Delhi High Court
Commissioner Of Central Excise, ... vs Vishnu & Co. Pvt. Ltd. & Ors. on 2 December, 2015
Author: S. Muralidhar
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CEAC 62/2014 & CM No.11312/2014
COMMISSIONER OF CENTRAL EXCISE,
DELHI-1 ..... Petitioner
Through: Ms Sonia Sharma, Senior Standing
Counsel.
versus
VISHNU & CO. PVT. LTD. & ORS. ..... Respondents
Through: Dr Seema Jain, Mr Ajay K. Jain and Mr
Dushyant K. Mahant, Advocates.
WITH
+ CEAC 73/2014 & CM Nos.16426-27/2014
COMMISSIONER OF CENTRAL EXCISE ..... Petitioner
Through: Ms Sonia Sharma, Senior Standing
Counsel.
versus
G.G. CARRIERS ..... Respondent
Through: Dr Seema Jain, Mr Ajay K. Jain and Mr
Dushyant K. Mahant, Advocates.
WITH
+ CEAC 74/2014 & CM No.16497/2014
COMMISSIONER OF CENTRAL EXCISE ..... Petitioner
Through: Ms Sonia Sharma, Senior Standing
Counsel.
Versus
CEAC Nos. 62 of 2014 etc. Page 1 of 38
LAXMI FREIGHT CARRIERS(P), LTD. ..... Respondent
Through: Dr Seema Jain, Mr Ajay K. Jain and Mr
Dushyant K. Mahant, Advocates.
WITH
+ CEAC 75/2014 & CM No.16500/2014
COMMISSIONER OF CENTRAL EXCISE ..... Petitioner
Through: Ms Sonia Sharma, Senior Standing
Counsel.
versus
MOHAMMED KAYUM KHAN ..... Respondent
Through: Dr Seema Jain, Mr Ajay K. Jain and Mr
Dushyant K. Mahant, Advocates.
WITH
+ CEAC 76/2014 & CM No.16503/2014
COMMISSIONER OF CENTRAL EXCISE ..... Petitioner
Through: Ms Sonia Sharma, Senior Standing
Counsel.
versus
R. K. TRIPATHI ..... Respondent
Through: Dr Seema Jain, Mr Ajay K. Jain and Mr
Dushyant K. Mahant, Advocates.
WITH
+ CEAC 77/2014 & CM No.16506/2014
COMMISSIONER OF CENTRAL EXCISE ..... Petitioner
Through: Ms Sonia Sharma, Senior Standing
Counsel.
versus
CEAC Nos. 62 of 2014 etc. Page 2 of 38
SANTOSH TOBACCO ..... Respondent
Through: Dr Seema Jain, Mr Ajay K. Jain and Mr
Dushyant K. Mahant, Advocates.
WITH
+ CEAC 78/2014 & CM No.16509/2014
COMMISSIONER OF CENTRAL EXCISE ..... Petitioner
Through: Ms Sonia Sharma, Senior Standing
Counsel.
versus
GOPI ROAD LINES ..... Respondent
Through: Dr Seema Jain, Mr Ajay K. Jain and Mr
Dushyant K. Mahant, Advocates.
WITH
+ CEAC 79/2014 & CM No.16512/2014
COMMISSIONER OF CENTRAL EXCISE ..... Petitioner
Through: Ms Sonia Sharma, Senior Standing
Counsel.
versus
VISHNU & CO. PVT. LTD. ..... Respondent
Through: Dr Seema Jain, Mr Ajay K. Jain and Mr
Dushyant K. Mahant, Advocates.
WITH
+ CEAC 80/2014 & CM No.16515/2014
COMMISSIONER OF CENTRAL EXCISE ..... Petitioner
Through: Ms Sonia Sharma, Senior Standing
Counsel.
CEAC Nos. 62 of 2014 etc. Page 3 of 38
versus
H. SUNDER ..... Respondent
Through: Dr Seema Jain, Mr Ajay K. Jain and Mr
Dushyant K. Mahant, Advocates.
WITH
+ CEAC 81/2014 & CM No.16518/2014
COMMISSIONER OF CENTRAL EXCISE ..... Petitioner
Through: Ms Sonia Sharma, Senior Standing
Counsel.
versus
HARSH TRANSPORT PVT. LTD, ..... Respondent
Through: Dr Seema Jain, Mr Ajay K. Jain and Mr
Dushyant K. Mahant, Advocates.
+ CEAC 82/2014 & CM No.16521/2014
COMMISSIONER OF CENTRAL EXCISE ..... Petitioner
Through: Ms Sonia Sharma, Senior Standing
Counsel.
versus
SINGHAL TRANSPORT CO. ..... Respondent
Through: Dr Seema Jain, Mr Ajay K. Jain and Mr
Dushyant K. Mahant, Advocates.
WITH
+ CEAC 83/2014 & CM No.16524/2014
COMMISSIONER OF CENTRAL EXCISE ..... Petitioner
Through: Ms Sonia Sharma, Senior Standing
Counsel.
CEAC Nos. 62 of 2014 etc. Page 4 of 38
versus
PARAMJEET SINGH KAKKAR ..... Respondent
Through: Dr Seema Jain, Mr Ajay K. Jain and Mr
Dushyant K. Mahant, Advocates.
WITH
+ CEAC 84/2014 & CM No.16527/2014
COMMISSIONER OF CENTRAL EXCISE ..... Petitioner
Through: Ms Sonia Sharma, Senior Standing
Counsel.
versus
DELHI INDORE TRANSPORT CO. ..... Respondent
Through: Dr Seema Jain, Mr Ajay K. Jain and Mr
Dushyant K. Mahant, Advocates.
WITH
+ CEAC 85/2014 & CM No.16530/2014
COMMISSIONER OF CENTRAL EXCISE ..... Petitioner
Through: Ms Sonia Sharma, Senior Standing
Counsel.
versus
PARAMJIT SINGH KAKAR ..... Respondent
Through: Dr Seema Jain, Mr Ajay K. Jain and Mr
Dushyant K. Mahant, Advocates.
WITH
+ CEAC 86/2014 & CM No.16533/2014
COMMISSIONER OF CENTRAL EXCISE ..... Petitioner
CEAC Nos. 62 of 2014 etc. Page 5 of 38
Through: Ms Sonia Sharma, Senior Standing
Counsel.
versus
VISHNU & CO. PVT. LTD. ..... Respondent
Through: Dr Seema Jain, Mr Ajay K. Jain and Mr
Dushyant K. Mahant, Advocates.
WITH
+ CEAC 87/2014 & CM No.16536/2014
COMMISSIONER OF CENTRAL EXCISE ..... Petitioner
Through: Ms Sonia Sharma, Senior Standing
Counsel.
versus
GOPI ROAD LINES ..... Respondent
Through: Dr Seema Jain, Mr Ajay K. Jain and Mr
Dushyant K. Mahant, Advocates.
WITH
+ CEAC 88/2014 & CM No.16539/2014
COMMISSIONER OF CENTRAL EXCISE ..... Petitioner
Through: Ms Sonia Sharma, Senior Standing
Counsel.
versus
LAXMI PARAKSH GUPTA ..... Respondent
Through: Dr Seema Jain, Mr Ajay K. Jain and Mr
Dushyant K. Mahant, Advocates.
WITH
CEAC Nos. 62 of 2014 etc. Page 6 of 38
+ CEAC 89/2014 & CM No.16542/2014
COMMISSIONER OF CENTRAL EXCISE ..... Petitioner
Through: Ms Sonia Sharma, Senior Standing
Counsel.
versus
VISHNU & CO. PVT. LTD. ..... Respondent
Through: Dr Seema Jain, Mr Ajay K. Jain and Mr
Dushyant K. Mahant, Advocates.
AND
+ CEAC 90/2014 & CM No.16650/2014
COMMISSIONER OF CENTRAL EXCISE ..... Petitioner
Through: Ms Sonia Sharma, Senior Standing
Counsel.
versus
SH. GOPAL KRISHAN PARASHAR ..... Respondent
Through: Dr Seema Jain, Mr Ajay K. Jain and Mr
Dushyant K. Mahant, Advocates.
CORAM:
JUSTICE S. MURALIDHAR
JUSTICE VIBHU BAKHRU
ORDER
% 02.12.2015
Dr. S. Muralidhar, J.:
CM APPL No. 11312/2014 (for delay) in CEAC 62/2014
CM APPL No. 16426/2014 (for delay) in CEAC 73/2014
CM APPL No. 16497/2014 (for delay) in CEAC 74/2014
CM APPL No. 16499/2014 (for delay) in CEAC 75/2014
CM APPL No. 16502/2014 (for delay) in CEAC 76/2014
CM APPL No. 16505/2014 (for delay) in CEAC 77/2014
CM APPL No. 16500/2014 (for delay) in CEAC 78/2014
CM APPL No. 16511/2014 (for delay) in CEAC 79/2014
CM APPL No. 16514/2014 (for delay) in CEAC 80/2014
CM APPL No. 16517/2014 (for delay) in CEAC 81/2014
CM APPL No. 16521/2014 (for delay) in CEAC 82/2014
CM APPL No. 16523/2014 (for delay) in CEAC 83/2014
CM APPL No. 16527/2014 (for delay) in CEAC 84/2014
CM APPL No. 16530/2014 (for delay) in CEAC 85/2014
CM APPL No. 16533/2014 (for delay) in CEAC 86/2014
CM APPL No. 16536/2014 (for delay) in CEAC 87/2014
CM APPL No. 16539/2014 (for delay) in CEAC 88/2014
CM APPL No. 16542/2014 (for delay) in CEAC 89/2014
CM APPL No. 16550/2014 (for delay) in CEAC 90/2014
1. For the reasons stated therein, the delay in filing the present appeals are
condoned.
2. The applications are disposed of.
CEAC Nos. 62/2014, 73/2014, 74/2014, 75/2014, 76/2014, 77/2014,
78/2014, 79/2014, 80/2014, 81/2014, 82/2014, 83/2014, 84/2014, 85/2014,
86/2014, 87/2014, 88/2014, 89/2014 & 90/2014
3. These appeals under Section 35G of the Central Excise Act, 1944 ('Act')
are directed against the final order dated 21st October 2013 passed by the
Customs, Excise and Service Tax Appellate Tribunal ('CESTAT') whereby
the appeals of the Respondents were allowed and the orders-in-original
dated 9th June 2005 and 21st November 2005 passed by the Commissioner of
Central Excise, Delhi-I ('CCE'), New Delhi were set aside.
Background facts
4. The facts in brief are that Vishnu & Co. Pvt. Ltd. ('VCPL') (the
Respondent in CEAC No. 62 of 2014), having its office at Rama Road,
Shivaji Marg, New Delhi, was engaged in the manufacture of gutka and pan
masala under the brand name 'Vimal', falling under the Chapter Heading
No. 21 and 24 of the Central Excise Tariff Act, 1985. It was registered with
the Central Excise Department ('Department') and was not availing
CENVAT credit on any of the inputs or packing material or capital goods.
5. The Department received an intelligence that VCPL was indulging in
large scale evasion of central excise duty, by suppressing the actual
production of gutka and was also indulging in clandestine removal without
payment of duty. The intelligence further indicated that some more
manufacturing units were associated with VCPL in the supply of
unaccounted raw materials/ inputs/packing materials. Specifically it was
alleged that VCPL had (i) misled its capacity of production, procured
unaccounted raw material and packing material which was not reflected in
the books of account maintained by it; (ii) manipulated the stock account
register for finished goods as well as stock of raw material which included
supari and tobacco; (iii) suppressed its production figures, clandestinely
removed the finished goods without payment of duty and transported such
goods surreptitiously to the godowns of certain transporters for onward
dispatch to their dealers outside Delhi; (iv) not maintained any account of
several other inputs and the entire packing material.
6. Simultaneous searches were conducted on 5th July 2003 by the officers of
Directorate General of Central Excise of Intelligence ('DGCEI') on the
premises of VCPL and several other premises including those of five
transporters, i.e., GG Carriers, Harsh Transport Pvt. Ltd, Singhal Transport
Company, Delhi Indore Transport Company/Star Transport and Gopi Road
Lines, who are Respondents in the separate appeals in this batch. Further,
follow-up searches were conducted at various dealers of VCPL in various
cities.
The first search on 5th July 2003
7. According to the Department, the searches resulted in the recovery and
seizure of incriminating records or documents from such premises which
was annexed to the respective panchnamas drawn on the spot by the search
team. The documents recovered pertained to the period from 1st April 2002
to 5th July 2003. The officers of the DGCEI also seized finished
goods/Vimal brand gutka at several places since valid documents showing
the payment of duty were not available in respect of the finished goods.
They also seized raw materials/inputs and packing materials from the
factory of VCPL and other places, including godowns of some of the
transporters and their vehicles. The quantities of inputs found in excess of
the recorded balances were in respect of both supari and tobacco. It was
further observed that no account was being maintained in the factory in
respect of other inputs and packing material. In the absence of any stock
register for these inputs or packing material, the actual physical balances
were recorded under the panchnama drawn and the goods found
unaccounted were seized. No stock of either jute bags, used for packing their
products or menthol, one of the important ingredients, was found in the
factory of VCPL. The goods after seizure were handed over to Mr. H.
Sunder, Director of VCPL (who is also the Respondent in CEAC No. 80 of
2014). Searches were also carried out in the premises of M/s. Ashoka
Tobacco, M/s. Lalwani Convertors, M/s. Pragati International (P) Ltd. from
whose premises further seizures were made of unbranded loose chewing
tobacco and printed laminated rolls meant for packing Vimal brand gutka.
The first Show Cause Notice
8. A show cause notice ('SCN') was issued on 24th December 2003 to VCPL
and 14 other entities/persons which included transporters whose premises
were searched. The noticees included H. Sunder, the Director of VCPL,
Ashoka Tobacco Company (from whose premises raw chewing tobacco and
a host of inputs into the making of gutka were seized), Lalwani Convertors
and Pragati International Pvt. Ltd. (from both of whose premises flexible
laminated film material used for packing was seized), Mohd. Kayum Khan
(owner of a temp truck used to transport 40 bags from the factory of VCPL
to Singhal Transport Co.), Paramjeet Singh Kakkar (Proprietor of M/s
Singhal Transport Company and the owner of the truck HR 38D 4117,
which was found parked near the godown of the transport company, from
which 40 bags of gutka were seized), Santosh Tobacco of Chhindwara,
Kamal Stores in Jaipur and Laxmi Prakash Gupta of Seoni (all three of
whom were supposed to have received, stored and dealt with Vimal brand
gutka). Most of the noticees are Respondents in the various appeals in this
batch.
9. The said SCN dated 24th December 2003 inter alia required the noticees
to show cause why a demand of Rs. 12,85,58,100 being the excess duty
corresponding to the removal of 38957 bags of Vimal brand gutka
clandestinely from the factory during the period from 1st April 2002 to 5th
July 2003 (as detailed in Chart No. 5 annexed to the SCN) along with
interest; central excise duty amounting to Rs. 6,93,000 in respect of 210
bags of Vimal brand gutka valued at Rs. 23,10,000 (MRP) seized from the
premises of M/s. Singhal Transport Co.; central excise duty amounting to
Rs. 39,141 in respect of quantities of Vimal brand gutka seized from the
godowns of M/s. Harsh Transport Pvt. Ltd., the business premises of
Lakshmi Prakash Gupta, Seoni and the common business premises of M/s.
Kamal Store and M/s. Gobind Store, Jaipur should not be raised against
VCPL. The SCN also proposed confiscation of 9356 kgs of supari, 466 kgs
of tobacco, 1200 kgs of gutka mixture, printed packing laminates weighing
6355 kgs, 404000 pieces of poly pouches, 5450 cotton (canvas bags) and
other inputs and packing materials.
10. Annexed to the SCN was the report of the Shri Ram Institute of
Industrial Research (SIIR), the findings of which when compared with the
consumption of various raw materials as shown by VCPL in its records,
revealed that there was excess consumption of supari and menthol, the two
essentials ingredients of gutka.
11. The SCN had noted that VCPL had voluntarily deposited a sum of Rs.
6,93,000 towards payment of duty on 210 bags of Vimal gutka seized on 9th
July 2003 and total of Rs. 1.96 crore voluntarily deposited on 5th July 2003,
15th July 2003 and 4th August 2003 towards duty not paid on past clearances.
It also proposed to appropriate the said deposits towards the duty demand of
Rs. 12,92,90,241.
12. The SCN proposed confiscation of other seized materials and imposition
of penalties against each of the other noticees under Rules 25 and 26 of the
Central Excise Rules 2002 ('CE Rules').
The second search and subsequent Show Cause Notice
13. A second SCN dated 1st March 2004 was issued pursuant to searches
conducted in the office-cum-godown premises of M/s. Gopi Roadlines, M/s.
Singhal Transport Company and M/s. Laxmi Freight Carrier (P) Ltd on 3rd
September 2003. The second SCN was issued to VCPL, its Director H.
Sunder, its Manager, Mr. R.K. Tripathi and three transporters, M/s. Gopi
Roadlines, M/s. Singhal Transport Company and M/s. Laxmi Freight
Carriers (P) Ltd. It noted that the statements of the respective employees of
the abovementioned transport companies were recorded at the time of the
search. The SCN also referred to the search of VCPL and the statements
recorded of its Director, Mr. H. Sunder and Manager Mr. R.K. Tripathi. The
second SCN further proposed to raise a demand of excise duty amounting to
Rs. 2,75,15,400 leviable on the past clearances made during the period from
14th July 2003 to 2nd September 2003. It was noted that under TR-6 challans
dated 5th July 2003, 17th September 2003 and 29th September 2003 VCPL
had voluntarily deposited a sum of Rs. 1 core and the said amount was
proposed to be appropriated/adjusted against their duty liabilities. It also
proposed levy of penalty and interest.
Orders in Original of the CCE
14. Two orders were passed by the CCE, one on 9th June 2005 dealing with
SCN dated 24th December 2003 and the second on 21st November 2005
dealing with the second SCN dated 1st March 2004.
15. As regards the first SCN dated 24th December 2003, the CCE by the
order dated 9th June 2005 confirmed the demand of central excise duty
amounting to Rs. 12,85,58,100 from VCPL and the penalty of the same
amount apart from confiscation of several quantities of seized materials was
ordered. The CCE also seized the transport vehicles and gave an option to
their respective owners, i.e., Mr. Mohammed Kayum Khan and Mr. Paramjit
Singh Kakkar to redeem their vehicles on payment of redemption fine of Rs.
15,000 each and further imposed a penalty of Rs. 20,000 each under Rule 26
of the CE Rules. A penalty of Rs. 2 crore on Mr. H. Sunder of VCPL, Rs. 15
lakhs each on M/s G.G. Carrier, M/s. Singhal Transport Company, M/s Gopi
Roadlines, M/s. Delhi Indore Transport Company and M/s. Harsh Transport
Pvt. Ltd were imposed under Rule 26 of the CE Rules. Further, a penalty of
Rs. 20 lakhs was imposed on M/s. Santosh Tobacco for receiving, storing
and selling clandestinely removed 2267 bags of Vimal brand gutka.
16. However, the CCE dropped the proceedings related to the seizure of
9356 kgs of supari, 466 kgs of Tobacco, 1200 kgs of gutka mixture, printed
packing laminates weighing 6355 kgs, 404000 pieces of poly pouches, 5450
cotton (canvas bags) and other materials from the factory of VCPL. The
proceeding against Ashoka Tobacco relating to seizure of 27382 kgs of
unbranded loose chewing tobacco and other materials was also dropped. The
proceedings against M/s. Lalwani Convertors relating to seizure of 4135 kgs
of flexible laminated film were also dropped.
17. As regards the second SCN dated 1st March 2004, the CCE by order
dated 21st November 2005 confirmed the duty demand of Rs.2,75,15,400
and imposed a penalty of an equal amount apart from interest against VCPL;
imposed a penalty of Rs. 1 crore against Mr. H. Sunder; Rs. 5 lakhs each on
Mr. R.K. Tripathi and M/s Gopi Roadlines; a penalty of Rs. 10 lakhs on
Paramjeet Singh Kakkar, proprietor of Singhal Transport Co.; a penalty of
Rs. 15 lakhs on M/s Laxmi Freight Carrier Pvt. Ltd.; and Rs. 1 lakh on
Gopal Krishan Parashar, Director of Laxmi Freight Carrier Pvt. Ltd.
Impugned order of the CESTAT
18. Aggrieved by the aforementioned Orders-in-Original, the Respondent
noticees herein filed two sets of appeals before the CESTAT arising out of
the first and second SCNs. The Department too filed appeals arising from
the first SCN to the extent that the proceedings, against VCPL to the extent
of seizure of 9356 kgs of supari etc., against Ashoka Tobacco relating to
seizure of 27382 kgs of unbranded loose chewing tobacco and against M/s.
Lalwani Convertors relating to seizure of 4135 kgs of flexible laminated
film, were dropped.
19. By the impugned common order dated 21st October 2003, the CESTAT
disposed of the appeals as under:
In respect of the appeals arising from the first SCN:
(i) In the appeals filed by VCPL and its Director, Mr. H. Sunder, only duty
demand of Rs.6,93,285/- along with interest under Section 11AB and
penalty of equal amount under Section 11AC was upheld. The remaining
duty demand against VCPL including the duty demand on 9 bags of gutka
seized from office of M/s. Harsh Transport Co. at Bhopal and 30518
pouches of Vimal gutka seized from Mr. Lakshmi Prakash Gupta, Seoni,
and interest thereon and penalty under Section 11AC was set aside. The
penalty under Rule 26 of the CE Rules on Mr. H. Sunder was reduced to Rs.
5 lakhs.
(ii) The penalty under Rule 26 of the CE Rules on M/s.GG Carriers, M/s.
Delhi Indore Transport Company, M/s. Singhal Transport Company, Mr.
Paramjit Singh Kakkar, Proprietor, M/s. Singhal Transport Company, M/s.
Harsh Transport Co. and M/s. Gopi Road Lines was set aside and the
appeals filed by them and Mr. Paramjit Singh Kakkar were allowed.
(iii) The confiscation of truck No.HR 38D 4117 of M/s. Singhal Transport
Co. was set aside.
(iv) The confiscation of the Tata 407 tempo DL-1LA 6232 of Mr. Kayum
Khan and the penalty on him was set aside. His appeal was allowed.
(v) The confiscation of 210 bags of Vimal gutka seized from the premises of
M/s. Singhal Transport Company and 950 pouches of Vimal gutka seized
from M/s. Gobind Stores, Jaipur and redemption fine in respect of them was
upheld.
(vi) The confiscation of 9 bags of Vimal gutka seized from the Bhopal office
of M/s. Harsh Transport Company and redemption fine in respect of them
was set aside.
(vii) The confiscation of 30518 Vimal gutka pouches seized from Mr.
Lakshmi Prakash Gupta of Seoni, redemption fine in respect of them and
penalty on Mr. Gupta was set aside. The appeal filed by Mr. Lakshmi
Prakash Gupta was allowed.
(viii) The confiscation of printed plastic laminates seized from M/s. Pragati
International, Delhi, redemption fine in respect of the goods and penalty on
M/s. Pragati International was upheld. The appeal filed by M/s. Pragati
International was dismissed.
(ix) The imposition of penalty on M/s. Santosh Tobacco was set aside and
the appeal filed by them was allowed.
(x) The appeals filed by the Department were dismissed.
In respect of the appeals arising from the second SCN, the CESTAT:
(xi) set aside the duty demand of Rs.2,75,15,400/- against VCPL, interest
thereon under Section 11AB and penalty on them under Section 11AC. The
penalty under Rule 26 of the CE Rules on Mr. H. Sunder was also set aside.
(xii) The penalty under Rule 26 of the CE Rules on M/s. Laxmi Freight
Carriers (P) Ltd., Mr. Gopal Krishan Parashar, Mr. Paramjit Singh Kakkar,
Proprietor, M/s. Singhal Transport Company and Mr. R.K. Tripathi of
VCPL were set aside and as such, the appeals filed by them were allowed.
(xiii) The penalty under Rule 26 of the CE Rules on M/s. Gopi Road Lines
was set aside and their appeal was allowed.
(xiv) The confiscation of 25 bags of sweet supari from the premises of M/s.
Gopi Road Lines and redemption fine in respect of them was upheld.
20. The main findings of the CESTAT were as under:
(i) The entire evidence of the Department was primarily ambiguous records
maintained by transporters and the oral statement of the employees of the
transporters. Such records maintained by transport companies nowhere
showed that the goods being transported under the cover of GRs had been
booked by VCPL and were in respect of the gutka of their brand name
Vimal.
(ii) Most of the deponents had retracted from their original stand at the time
of cross-examination during the course of adjudication. Even otherwise, it
was not possible for the employees of the transport companies to find out the
brand name of gutka contained in the gunny bags inasmuch as no such brand
name was admittedly written on the outer surface of the said gunny bags.
(iii) The charges of clandestine removal cannot be proved on the basis of
third party documents without there being any positive evidence on record to
link the third party documents with VCPL. Though the factory of VCPL was
searched by the officers of the Department, nothing incriminating was
recovered except the allegations of the shortages of menthol and gunny
bags.
(iv) There was no justification in relying upon the report of SIIR since only
a small quantity of 1.8 grams gutka was tested which possibly could not give
correct results particularly in case of a volatile substance like menthol,
which evaporates over a period of time. The content of supari, lime,
tobacco, kattha and menthol, in terms of the report of SIIR, was 68%, 2%,
5%, 15.5% and 0.013% respectively. This totalled to about 90%. These five
ingredients were the main ingredients and the percentages of other
ingredients were supposed to less than 1%. Therefore, the remaining 9% of
ingredients were not accounted for. Gutka is a heterogeneous mixture,
prepared manually. Therefore, it was unsafe to rely upon a small quantity of
gutka 1.8 grams for testing.
(v) To confirm such a huge demand of duty on the allegation of clandestine
manufacture, the Department was expected to prove the procurement of a
huge quantity of raw materials along with the packing materials and the
capacity of the assessee to manufacture such a huge quantity. There was no
evidence on record as regards procurement of such huge raw materials. The
Department also failed to record the statements of the workers of VCPL who
were engaged in the actual manufacture and packing of the gutka/pan
masala. In most of the cases; no buyers were identified and where the buyers
were identified either no inquiry was conducted with them (the cases of M/s.
Santosh Tobacco and M/s. Gupta Chemical Works) or if inquiry was
conducted, they denied having received the consignments of gutka through
the transporters mentioned above. The confirmation of demand of duty
based upon half written ambiguous records of third parties was not in
accordance with law.
The present appeals
21. In the present appeals by the Department the questions sought to be
urged are as under:
(i) Whether statements recorded under provisions of Section 14 of CE
Act by the officers of the Department can be taken as proof of the
statutory violations by the Respondents?
(ii) Whether demand of duty based on the third-party documents
supported by corroborative statements was not justified?
(iii) Was the CESTAT justified in setting aside or reducing, as the
case may be, the demand, redemption fine and confiscation of goods
by ignoring material facts?
(iv) Was the CESTAT justified in ignoring the entire evidence on
record and statements of the witnesses and concerned persons?
22. In the course of the hearing of these appeals, Ms. Sonia Sharma, learned
Senior standing counsel for the Department, urged that the central issue
projected by the Department in these appeals in the form of the above
questions was to show that the impugned order of the CESTAT was
perverse inasmuch as the material documents and evidence which forms part
of the record was overlooked by the CESTAT. On 18th August 2015, she
undertook to file a chart to show how the CESTAT had erred in coming to
its conclusions with reference to the evidence on record. The case was
adjourned to 28th October 2015 for that purpose. On 28th October 2015, the
Court passed the following order:
"1. While, the Appellant has not placed before the Court the chart of
the precise findings of the CESTAT, such a chart has been placed
before the Court by the learned counsel for the Assessee.
2. The main plank of the Appellant's case is that the order of the
CESTAT is perverse. However, in order to make good that ground,
the Appellant has to demonstrate, with reference to the evidence on
record, that the CESTAT either overlooked some clinching piece of
evidence or that it arrived at a conclusion on the evidence, which no
reasonable person could have.
3. Learned counsel for the Appellant states she will place before the
Court by the next date, a chart showing in two columns the
findings of the CESTAT and the relevant evidence in relation to
such finding which would show that the finding is perverse.
4. List on 2nd December, 2015."
23. Pursuant to the above order, apart from filing more than 4000 pages of
documents forming part of the record of the case, a chart has been filed by
the Department to indicate the findings, in two columns, of the CCE as well
as CESTAT and what, according to the Department, is the evidence
overlooked by the CESTAT in the impugned order. Apart from the above,
Ms. Sharma has also taken the Court through many of the documents placed
on record.
24. Appearing for the Respondents, Dr. Seema Jain, learned counsel, has
also placed on record a chart in a tabular form indicating the findings of the
CESTAT with reference to the evidence on record. Dr. Jain also handed
over the Court tables and charts which were prepared and submitted by the
Respondents before the CESTAT when the appeals were argued there.
Scope of judicial review in the present proceedings
25. Since the main plank of the Department's appeals against the order of the
CESTAT is that of perversity, it is necessary to recapitulate the legal
position in this regard. The appeal to the High Court under Section 35G of
the CE Act, arising from the order of the CCE, is a second appeal, the first
being to the CESTAT. Unless there are substantial questions of law that
arise, an appeal would ordinarily not be entertained.
26. On findings of fact, ordinarily it is the CESTAT which would have the
final say in the matter. A question of law would arise in that context only
where it is possible to demonstrate (a) some vital piece of evidence which is
material to the determination of the issues involved has been overlooked by
the CESTAT or (b) where it is has made a patent error in appreciation of the
evidence or misread the evidence on record. In Sree Meenakshi Mills
Limited v. CIT (1957) 31 ITR 28 it was observed that a finding of fact is
open to attack when it is shown that "there is no evidence to support it or if
it is perverse." The threshold for demonstrating perversity has always been
high.
27. In Ratanchand Darbarilal v. Commissioner of Income-tax 1985 (22)
ELT 653 (SC) it was held that if an order was passed by the Tribunal
without taking into account the relevant factors or if the Tribunal had mis-
directed itself by over-looking the salient features and reached an erroneous
conclusion, that would make for a question of law. Merely because another
view is possible to be taken on the same facts will not give rise to a question
of law warranting interference by the High Court in exercise of its appellate
jurisdiction.
28. As far as the present appeals are concerned, the Court is undertaking the
exercise of referring to some of the broad aspects of the evidence only for
the purpose of examining if the impugned order of the CESTAT warrants
interference on the ground of perversity in the background of the above legal
position.
29. Broadly the evidence gathered by the Department in respect of both the
SCNs can be categorized into primary evidence in the form of original
documents collected from the entity i.e. VCPL, the transporters and other
associate entities and secondary evidence in the form of report of SIIR, the
retracted statements of some of the persons examined in the course of
investigation and other material stated to be of a corroborative nature.
Report of the SIIR
30. It was submitted on behalf of the Department that the report of SIIR was
a clinching piece of evidence. It was proved by the oral evidence of Mr. S.
K. Chib, who had prepared the report. Mr. Chib was cross-examined at
length but was unable to be discredited by the Respondents. As regards 9%
ingredients not accounted for in the report, Mr. Chib in his cross-
examination explained that this would include "moisture, cardamom
flavouring material etc. which was not analysed." A reference was also
made to the explanation of Mr. Chib with reference to 1.90 gms, was in fact
average weight of the 10 pouches and which constituted the set of the
represented sample. The panchnama drawn at the time of drawing of the
sample on 22nd July 2003 substantiated this fact. Mr. Chib had explained
that menthol was used only in traces and did not undergo any process during
manufacturing where it is exposed to severe heat conditions. Once the
mixture was ready, it was packed in pouches made of plastic film which
were heat sealed to avoid any leakage or the contents absorbing moisture. A
reference is made to the analysis undertaken by the CCE in the order-in-
original which tried to show that the explanation for the gap between 450
gm of menthol claimed by the Assessee to be present in the representative
sample and 13 grams which was actually found in the report of the SIIR
could not be attributed only to evaporation since it would then be 97.2%
which was in the "realm of impossible." It is urged that all of the above
evidence was overlooked by the CESTAT.
31. The Court finds that the CESTAT has considered the report of the SIIR
and has examined carefully the evidence of Mr. Chib. It noted that the
percentage of the contents of the mixture as declared by VCPL was 86%
supari, 2.2% lime, 6% tobacco, 5% kattha and 0.47% menthol, which added
up to 99.67%. The other ingredients were perfumes and substances which
were less than 1%. The total of the percentage of these five ingredients in
the report of SIIR, instead of being more than 99%, was only about 90%.
This by itself, therefore, created a doubt as to its correctness.
32. Indeed the Court finds that the explanation offered by Mr. Chib for the
balance 9% is not very convincing. Considering that the test conducted was
on a small quantity of 1.8 gm of gutka, the failure to account for 9% of the
ingredients would be significant. The 9% could well have contained some
percentage of the five main ingredients. That might then alter the inference
to be drawn regarding the actual consumption of menthol. The missing
contents that constituted the 9% cannot be a matter of surmises and
conjectures.
33. The Court is, in the above circumstances, called upon to determine
whether the CESTAT committed any gross error in appreciating the above
evidence or whether its conclusion regarding the unreliability of the SIIR
report was perverse. In the considered view of the Court, the answer to both
questions must be in the negative. The CESTAT has not only discussed the
report of SIIR but has given cogent reasons why it was unable to accept it as
a reliable piece of evidence.
34. It was then urged that if the noticees wanted to challenge the credibility
of the report of SIIR, they ought to have produced another expert report. The
Court is unable to accept this submission. The primary onus is on the
Department to make good the case set out in the SCNs. It is open to an
Assessee to seek to contest the report by bringing out its inherent
weaknesses during the cross-examination of the person who has prepared it.
Alternatively, the Assessee might choose to produce another expert report
which contradicts report of the expert of the Department. In the present case
the Assessee has chosen the former course and has been able to persuade the
CESTAT to hold the SIIR report to be unreliable. The Court is unable to
find any error having been committed by the CESTAT in coming to the
above conclusion.
Statements of persons recorded during investigation
35. In stressing that CESTAT ought not to have rejected the statements
recorded of various persons in the course of investigations by the officers of
the Department, notwithstanding that many of them may not have been
produced in the cross-examination, Ms. Sharma placed reliance upon the
decisions of Collector of Customs, Madras v. D. Bhoormull AIR 1974 SC
859, Sujeet Singh Chhabra v. Union of India AIR 1997 SC 2560, K.I.
Pavunny v. Assistant Collector (HQ)1997 (90) ELT 241 (SC). She further
submitted that the Department was not required to prove beyond doubt each
and every piece of evidence gathered. It was sufficient for the Department to
adduce "only so much evidence, circumstantial or direct, as is sufficient to
raise a presumption in its favour with regard to the existence of the facts
sought to be proved."
36. It must be observed that the decision in Collector of Customs, Madras v.
D. Bhoormull (supra) was specific to the provisions of Sea Customs Act,
1878 pertaining to smuggling. Although it is observed by the Court that this
initial onus of proof on the Department can be sufficiently discharged by
circumstantial evidence this was in the context of the fact that provision
itself shifted the burden on the person in whose possession the contraband is
found. As far as the CE Act is concerned, there is no such provision that
raises a presumption and shifts the burden on to the person who is charged
with clandestine removal of excisable goods. Section 14 of the CE Act
provides for a detailed enquiry involving the gathering of evidence through
documents and recording of statements. It does not dispense with the
principles of natural justice or the general principles of fairness that govern
all departmental inquiries. In the decision of the Bombay High Court in
Patel Engineering Ltd. v. Union of India 2014 (307) ELT 862 (Bom.) an
expert panel was formed by the Department in response to the challenge by
the noticees to the certificates produced by the Chartered Engineer. It was in
that context that it was held that the denial of an opportunity to cross-
examine the persons who were part of the expert panel would not result in
the entire proceeding being vitiated. In fact in the present case the Assessee
was given an opportunity to cross-examine Mr. Chib who prepared the
report of the SIIR and the Assessee was able to demonstrate the unreliability
of the said report.
37. In the present case the noticees had sought the cross-examination of 20
persons whose statements had been recorded by the Department in the
course of investigation. Some of these persons had retracted their initial
statements through affidavits tendered subsequently or resiled from the
statements when cross-examined. In urging that even the retracted
statements could be relied upon, Ms. Sharma referred to the decision in K.I.
Pavunny v. Assistant Collector (HQ) (supra). That decision was rendered in
the context of Customs Act, 1962. The question was whether the
confessional statement of the Appellant given to the custom officers under
Section 108 of the Customs Act 1962, though retracted at a later stage, was
admissible in evidence and could form basis for conviction or whether the
retracted confessional statement required corroboration on material
particulars in the form of other independent evidence. It was held that the
burden of showing that the confession statement was given under coercion
or threat was on the person making such allegation. It was observed that if
the confession was voluntary, there was no legal bar on the Court relying on
it to order a conviction. However, where it was retracted, and even if the
person retracting was unable to show that it was obtained under duress,
"however, rule of prudence and practice does require that the Court seek
corroboration of the retracted confession from other evidence." It was
further observed that "each case would, therefore, require to be examined in
the light of the facts and circumstances in which the confession came to be
made and whether or not it was voluntary and true."
38. In the present case it needs to be first observed that there was no
'confession' as such by any of the noticees as to their involvement in the
activities alleged against them in both the SCNs. The Department relied on
the statements made by third parties including transporters, agents, and their
employees. Where such statements are subsequently retracted or resiled
from, it becomes necessary for the Department to produce other evidence
which is of an independent nature which corroborates the retracted
statements.
39. The CCE has in the Orders-in-Original proceeded to rely on the retracted
statements or on statements of persons not offered for cross-examination by
either disbelieving that they were obtained under coercion or by holding the
persons who have retracted or resiled from the earlier statements as having
done so under the influence of the noticees themselves. The CCE noted that
the noticees had submitted a list of 20 such witnesses whom they wanted to
cross-examine. The CCE observed: "Though it is a very large number and
not very convincing grounds were given for their cross-examination, yet all
the 20 witnesses were allowed and all of them were given two opportunities
each (but) only 6 of them appeared." The CCE further observed that
"instead of appearing for cross-examination they chose to provide sworn
affidavits to the noticee alleging high handed methods of the investigating
officers. If the noticees were really interest in cross-examining them they
themselves could have made them available, particularly when they were so
cooperative that they provided sworn affidavits."
40. In fact Ms. Sharma too insisted upon reading from such retracted
statements in order to persuade the Court to hold that the impugned order of
the CESTAT is perverse. According to her the retraction made more than 20
months after the making of the initial statements "would have no effect in
the eye of law". She too submitted that the responsibility of ensuring the
presence of such persons for cross-examination was of the noticees
themselves.
41. What the above submission overlooks is the 'reliability' of such
statements. Once it is shown that the maker of such statement has in fact
resiled from it, even if it is after a period of time, then it is no longer safe to
rely upon it as a substantive piece of evidence. The question is not so much
as to admissibility of such statement as much as it is about its 'reliability'. It
is the latter requirement that warrants a judicial authority to seek, as a rule of
prudence, some corroboration of such retracted statement by some other
reliable independent material. This is the approach adopted by the CESTAT
and the Court finds it to be in consonance with the settled legal position in
this regard.
42. The contention that it is the responsibility of the noticees to produce the
witnesses for cross-examination is a strange one considering that they are
witnesses of the Department and that their statements are being relied upon
by the Department in support of the SCNs. Since it is relying on such
statements, it is the responsibility of the Department to ensure their presence
for cross-examination. As already mentioned, whenever such witnesses (i.e.
six of them) were produced for cross-examination they resiled from their
earlier statements.
43. It is not a matter of mere coincidence that none of the witnesses who
were cross-examined stood by their earlier statements. It is one thing to
overlook this feature on the premise that all of them were under the pressure
and control of the noticees. The other approach is to view this with some
caution and ask what might be the case if the remaining witnesses were also
produced for cross-examination? Importantly, what would be the prejudice
caused to the noticees, in such circumstances, by their non-production for
cross-examination? Thus a doubt is created in favour of the noticees when
such witnesses do not turn up for cross-examination. It is the latter approach
that has weighed with the CESTAT. That, in the view of this Court, was a
possible approach and does not render its order perverse on that score.
Canvas bags
44. Turning to some of the specific instances, as regards the allegation of
excess consumption of unaccounted receipt of canvas bags, reliance was
placed on the documents seized from M/s. Ram Lal Ram Chandra (India)
Ltd. (RLRC), the case of the Department is that during the period from April
2002 to 4th July 2003, VCPL had received only 105000 canvass bags from
RLRC. The allegation of excess receipt to the tune of about 510650 canvass
bags was based on the entries in the gate register. However, as noted by the
CESTAT, the delivery challans did not indicate that canvas bags, covered by
the delivery challans had in fact been delivered to VCPL. The delivery
challans mentioned the registration numbers of trucks and yet no enquiry
was made with the drivers or owners of the trucks. Moreover, Mr. Rajiv
Gupta, Managing Director (MD) of RLRC was not available for cross-
examination. He submitted an affidavit to the effect that certain quantities of
canvas bags bearing Vimal brand had been sold at factory gate also in cash.
Regarding the jute bags, the panchnama and seized bags from M/s. Shyam
Jute Industries did not per se reveal any shortage of jute bags. These
documents by themselves were insufficient to conclude that there was
shortage of jute bags and menthol, thereby permitting an inference that they
were used in the unaccounted manufacture of gutka cleared clandestinely.
Cash sales at the gate
45. The defence of VCPL, which was unable to be effectively countered by
the Department, was that there were cash sales of gutka at the factory gate
and the buyers at the gate engaged the transporters for despatch of the
purchased gutka to various destinations. It was urged before the CESTAT
that during the period in question VCPL had effected cash sales of gutka of
almost Rs.9 crores at their factory gate on which they had paid duty. It was
pointed out that Mr. Dubey, whose name figured in the statements given to
the Department by many of the employees of the transporters, was a person
whose help was sought by the purchasers of Vimal brand gutka to get
bookings with the transport companies. Mr. Dubey was stated to be earning
some commission in the process. Therefore, the mere fact that Mr. Dubey
accompanied the goods to the transporters' offices did not mean that it was
VCPL which was removing the goods for despatch. The Department was
unable to produce any tangible evidence to link VCPL with the despatches
made through the transporters.
46. The attempt at linking VCPL with the despatches through the letter 'V'
appearing on some of the gunny bags also failed when it was shown to the
satisfaction of the CESTAT that since Vimal was a popular brand, other
spurious manufacturers were passing off their products as that of Vimal. The
CESTAT took note of the fact that VCPL had lodged an FIR much prior to
the date of search. Pursuant thereto, the police recovered 480 bags of gutka
manufactured spuriously. The CESTAT also noted that the Department had
not contested the filing of the FIR. Therefore, in the absence of other
positive evidence the mere fact that the goods seized from the transporters
originated at the factory gate of VCPL or from the same source was not
sufficient to establish that it was VCPL which was clandestinely clearing
such consignments. The Court is not persuaded to hold that the CESTAT
erred in the appreciation of evidence or failed to consider any material
evidence in coming to the above conclusion.
Goods seized from Singhal Transport
47. Relevant to the seizures effected from Singhal Transport Co., were the
statements of Mr. Yogesh Sharma, Godown Incharge, Mr. Sita Ram and Mr.
Mohd. Ilyas, drivers of trucks allegedly used in transporting the goods to its
office. Mr. Yogesh Sharma and Mr. Sita Ram were not made available for
cross-examination. An affidavit of Mr. Mohd. Iliyas was tendered in which
he stated that he used to be approached by Mr. Dubey who was engaged by
purchasers of gutka on cash basis. He stated in the affidavit that seizure of
40 bags from his tempo without bill was a sporadic event.
48. The other statement in this regard on which reliance was placed was of
Mr. H. Sunder. The case of the noticees was that the statement made by him
on 5th July 2003 was dictated by the officers of the Department and he was
forced to sign certain documents. It is stated that he was forced to deposit
Rs. 66 lakhs although only 210 bags of gutka were recovered from M/s.
Singhal Transport Co. One witness who was offered for cross-examination
was Mr. Paramjeet Singh Kakkar, Proprietor of M/s. Singhal Transport Co.
He initially gave a statement that they transported only Vimal brand gutka
and the names of the consignors in the GRs were shown as per the advice of
Mr. Sunder. However, in his cross-examination, Mr. Kakkar stated that the
bags were plain gunny bags without any marking; that they never opened the
bags; that they were never paid by VCPL; that VCPL had never booked any
gutka for despatch through them; that the person who came to book the
goods used to give the name of consignor. Some of the GRs show that bags
of gutka were transported by M/s. Gupta Chemical Works to 'self' at Hubli
on 3rd July 2003 and 4th July 2003. Mr. Rajiv Gupta, partner of Gupta
Chemical Works was not questioned about the said GRs. One general
observation in this regard is that the Department does not appear to have
carried the investigations to their logical end. The CESTAT examined 17
truck guidance notes and the Court has also been shown a sample of one of
them which shows that the consignment was to be sent to Gujarat. It does
not show who the consignor is and whether it had anything to do with
VCPL.
49. It requires to be noted at this stage that as far as seizure of 210 bags from
Singhal Transport is concerned, VCPL has not disputed it and has also not
disputed its duty liability. This was also confirmed by the CESTAT.
Seizures form GG Carriers
50. As regards seizure from the transporter, M/s. GG Carriers, is concerned,
the documents seized including (i) one book seized which contained entries
in relation to pan masala and not gutka; (ii) private marks like 'GRK',
'UMS', '013', '017', 'GOB', 'Kaku', , and 'KK'. Even the loose sheets only
mentioned 'pan masala'. The loading register also showed only some private
marks and numbers without any mention of the description of the goods.
The Court has also been shown some of the copies of the loading
challans/registers. They only describe the goods as pan masala. The persons
who wrote the loading registers and the day book were not identified and
their statements were not recorded. One employee of GG Carriers, Mr.
Harjinder Singh, was examined. He mentioned the name of the booking
clerks as Naresh Kumar and Vishnu but neither of them was examined. In
his cross-examination, Mr. Harjinder Singh denied transporting gutka of
VCPL. It was for the Department to explain why the entries in the
documents were not further investigated by them and why someone in a
responsible position in GG Carriers was not examined. It was for the
Department to establish the link between such evidence and VCPL. If
CESTAT was not prepared to rely on the above evidence, then certainly its
approach could not be faulted.
The production capacity
51. On the question of production capacity, what has come on record is that
at the time of inspection 65 machines were found installed and 20 were
found working beyond 5 pm. Although there were 120 machines in all, 65
were found to be operational. At the relevant time, what was declared to the
Department by VCPL was 65 machines. As rightly pointed out by learned
counsel for the noticees, and as accepted by the CESTAT, at the relevant
time there was no bar against an Assessee having more machines than what
was declared as long as the machines that were operational tallied with the
number declared. This aspect of the matter was overlooked by the CCE and
the fact that there were 120 machines was taken to mean that they ought to
have been used in manufacturing excess quantities of gutka which were
clandestinely removed without payment of excise duty.
Other seizures
52. In connection with the seizures from two dealers in Jaipur, three persons
were examined. One was Leela Ram Makhija, Proprietor of M/s. Leela Ram
Gobind Ram, Kota who gave a statement that they purchased directly from
VCPL and that the goods always came from Jaipur Golden Transport. Mr.
Leela Ram stated that the abbreviation 'GR' did not belong to him. There
was a proprietor of M/s Prem Supari Bhandar, Gobind Ram, brother of
Leela Ram Makhija. He was, however, not asked whether the initials 'GRK'
belonged to him. As regards the initials 'GOB', Mr. Narayan Lal, proprietor
of M/s. Gobind Store, Jaipur who is a distributor of Vimal gutka confirmed
that the seized goods were in fact received under Invoice dated 27th June
2003.
53. Turning to the seizure of 8406 bags of Vimal gutka from M/s. Delhi
Indore Transport Company, the Court has been shown a sample of the
relevant document seized. Mr. Vijay Singh the booking clerk of Star
Transport, was the person who was supposed to have explained that the Day
Book Register entries like 'V/40/OK' pertained to Vimal gutka and that 'V'
means Vimal and 40 means 40 bags. However, he was not made available
for cross-examination. He tendered an affidavit that the 'bilities' were made
in the name of the parties who had purchased the goods from VCPL. He
now explained that 'V/40' did not represent cargo pertaining to gutka and
that V could stand for Victory, Vinod, Vishal and could contain any other
goods. This is to be seen in the context of the fact that the day book
register/loading register did not contain a description of the goods. A
telephone diary with the names of Vimal Gopal, Rajesh and Dubey was
recovered. The statement of Mr. Ravinder Kumar, Night Booking Clerk was
recorded but he was not made available for cross-examination. Later he too
tendered an affidavit clarifying the entries and that 'V/40' does not represent
cargo of gutka.
54. Next the Court proposes to examine the evidence pertaining to the
seizure of 5971 bags of Vimal brand gutka supposed to have been cleared
clandestinely by VCPL through M/s Gopi Road Lines. As rightly pointed
out by CESTAT, the statement of Mr. Sushil Kumar, one of its commission
agents, was recorded but he retracted the said statement. He was not
produced for cross-examination. Other than this statement, there was no
evidence to link the challans seized with VCPL. CESTAT has rightly held
that the duty demand of Rs. 1,97,04,300 based on the records of Gopi Road
Lines cannot be sustained.
55. Turning to the allegation that 2267 bags of Vimal brand gutka were
removed by VCPL through M/s Harsh Transport Co. Pvt. Ltd., the
statements of Mr. Ravi Bhandari and Mr. Santosh Kumar Mishra were
sought to be relied upon by the Department. Mr. Ravi Bhandari in his cross-
examination stated that he was not aware of the brand name of the gutka
booked under the GRs in question. Mr. Santosh Kumar Mishra gave an
affidavit retracting his statement implicating Mr. Dubey.
56. Even as regards the seizure at Laxmi Freight Carriers, as pointed out by
the CESTAT, inferences were sought to be drawn on the basis of a few
telephone calls between Mr. R.K. Tripathi and Laxmi Freight Carriers. No
documents showing booking of any consignment of gutka through Laxmi
Freight Carriers by VCPL were able to be produced.
57. As regards the Department's appeals, cogent reasons have been given by
the CESTAT for affirming the order of the CCE arising from the first SCN
to the extent that the proceedings against VCPL regarding seizure of 9356
kgs of supari etc., against Ashoka Tobacco relating to seizure of 27382 kgs
of unbranded loose chewing tobacco and against M/s. Lalwani Convertors
relating to seizure of 4135 kgs of flexible laminated film.
Conclusion
58. For all the foresaid reasons, the Court holds that the Department has
been unable to show that the impugned order of the CESTAT suffers from
illegality or is perverse so as to warrant interference in the present appeals.
The view taken by the CESTAT is based on a thorough analysis of the
evidence on record and is a plausible one. It does not give rise to any
substantial question of law.
59. The appeals are accordingly dismissed but with no order as to costs.
S.MURALIDHAR, J
VIBHU BAKHRU, J
DECEMBER 2, 2015
Rk
