2018 (2) TMI 360 – CESTAT ALLAHABAD – TMI – Clandestine removal – excesses of raw material and finished goods – personal penalty u/r 26 of CER, 2002 on co-noticees – Held that: – Revenue has accepted that 21 Co-noticees were innocent – the entire Show Cause Notice for demand of Central Excise duty amounting to ₹ 7,38,84,853/- was based on the statements and the said statements did not stand the scrutiny before the Original Authority – there was no evidence brought forward by Revenue in respect of procurement of raw-materials, engaging labourers, transportation of goods, buyers of the goods and realization of sale proceed in respect of goods alleged to have been clandestinely manufactured and cleared.
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Demand set aside – appeal dismissed – decided against Revenue. – Appeal No. E/70545/2017-EX[DB] With MISC. Application No. E/MISC/70315/2017 – Final Order No. 70274/2018 – Dated:- 6-12-2017 – Mr. Anil Choudhary, Member (Judicial) And Mr. Anil G. Shakkarwar, Member (Technical)
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respondents were called upon to show cause as to why excess finished goods valued at ₹ 7,14,533/- (MRP Value at ₹ 15,87,851/-) involving Central Excise duty of ₹ 6,32,933/- & raw-material valued at ₹ 1,36,83,980/- seized at the factory premises of respondent should not be confiscated under Rule 25 of the Central Excise Rules, 2002. There were, further, proposals to confiscate unaccounted raw-material valued at ₹ 11,13,375/- & packing material valued at ₹ 1,07,307/-. Further there was a proposal to confiscate 295 Cartons of Bharat & Vani Brand Chewing Tobacco and 44 Cartons of Unbranded Chewing Tobacco valued at ₹ 20,79,122/- involving Central Excise duty of ₹ 18,40,688/- seized on 26/02/2015 at the premises of various transporters or during transit. Further there was a proposal to demand duty of Central Excise duty ₹ 18,40,688/- involved in said goods valued at ₹ 20,79,122/- On the basis of investigations and stat
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Kumar Sen, Shri Arun Kumar, Shri Govind Singh, Shri Devi Lal, Shri Ajay Sharma, Deepak Sehgal, Shri Gaurav Chawla, Shri Santosh Kumar Dubey, Shri Dilip Shah, Tapan Das & Shri Vaibhav Agrawal. The respondent contested the allegations in said two Show Cause Notices before the Original Authority. The respondents submitted before the Original Authority that no incriminating documents evidencing clearance of goods by them using invoices of any other firms or clearance without payment of duty were recovered, not even a single duplicate copy of invoice of any of the alleged fake/pseudo firms said to be used for transportation of clandestine clearances was recovered, there was no recovery of unaccounted cash. Further they submitted before the Original Authority that the transporters never open the packages booked for transportation when the goods are booked for transportation and stated that goods were generally booked by Shri Manoj and Shri Tiwari both of whom were booking agents and were
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and executed bonds, they concluded the seized goods were not genuine after obtaining provisional release of same quantity and therefore refrained from obtaining provisional release of remaining goods. The Original Authority has found that the evidence for allegations in respect of Show Cause Notice dated 03/01/2017 was virtually non-existent. The Original Authority has also held that the demands supporting the allegations in the said Show Cause Notice dated 03/01/2017 were denied during cross-examination. He further held that there was no evidence in respect of the said Show Cause Notice and there were no Bills, Slips, any documentary evidence, evidencing such production and clearance and there was no unaccounted cash or any other hard evidence recovered from the factory premise of the appellant or their transporters or the buyers. He further held that the entire case was based upon the statements, which was denied during cross-examination. Therefore, he ordered confiscation of unacco
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per and deserves to be set aside on the following grounds- 2.1 The Adjudicating Authority erred in deciding to ignore the entire body of evidence meticulously collected by the investigating officers over a period of time and from several geographical and placed its entire focus on various statements recorded during investigation by summing up its findings in Para-26 as under:- The entire case was predicated on the statements which were denied during cross-examination. 2.2 The above findings recorded in the Order passed by the Adjudicating Authority are contrary to the facts and are at variance with the very spirit & thrust of investigations discussed in the Demand-cum-SCN wherein the statements of various witnesses are not the sole evidence but have merely been used as corroboration of physical and documentary evidence gathered during investigations. 2.3 Various findings with regard to the evidentiary value of statements recorded by investigating officers are not only contrary to t
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pplication of mind. 2.5 In a rather unusual, unheard of and unprecedented move, the Adjudicating Authority summoned one Shri Manoj Ji (No further details except a Mobile phone No. is available in the records of Adjudication proceedings) for Cross-examination by the main Noticee, although the said Manoj Ji neither figures anywhere in the investigations, nor his statement was recorded, nor any reliance placed on his any revelations. The said Manoj Ji, during cross-examination put forward a theory that the consignment seized by the officers on 26.02.2017 from the godown of M/s Jaipur Golden Transport Company Pvt. Ltd., situated at Naurangpur Village, Tauru Road, Sector 78, Gurgaon may have been fake goods (purportedly manufactured by someone other than M/s MPE). The said consignment, packed in 17 bags, was found to have finished goods valued at ₹ 4,35,600/-, the brand name on the goods i.e. VANI Premium, found on goods packed in 15 bags out of 17 bags pertains to M/s MPE and booked
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orward address. The said Mukesh Tiwari never joined investigations. It is not clear if Shri Manoj Ji referred to the same Shri Tiwari. Prior to the deposition of the said Shri Manoj Ji before the A/A, the question of goods under seizure being fake/counterfeit never came up. The first SCN covering the seizure portion of the case was issued on 25.08.2015 which was duly received by the main Noticee and in which details of all goods placed under seizure were provided and all Panchnamas, Statements etc. were provided as RUDs. However, at no stage M/s MPE claimed the seized goods as fake/counterfeit/not belonging to them. They, in fact, applied for provisional release of the seized goods, submitted Bonds/Bank guarantees and got all the goods released provisionally except one consignment. However, based on this unusual deposition of someone who did not have the status of a witness, the A/A erred in holding all the finished goods seized at various places other than the factory premises as fake
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with cogent reasons to be recorded in writing. The A/A has clearly travelled beyond the four walls of the SCN by calling Shri Manoj Ji for evidence, without recording any grounds for doing so. There is no harm if the A/A in the present case wanted to create a precedent of calling Defence witness for cross-examination in furtherance of justice and the department would always welcome any steps taken in furtherance of justice. However, equity required that a level-paying field should have been provided by giving an advance notice to the department in this regard before allowing the Defence witness . Moreover, grounds for taking such an unprecedented step, should have been recorded in writing and given due space in the OIO. Unfortunately, the A/A erred in neither recording any grounds to allow defence witness nor providing any opportunity to the department to examine the witness, based on whose deposition before the A/A, seizure of the entire finished goods seized outside the factory were
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or during adjudication proceedings, the main notice offer any cogent explanation. The consignee of these goods was the same which has also been making recorded purchases. Contrary to its findings quoted above that statements are the only evidences in the case, the A/A also held presence of such enormous quantity of unaccounted finished goods as contrary to law and ordered confiscation of these goods. ii) Huge quantities of unaccounted raw material & packing material, collectively valued at over ₹ 1.36 crores was seized from the factory of the main Noticee. Further, unaccounted raw material & packing material collectively valued at ₹ 23.34 Lakh were also seized from a godown belonging to the main notice. Qty of raw tobacco, a perishable material, is 7225kgs. As in case of finished goods, packing material mainly comprising small tin boxes for packing of 10 gms, 50 gms of finished goods are of very low value and, therefore, the quantity is huge in term of nos. e.g. 94,
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landestine removal was corroborated by documentary evidence in the form of a file and a notepad recovered in November, 2014 during a search conducted in connection with another case, from the factory of the supplier of tin boxes revealing unaccounted supplies to M/s MP Enterprises, the main Noticees of this case and was further corroborated by the supplier himself as well as by Shri Atul Chaurasia, the authorized representative/Partner of the main Noticee in their voluntary statements. Even the A/A did not differ with the investigating officers regarding unrecorded nature of these goods. v) A consignment of 21 bags of finished goods, comprising 10,080 ready to sell tin container packed with finished goods were seized from a transporter in Ghaziabad. All the containers carried the Brand name of the main Noticee, name of the manufacturer printed on the labels is that of the main assessee and were covered by an invoice issued by the main assessee. However, on verification, it was revealed
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from Delhi & Gurgaon which were at various stages of transit and were destined for buyers figuring in the recorded sales of M/s MPE. These consignments were mostly found booked under fake invoices of non-existent companies and were generally found mis-declared as Sweet Mix, Agarbattis etc. Some of these seizures were effected by Central Excise officers of various Commissionerates. viii) Investigations conducted under summon proceedings with another transporter, namely M/s M.S. Freight Carriers (P) Ltd., Ghaziabad revealed another modus operandi of the main Noticee. Scrutiny of records voluntarily submitted by the said transporter under summons revealed that, though most of the consignments booked by the main Noticee with the said transporter for delivery to a Mizoram based buyer were duly recorded by the main Noticee and were duty paid, there were several instances when more than one consignment was booked for transportation under invoices bearing the identical Nos. and Date of is
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he Adjudicating Authority, that the entire case is based only on statements, is contrary to the facts on record and all the aforementioned evidences have been brushed aside without giving reasons, thereby showing lack of application of mind on the part of the Adjudicating Authority. 2.8 The fact that the goods seized from the premises of M/s NECC, the transporter, were booked by M/s MPE on their own fake bills as well as on the fake bills of fake companies, was admitted by Shri Devender Singh, Booking Clerk of M/s NECC in his voluntary statement dated 26.02.2015 recorded under Section 14 of the Central Excise Act, 1944, wherein, he had, inter alia, admitted that the seized goods had been received from M/s MPE for transportation; that presently they (i.e. M/s MPE) were using fake bills of M/s Delite Trading Company and M/s Frontier Trading Company and that they had transported the goods of M/s MPE on the bills of M/s D. K. Enterprises, M/s MPE, M/s Delite Trading Company and M/s Frontie
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nvestigations with suppliers of raw/packing material and buyers of finished goods, including gist of statements recorded, are also given in the tables above. 2.10 That Shri Atul Kumar Chaurasia, Authorised Signatory of M/s MPE in his voluntary statements dated 26.02.2015 & 27.02.2015, inter alia, admitted that they had been manufacturing branded and unbranded chewing tobacco and clearing them clandestinely without payment of duty. Shri Atul Kumar was confronted with the Panchnamas dated 26.02.2015 drawn at the factory premises of M/s MPE and their godown at 56/10, Near Atlas Cycle, Site-IV, Sahibabad, Ghaziabad and he admitted that the unaccounted raw material and packing material were procured without bills for clandestine manufacturing and clearance of finished goods without payment of duty. He also admitted that the unaccounted finished goods seized from their factory premises were manufactured by them from the unaccounted raw material procured without bills. Shri Atul Kumar was
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were fictitious and non-existent firms and were used for the purpose of clandestine transportation of unaccounted goods manufactured by them. 2.11 The statement of Shri Atul Chaurasia that firms like M/s Delite Trading Company, M/s D. K. Enterprises, M/s Waxpol General Merchant etc., the names of which were used by M/s MPE for booking their clandestine removed consignments with the transporters were fake & non-existent got corroborated from physical verification conducted at the addresses mentioned on these invoices which revealed that these firms/companies namely M/s Delite Trading Company, B-78, Jhilmil Industrial Area, Delhi, M/s D. K. Enterprises, B-12/5, Site-IV, Sahibabad Indl Area, Sahibabad, Ghaziabad and M/s Waxpol General Merchant, 1682, Gali Peepal Mahadev, Hauz Qazi, Delhi, were fake and non-existent. 2.12 In spite of there being overwhelming evidences on record, the Adjudicating Authority has vacated the seizures made at the premises of the transport companies as well
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cted with the transportation/purchase of the party s goods during cross-examination, had stated their statements were obtained under coercion. 2.14 That the Adjudicating Authority has erred by ignoring the fact that Shri Atul Kumar Chaurasia had tendered his statements dated 26.02.2015, 27.02.2015 and 21.08.2015 voluntarily and similarly the other persons connected with transportation, purchase of M/s MPE s goods as well as the supply of raw materials to M/s MPE, had tendered their statements voluntarily and they had never retracted their statements. Moreover, the Adjudicating Authority in para 23 of the impugned Order-in-Original has himself admitted that the statements relied upon in the impugned show cause notices, were not retracted, which were recorded over a long period of time on various dates from February, 2015 to May, 2016. 2.15 That the Adjudicating Authority has erred in not considering the fact that all the statements relied upon in the impugned show cause notices were rec
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ex Court. 2.16 That the Adjudicating Authority has erred in not considering the fact that in the instant case the confessional statements are inculpatory and specific and had never been retracted, therefore, the said statements are admissible as evidence. In this regard, reliance is placed on the judgment of the Hon ble CESTAT, New Delhi in the case of Commissioner of Central Excise, Raipur vs Hi Tech Abrasive Ltd. reported as 2017 (346) ELT 606 (Tri.-Del), wherein the Hon ble CESTAT has held that when the confessional statement is inculpatory and specific and was never retracted, said statement is admissible as evidence. The relevant portion of the above said judgment is reproduced below:- Demand clandestine removal Shortage of inputs and finished goods Evidence of Statement of Director admitting that clearances shown in chart, prepared by Department on basis of entries in loose sheets and note-books found on premises of assessee and sister concern, were made without payment of duty o
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ng any duty paying documents. Further, it is on record that the buyers of M/s MPE had been purchasing both accounted and unaccounted finished goods and similarly, the suppliers of raw material had been supplying both accounted and unaccounted raw materials. Therefore, the collusion of the persons connected with the Transporters, buyers & suppliers of M/s MPE i.e. Co-Noticees in the present case, cannot be ruled out with the main Noticee i.e. M/s MPE and that this could be one reason as to why they, during cross-examination, had taken the stand that their statements were recorded under coercion and that too without bringing on record any documentary evidence to establish their allegation. Further, the Adjudicating Authority, without bringing on record any evidence, documentary or otherwise, regarding recording of statements under coercion and without considering the fact that before cross-examination, no statement was ever retracted by any of the persons connected with the Co-Notice
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there is no need to call Panch witnesses for examination and cross-examination by the petitioner. In the instant case, the statements were recorded from February, 2015 to March, 2016 and the retractions were made only 27.02.2017 & 06.03.2017 during the cross-examination i.e. after lapse of a long period from the dates of recording of the relied upon statements. Similarly, the Hon ble Supreme Court in the case of Telestar Travels Pvt. Ltd. Vs. Special Directory of Enforcement reported as 2013 (289) ELT 3 (SC) had held that if the statements are based on consideration of relevant facts and circumstances and found to be voluntary, they can be relied on irrespective retraction and that subsequent retraction was mere afterthought to escape consequences of violations committed. The ratio of the case supra is squarely applicable in the present case as the relations made by the witnesses in their written statement are corroboration of facts already on record. 2.18 That the Adjudicating Aut
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he person who had actually recorded such statement, then no cognizance of such retraction is required to be taken. In this regard, reliance is place on the judgment of the Hon ble CESTAT, New Delhi in the case of ZAKI ISHRATI Vs. CCE, Kanpur [2012(255)ELT 545 (Tri. Del)], wherein the Hon ble CESTAT has held as under:- The retraction of any statement should be addressed to the officer to who the statement was given. The so called retractions addressed to the Collector of Central Excise, Kanpur are at the most could be considered as a representation or complaint. Under these circumstances, the controversy whether the said communications were received in the office of the Collector of Central Excise or not need not be gone into. Similar view has been taken by the Hon ble CESTAT, Mumbai in the case of M/s P.B. Nair C&F Pvt. Ltd. Vs Commissioner of Customs (General), Mumbai reported as 2015 (318) ELT 437 (Tri-Mumbai) by holding as under:- Evidence Statement Retraction of Confessional st
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r Section 14 of the Central Excise Act, 1944, were tendered by him voluntarily and, during his last statement dated his last statement dated 7.12.2016 he was again shown his previous 3 statements, he signed the same in token of having seen the same also in his agreement and recorded that he agrees with his previous statements. It was only with regard to statements of other witnesses shown to him that he gave a evasive reply. The findings of the Adjudicating Authority that Shri Atul Kumar Chaurasia retracted his earlier statements during his statement dated 7.12.2016 is, therefore, contrary to facts o record. The statement dated 7.12.2016 cannot be treated as retraction of his earlier statements dated 26.2.2015, 27.2.2015 and 21.8.2015, which were never retracted by him at any point of time. 2.21 That the Adjudicating Authority has relied upon the judgement of the Hon ble Supreme Court of India in the case of Vinod Solanki vs Union of Idia reported as 2009 (233) ELT 157 (SC) and the jud
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were given by them under pressure from the officers, or explained the kind and nature of pressure; whether threat of arrest or physical violence or of any other kind. No such questions were asked either by the defence counsel or by the A/A to delve in further details of the alleged pressure tactics. It is also not clear as to how the alleged pressure built up on them by the officers was in force till a day prior to their cross-examination and dissipated suddenly on the day of cross-examination. In the case of Vinod Solanki vs Union of India reported as 2009 (233) ELT 157 (SC), relied upon the by the A/A in dismissing the statements as of no evidentiary value, the facts and circumstances are vastly different. In case cited supra, searches were conducted on 25.10.1994, the statements of accused person were recorded on 26.10.1994 and 27.10.1994 and the accused was arrested and produced before the Hon ble Court with request for remand on 28.10.1994. The accused person filed written retract
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action made by the accused. 2.22 That the Hon ble Supreme Court of India in its above referred judgement in the case of Vinod Solanki vs Union of India reported as 2009 (233) ELT 157 (SC), has also held that the evidence brought by confession if retracted must be corroborated by other independent and cogent evidences. In the instant case, as explained above, thought no retraction was made by any of the witnesses prior to cross-examination, but the seizure of the clandestinely removed finished goods by M/s MPE at the premises of the transporters, from their trucks enroute as well as the seizure of the excess quantity of finished goods and unaccounted raw materials/packing material in the factory premises & godown of M/s MPE, clearly substantiate and prove the fact that M/s MPE were engaged in clandestine manufacture and clearances of their finished goods and that they had evaded the Central Excise duty on their finished goods, as rightly alleged in the impugned show cause notice dat
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sted whether confession is voluntary and truthful, inculpating the accused in the commission of the crime. Burden is on the accused to prove that the statement was obtained by threat, duress or promise like any other person as was held in Bhagwan Singh V/s. State of Punjab [AIR 1952 SC 2147, para 30]. If it is established from the record or circumstances that the confession is shrouded with suspicious features, then it falls in the realm of doubt. The confession must be one implicating the accused in the crime. It is not necessary that each fact or circumstance contained in the confession is separately or independently corroborated. It is enough if it receives general corroboration. It is seen that in Barkat Ram s case, this Court accepted the retracted confessional statement and upheld, on that basis, the conviction. In Vallabhda Liladhar s case and also in Rustom Das s case the retracted confessional statement found basis for conviction and in the latter the recoveries were relied as
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STAT has held as under:- In any type of clandestine activity, the persons try their best not to leave any evidence. Therefore, such persons cannot be expected to faithfully put the details of all such clearances in some register and append their signature. Hence, clandestine activity at best can be established by circumstantial evidence and it will be humanly impossible to establish every link in the chain of clandestine activity without a break. 2.25 That the Adjudicating Authority has erred in not considering the fact that the Department is not required to prove its case with mathematical precision and in this regard, reliance is place on the judgment of the Hon ble Supreme Court in the case of CC Vs. D. Bhoormull reported as 1983 (13) ELT 1546 (SC), wherein the Hon ble Apex Court has held that the Department is not required to prove its case with mathematical precision, but what is required is the establishment of such a degree of probability that a prudent man may on its basis beli
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uress and subsequent retraction not relevant Statement of accountant of raw material supplier that appellants were actual owners of such supplier firm, not retracted and the same corroborated by documentary evidences Invoices with address of appellants reached raw material supplier proving link between such supplier and appellant Gold transactions by members of appellant s family prima facie amounting to money laundering Preponderance of probability established Duty demand of ₹ 33.20 crore confirmed in impugned order Penalty totaling ₹ 67 crore higher and reduced to ₹ 5 crore each on all three appellants Rule 209A of erstwhile Central Excise Rules, 1994 Rule 26 of Central Excise Rules, 2002 [Paras 4, 5, 5.2 , 5.3, 5.6, 5.7.2, 6] Evidence Preponderance of probability Confiscation of goods, confirmation of duty evaded and imposition of penalty Standard of proof required in departmental proceedings is preponderance of probability Adjudicating Authority or Tribunal to eva
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Adjudicating Authority has erred in holding that the duty in the impugned show cause notice dated 03.01.2017 has been computed on presumptive basis. The A/A ignored the fact that the Goods covered under the documents seized from transport companies had already been delivered to the consignees and no details were available. Similar situations arise in virtually every case of clandestine removal where duty evasion has to be calculated on the basis of meager details available in the records. Merely because minute details of goods and values thereof are not available, cannot be the ground to let go on an offence of mammoth proportions committed by duty evaders. In all such situations, best judgment methods are applied by applying a formula based on reasonableness and justice to the assessee as well to the Government exchequer. In the instant case, as the officers found bags in all the live consignments seized by them to be almost identical, the proportion in which goods of various packagin
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MPE by admitting their duty liability, had voluntarily paid ₹ 4 Crores towards their duty liability, as detailed in Para 26 of the impugned Show Cause Notice dated 03.01.2017 and the said assessee had never disputed the voluntary payment or had claimed refund of the same. Thus, the Adjudicating Authority has erred in not considering the fact that it is a settled law that where an assessee comes forward to pay the Central Excise duty voluntarily, the clandestine removal is proved. In this regard, reliance is placed on the judgment of the Hon ble Apex Court in the case of Commissioner of Central Excise, Mumbai Vs. Kalvert Foods India Pvt. Ltd., reported as 2011 (270) ELT 643 (SC) wherein the Hon ble Apex Court has held as under:- Clandestine removal Proof Managing Director admitting clandestine clearance and voluntarily paid duty Statement of proprietor of buyer and of production supervisor also show clandestine removal Adjudicating Authority s finding that unaccounted finished goo
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acted statements, and therefore, they cannot be relied upon. However, the statements were recorded by the Central Excise Officers and they were not police officers. Therefore, such statements made by the Managing Director of the Company and other persons containing all the details about the functioning of the company which could be made only with personal knowledge of the respondents and therefore could not have been obtained through coercion or duress or through dictation. We see no reason why the aforesaid statements made in the circumstances of the case should not be considered, looked into and relied upon. Besides, the Managing Director of the Company on his own volition deposited amount of ₹ 11 lakhs towards excise duty and therefore in the facts and circumstance of the present case, the aforesaid statement of the counsel for the respondents cannot be accepted. This fact clearly proves the conclusion that the statements of the concerned persons were of their volition and not
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, the aforesaid findings of the A/A are purely based on the mysterious deposition of a defence witness namely Shri Manoj Ji which has already been discussed in detail in Para-6 above. Even therein his deposition before the A/A, the mysterious witness namely Shri Manoj Ji made only a general reference about fake/counterfeit nature of goods being booked by his employee. The reference to goods being fake/counterfeit comes only in reply to one question and a free English translation of the reply is reproduced below:- Sir, I used to have an employee named Mukesh Tiwari who used to connive with some rogue traders by booking their fake/counterfeit goods (NAKLI MAAL). I removed him from my employment when I came to know about this fact. This is the only reference to goods being fake in his apparently unauthorized and illegal deposition. Manoj Ji did not claim that all the finished goods under seizure at various places were booked by Mukesh Tiwari and were fake; he did not claim that the goods
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ing Authority has committed a grave mistake in vacating the seizures of the finished goods seized at the premises of the Transporters as well as from their trucks interrupted enroute, which are liable for confiscation and the Central Excise duty amounting to ₹ 18,41,688/- on the said seized goods is also required to be recovered from M/s MPE, as rightly proposed in the impugned Show Cause Notice dated 25.08.2015. The finished goods under seizure bear the brand name and name/address of M/s MPE as manufacturer. Documentary evidences seized along with the goods and various statements of employees of transporting companies, as well as the un-retracted statement by the partner of M/s MPE clearly show that the goods belong to M/s MPE and is further corroborated from the fact that M/s MPE not only deposited ₹ 4 Crore towards duty liability and obtained provisional release of almost all the goods. No evidence to show duty-paid nature of the finished goods under seizure appeared eit
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ng Authority while vacating the seizures of the unaccounted raw materials, has ignored the fact that the procurement of unaccounted raw material was linked to clandestine manufacturing and clearance of the finished goods and the said fact had also been admitted by Shri Atul Kumar Chaurasia, Authorized Signatory of M/s MPE in his voluntary statements dated 26.02.2015 & 27.02.2015, wherein, he, interalia, admitted that that the unaccounted raw material and packing material were procured by them without bills for clandestine manufacturing and clearance of finished goods without payment of duty. He also admitted that the unaccounted finished goods seized from their factory premises were manufactured by them from the unaccounted raw materials procured without bils. The Adjudicating Authority has ignored the fact that if any producer, manufacturer, registered persons of a warehouse or a registered dealer does not account for the excisable goods i.e. raw materials (inputs), the unaccounte
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le goods, the said excisable goods used as raw material are liable to confiscation under Rule 25(1)(v) of the Central Excise Rules, 2002. The relevant Paras 7 & 8 of the above judgment are reproduced below:- 7. On a plain reading of the said Rule, particularly Clause (b), it is clear that if any producer or manufacturer or registered persons of the warehouse or a registered dealer, does not account for any excisable goods produced or manufactured or stored by him, then all such goods shall be liable to confiscation and the producer or manufacturer or registered person of the warehouse or a registered dealer, shall be liable to penalty. The argument of the ld. Adcocate is that the expression excisable goods mentioned in Caluse (b) of the said Sub-rule, referes only to the goods manufactured by the manufacturer and cannot be made applicable to excisable goods procured by him as raw materials to be used in the manufacture of finished excisable goods is, in my opinion, an incorrect int
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a manufacturer but also excisable goods manufactured elsewhere and stored in the factory. Thus, the said Rule 25 of the Central Excise Rules, 2002 covers both the situations, that is, where excisable goods are manufactured and stored in the factory and also those excisable goods that are procured and stored in the factory premises. Needless to emphasize, mere keeping or storage of excisable goods in the factory premises by a manufacturer per se shall not invite the rigour of the said provision, but something more is required, to come within its fold. 8. In the present case, the excisable goods procured as raw materials found in the factory premises were not stored in a routine manner, but were purposely kept unaccounted. As per the categorical statement of the Director, Mr. Kamlesh Ladha, it is evident that the said excisable goods were procured with a specific intention to use it as raw material in the manufacture of finished excisable goods intented to be removed clandestinely withou
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ngs against the Co-Noticees fully knowing that from the confessional statements relied upon in the impugned Show Cause Notice, it was crystal clear that the said Co-Noticees were in league with M/s MPE in transporting the clandestinely removed finished goods by M/s MPE on fake bills of fake firms, purchasing of clandestinely cleared finished goods of M/s MPE as well as supplying of unaccounted raw materials to M/s MPE and their roles have already been given in the impugned Show Cause Notice dated 03.01.2017. Therefore, dropping of penal proceedings against the Co-Noticees is illegal and they are liable to penal action as rightly proposed in the impugned Show Cause Notice. 5. Heard the ld. A. R. for Revenue, who presented the above stated grounds of appeal. 6. Heard the Counsel for the respondent, who has summarized the grounds raised by Revenue as follows:- (i) That the Adjudicating Authority instead of relying on the statements recorded during investigation, has considered retractions
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ri Manoj during his cross-examination stated that the consignments seized by the officers on 26/02/2017 from the godown of Jaipur Golden Transport Co. were faked goods and the same were not manufactured by the respondent. They further submitted that voluntary deposits of duty during investigations cannot be considered to be the admission of guilt and such deposits are treated as Revenue deposits and the same are not to be treated as duty since the same are not deposited as an outcome of any adjudication proceedings. They further submitted that the entire demand of around ₹ 7 crores was based on various statements recorded and the said statements did not stand the scrutiny during cross-examination before the Original Authority. Therefore, Original Authority has dropped the demand and Revenue has not submitted any sustainable ground to establish that the said finding of Original Authority is not sustainable. 7. Having considered the rival contentions and on perusal of the facts on
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