown his own account records that he has continued to receive the same rent and asked to show where he has booked increased rent, he failed to do so, and feigned ignorance. He also failed to show in his submitted accounts the entries for the amount of increase in rent. He also failed to answer as to why the disputed agreement or the signatures are not dated. During cross examination of witness of disputed Rent Agreement Shri Jitesh Joshi stated that he could not trace any date on which such agreement was signed. He admitted that said agreement does not disclose on which date it was signed. He could not explain as to why he did not dated his own signatures. The Appellant has contended that they have disputed the report of signature expert Shri H.S Tuteja, as he has tainted public reput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal Case against him vide Cr. Case no. 24548 / 2013 is pending before Judicial Magistrate First Class Gr-I, Indore, for allegations under IPC 420. He stated that he does not know why his opinion in the matter was sought when a Government Forensic Lab is available in Bhopal for doing forensic analysis of questioned documents. In view of above answers in cross examination by Shri Tuteja, we find that his report is highly doubtful and cannot be made basis to conclude that the rent agreement was signed by Shri Anmol Mishra. Even the Adjudicating Authority in the impugned O-in-O has not stated as to why any expert would have refused the signatures on PAN and Driving License as admitted signatures. The Government documents are highly acceptable and beyond doubt. Our views are also based upon the decision of Hon ble Bombay High Court in case of BHARGAV KUNDALIK SALUNKHE VERSUS STATE OF MAHARASHTRA reported as 1995 (12) TMI 384 - BOMBAY HIGH COURT wherein the Court held that - 12. The Apex Court in the case of Magan Bihari Lal v. State of Punjab, has held that it is unsafe to base the conviction solely on the expert opinion without substantial corroboration. In that case it was allege ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same view is also echoed in the judgments of English and American Courts. Vide Gurney v. Longlands, (1822) 5B Ald 330, and Matter of Alford Foster's Will, 34 Mich 21. The Supreme Court of Michigan pointed out in the last mentioned case : Every one knows how very unsafe it is to rely upon any one's opinion concerning the niceties of penmanship - Opinions are necessarily received, and may be valuable, but at best this kind of evidence is a necessary evil. We need not subscribe to the extreme view expressed by the Supreme Court of Michigan, but there can be no doubt that this type of evidence, being opinion evidence, is by its very nature, weak and infirm and cannot of itself form the basis for a conviction. We must, therefore, try to see whether, in the present case, there is, apart from the evidence of the handwriting expert B. Lal, any other evidence connecting the appellant with the offence. 30. The adjudicating Authority has not considered the issue relating to evidence of a handwriting expert. In case of State of Maharashtra v. Sukhdeo Singh, the Apex Court opined that before a Court can act on the opinion evidence of a handwriting expert two things must be p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 26 of the CER, 2002. Hence his calls cannot be regarded as a conclusive proof of dealing in contraband excisable goods attracting provisions of rule 26 of the CER, 2002. Our views are also based upon the judgments in case of SHAFEEK P.K. Vs. COMMISSIONER OF CUSTOMS, COCHIN 2015 (325) E.L.T. 199 (Tri. - Bang.) and KHEMANI PURSHOTTAM MOHANDAS Vs. CC, CSI AIRPORT, MUMBAI 2017 (354) E.L.T. 275 (Tri. - Mumbai), M/s Popular Paints and Chemicals Vs CCE, Raipur, 2018 (8) TMI 473 CESTAT New Delhi and Anwar P.V. Vs. P.K. Basheer, 2017 (352) ELT 416 (SC). We also find that the adjudicating Authority has erred in placing reliance on retracted statements of appellants and such statements, as the same were not corroborated with any evidence thus have no evidential value in eyes of law. Our view is based upon judgment in case of SUNTREK ALUMINUM P. LTD. VERSUS COMMISSIONER OF CUS., C. EX. ST., RAJKOT 2013 (288) E.L.T. 500 (Guj.) wherein it was held that - 6.7 More importantly the statement in question was too weak to be relied on as evidence on law, in absence of any corroboration thereof by cogent evidence. The show cause notice mentioned the details of different firms such as Pares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the reason that the gutka mix or packing material and finished goods bearing name of M/s MSS was found cannot be an evidence of their involvement. Shri Anmol Mishra in his cross examination have categorically stated that he does not have any dealing with M/s.MSS, Shri Sunil Wadhwani or Shri Amarchand Upadhyay. Recovery of pouches of brands used by M/s MSS, laminations and outer packing from impugned premises does not conclusively prove that the zarda masala (gutkha mix) used for the manufacture of such brands of gutkha in factory at Bhorasla was actually and physically received from the factory of M/s MSS. The SCN does not contain any evidence to establish clandestine manufacture of zarda masala in question. There is no evidence on record to prove alleged clandestine manufacture by M/s MSS with reference to the installed capacity of the factory, excess consumption of the electricity, number of labourers employed, quantity of raw materials consumed, difference in the stock of inputs and final products, amount received on account of clandestine sale and disposal of such amount. Thus for want of above evidence relating to the above points, clandestine manufacture and removal of za ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods is on record. Hence penalty under Rule 25 or 26 of the Central Excise Rules, 2002 is not attracted in case of MSS and is set aside. Further as far as penalty on appellant Shri Shiv Bahadur Singh Chauhan, the owner of the vehicle is concerned, we find that no evidence is on record to show that the goods were non duty paid and hence liable for confiscation. The manufacture of goods has not been ascertained and no enquiry has been caused from the supplier/seller of the lamination or outer packing which were found in seized vehicle to ascertain their duty paid/ non duty paid nature. We have already noted that no linkage of the seized goods with M/s MSS has been established. Further no statement of Shri Shiv Bahadur Singh Chauhan is on record to show that he was involved in illegal transportation, hence the contention of the adjudicating authority that the goods were liable for confiscation being not duty paid, is not correct. The adjudicating authority has held that Shiv Bahadur Singh during enquiry and reply to SCN has stated that the vehicle was sold to one Shri Shambhu Singh, who had expired. The signature of Shambhu Singh appearing on sale/purchase documents of vehicle were go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s namely Mrs. Nitin Supekar and Shri Brijesh Ram Sharan Shankarlalji Sharma, according to which the signature of Sanjay Ajwani made on rent agreement were not made by Shri Sunil Sadhwani. The appellant have contested the allegations that the brands mentioned on laminations and outer packings are not owned by them. That SCN has failed to answer questions like how, when and from where Shri Sunil Sadhwani had procured the said packing materials; how and when he stored in the said godowns; what means of transportation was used for bringing the said goods upto the said godown; who was instrumental in transportation of the said material and unloading in the said godown; and to whom, when and by whom the payment for purchase of such goods were made. That the SCN do not place any evidence on record that such goods were non duty paid, as all excisable goods available in market are considered to be duty paid goods, until proved otherwise. The adjudicating authority relying on the report of unqualified hand writing expert Shri H.S Tuteja, held that signatures on rent agreement were made by Shri Sunil Sadhwani and the godown was occupied by Shri Sunil Sadhwani on the day of search. No body cam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... get the same tested from some private (unqualified) person. We find that our findings given in preceding paras on reliance of report of hand writing expert, in case of demand against Shri Anmol Mishra, shall hold equally good and applies in present case also. The impugned order has held that Shri Sadhwani was instrumental in storing the seized goods being partner in a firm producing gutkha and pan masala. We find that no physical/ material evidence in relation to procurement, storage, transportation, unloading, godownkeepers etc in relation to seized goods by Shri Sunil sadhwani or M/s MSS is on record. The Appellant and its partners were regularly complaining that duplicate products of their brands are being sold in the market. Even then no attempts were made for any forensic test or visual comparision or chemical analysis of the seized / abandoned materials with the goods of the appellants. In absence of such preliminary and vital investigations, the nexus of the seized goods is zapped with the appellants. Such nexus can not be presumed on the basis of retracted statements or reverse mathematical calulations. The impugned order confirming duty and imposing various penalties on ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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