TMI Blog2022 (9) TMI 622X X X X Extracts X X X X X X X X Extracts X X X X ..... emises of manufactures during the course of search can lead to inevitable conclusion of clandestine manufacturer and removal. In the present case also, there are no evidence which establishes beyond doubt or which is a positive evidence to establish beyond doubt the allegation of clandestine removal of the finished goods by the appellants manufactures. The doubt and apprehension as mentioned in the show cause notice remains incorroborated due to the lack of any evidence. The Adjudication Authority below while confirming the demand have given their finding on the fact that manufacturer failed to produce any relevant document either in the form of invoices / bill or in the form of stock register / RG I register but non production of these documents cannot be sole basis for demanding duty on the allegations of clandestine removal. Thus, the allegations of clandestine removal of the goods against both the manufactures and their office bearers/ owner (also appellants herein) are without any cogent basis and accordingly, are not sustainable. Imposition of penalties upon the office bearers/ incharge of the manufacturers - HELD THAT:- It has been settled law that the mens rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roboration to his statement which has been considered as the sole basis for confirming the duty demand on the allegation of clandestine removal. The penalty against him is also therefore, liable to be set aside. None of the deponent has been examined by the Adjudicating Authority as is mandatorily required in terms of section 9D of Central Excise Act, 1944. In absence of said compliance the contents of the statements cannot be the proof of relevant fact. Confirmation of demand and imposition of penalty based on such statements which have not put to test of veracity is highly uncalled for and is actually against the statute. Appeal allowed. - EXCISE APPEAL NO. 50507-50509 /2021 WITH EXCISE APPEAL NO. 50611-50616 /2021 AND EXCISE APPEAL NO. 50637 /2021 - FINAL ORDER No. 50847-50856 /2022 - Dated:- 13-9-2022 - DR. RACHNA GUPTA, MEMBER (JUDICIAL) Ms Priyanka Goel, Advocate for the Appellant Shri Mahesh Bhardwaj, Authorised Representative for the Department ORDER The present order disposes off above mentioned ten appeals issue, allegations and the investigation being common and even the order under challenge being common to all ten of these appeals. The det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacturer 309/2014- 15 dt. 17/04/2014 68 Dt 05.6.2020 Fine Rs.217820/- Penalty Rs.7000/- u/r 26 -do- 8 E/50613/2021 M/s. Amber Sales Corpn., Non registered dealer 309/2014- 15 dt. 17/04/2014 68 Dt 05.6.2020 Fine Rs.114090/- Penalty Rs.68000/- u/r 25 -do- 9 E/50614/2021 M/s. Satyam Traders Non registered dealer 309/2014- 15 dt. 17/04/2014 68 Dt 05.6.2020 Fine Rs. 19420/- Penalty Rs.11000/- u/r 25 -do- 10 E/50508/2021 Jhabbu Singh owner 309/2014-15 dt. 17/04/2014 Fine Rs.90000/- Penalty Rs.10000/- u/r 26 -do- 2. The facts relevant for the impugned adjudication are as follows: The officers of preventive headquarters collected intelligence about the M/s. Monty Confectionery m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fiscated vide the show cause notice date 17.4.2014 and based upon the variations during physical verification that a show cause notice dated 24.7.2018 was served upon M/s.Monty Confectionery proposing the duty demand and imposition of fine and penalty to the extent as mentioned in the table. Similarly searches were conducted in the premises of M/s. M G Food Products on 23.10.2013 itself. It was observed that they were not maintaining any entry of raw material at their factory gate or godown. The stock verification revealed that the stock was unaccounted and the difference was not being explained at the time of search. On the reasonable belief, they were also alleged to have produced and cleared the sugar confectionery clandestinely and unaccounted goods were held liable for confiscation. Shri Shankar Lal Dhingra has stated to have received the confectionery and chocolates from M/s. Amber Nutrition and M/s. M G Food Products, Indore. From the scrutiny of the documents recovered, Department formed the opinion that M/s. M G Food Products has sold their goods to M/s. Amber Sales Corpn and M/s. Satyam Traders without cover of invoices and without payment of duty. Pursuant to these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioned to have been confirmed even by Hon ble Supreme Court in its decision as reported as [2004 (170) ELT A 307 (SC)]. M/s. Amber Nutrition Ltd., M/s. Amber Sales Corpn., and M/s. Satyam Traders are mentioned to have not registered manufacturing dealers. It is submitted that Rule 25 is invokable only against the registered dealers. 7. With respect to the allegations of clandestine removal, it is submitted that the department has failed to produce any evidence to prove that finished goods were lying for clandestine removal thereof. Otherwise also the goods based whereupon the allegations of clandestine removal have been leveled, were found from the third party premises, that is from the premises of M/s. Amber Sales Corpn. and M/s. Satyam Traders. Learned Counsel emphasized that the statements of Jhabbu Singh, and incharge of M/s. Amber Nutrition Ltd., M/s. Amber Sales Corpn., was involuntary. It has totally been ignored by the Adjudicating Authority that he clearly stated about the goods to have been received and dispatched under proper bills and all records with respect to their entire sales purchases were kept in the main office of the Company. The main office was never sear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rival contentions and perusing the record of all ten appeals, it is observed and held as follows: The Department had conducted raid upon three manufactures of confectionary items along with two non registered dealers on the same date i.e. on 23.10.2013. The show cause notices for seizure of goods were issued to all the parties, i.e. three of the manufacturers and both non registered dealers on 17.4.2014 However show cause notices to the manufacturers for demand of duty were issued in the year 2018, i.e. on 24.7.2018 on M/s. Monty Confectionary and on 8.8.2018 M/s. M G Food Prodcuts. Perusal of the show cause notices issued to these manufactures reveal that those have been issued for duty demand while invoking the extended time period under section 11AC as those have been issued on the basis of some facts/ documents which were collected during the search of 23.10.2013. I also observe that there is no denial to the fact that duty demand in case of M/s. Amber Nutrition Pvt. Ltd. has already been set aside by the Assistant Commissioner vide Order- in- Original No. 37/2019-20 dated 25.10.2019. In the present case the show cause notice for seizure of goods is under cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounted finished goods found lying in the premises of manufactures during the course of search can lead to inevitable conclusion of clandestine manufacturer and removal. The kind of evidence as is required to prove the allegations of clandestine removal has been elaborated in the case of Continental Cement Company vs Union of India reported in [2014 (309) ELT 411 (All)] Hon ble Allahabad High Court has held that - 12. Further, unless there is clinching evidence of the nature of purchase of raw materials, use of electricity, sale of final products, clandestine removals, the mode and flow back of funds, demands cannot be confirmed solely on the basis of presumptions and assumptions. Clandestine removal is a serious charge against the manufacturer, which is required to be discharged by the Revenue by production of sufficient and tangible evidence. On careful examination, it is found that with regard to alleged removals, the department has not investigated the following aspects : (i) To find out the excess production details. (ii) To find out whether the excess raw materials have been purchased. (iii) To find out the dispatch particulars from the regular transporters. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Final Order No. 51565/2019 Ex(SM) dt 23.10.2019 2. Rooplaxmi Industries India Pvt Ltd. vs CCE Final Order No. 51591/2019 Ex(SM) dt. 30.10.2019 3. Shri Shyam Ingot Casting Pvt Ltd. vs CCE Final Order No. 50678/2022 Exc (SM) dt 30.08.2022 16. Accordingly after going through these decisions, I am of the opinion that these are about the similar circumstances as that of the present case. Henc I have no reason to differ. I hereby hold that the allegations of clandestine removal of the goods against both the manufactures and their office bearers/ owner (also appellants herein) are without any cogent basis and accordingly, are not sustainable. 17. Coming to the issue of imposition of penalties upon the office bearers/ incharge of the manufacturers, it has been settled law that the mens rea is a pre-condition and is normally required to be shown that there was n intent to evade the duty. It is this mens rea which is utmost relevant for the imposition of penalty. Hon ble Punjab and Haryana High Court in the case of CCE Jalandhar vs Indo German Fabs reported as [2007 (209) ELT 184 ] while relying upon the judgement of Hon ble Apex Court in the case of Hindus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the registration certificate required under section 6 of the Act; or (d) contravenes any of the provisions of these rules or the notifications issued under these rules with intent to evade payment of duty, then, all such goods shall be liable to confiscation and the producer or manufacturer or registered person of the warehouse or a registered dealer, as the case may be, shall be liable to a penalty not exceeding the duty on the excisable goods in respect of which any contravention of the nature referred to in clause (a)or clause (b) or clause (c) or clause (d) has been committed, or [rupees two thousand], whichever is greater. (2) An order under sub-rule (1) shall be issued by the Central Excise Officer, following the principles of natural justice. 20. I do not find any evidence on record to prove any aforementioned act to have been done by any of the manufacturers or their office bearer/ incharge/owner. It is held that penalty even under Rule 25 of Central Excise Rules, 2002 is wrongly been imposed upon these manufactures. 21. Finally, it is observed that duty demand with respect to M/s. Amber Nutrition has admittedly been set aside by the department itself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y upon the non registered dealers herein that too under Rule 25 and Rule 26 of Central Excise Rules is absolutely unreasonable, infact is beyond the statutory provisions. Accordingly, the same is to be set aside. 23. Finally coming to the imposition of penalty upon the truck driver, Shri Jhabbu Singh, it is observed that he not being the manufacturer, nor the registered person of ware house or a registered dealer, does not come under the scope of Rule 25 and Rule 26 of Central Excise Rules, 2002. The imposition of penalty upon him under any of the Rules or both of these Rules is highly illegal. Above all, there is no corroboration to his statement which has been considered as the sole basis for confirming the duty demand on the allegation of clandestine removal. The penalty against him is also therefore, liable to be set aside. On top of the above observations, it is apparent that only statements recorded during investigation have been relied upon even as corroborations for the documents recorded during search. None of the deponent has been examined by the Adjudicating Authority as is mandatorily required in terms of section 9D of Central Excise Act, 1944. In absence of sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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