Demand order against Clandestine removal of Zafrani Zarda and Gutkha was set aside on basis of Lack of Evidence

Patidar Products Vs C.C.E. & S.T.-Bhavnagar (CESTAT Ahmedabad)

Conclusion: Since there was failure on the part of revenue to collect any evidence in relation to either procurement of raw materials by the appellant or production of huge quantity of final goods alleged as removed clandestinely to sustain the charge of clandestine removal hence, the impugned demand was not sustainable for lack of evidences.

Held: In the instant case, an intelligence was gathered by the DGCEI that M/s Patidar Products were engaged in evasion of Central Excise Duty by way of clandestine manufacture and removal of their finished products particularly “Flavoured Tobacco” and Gutkha under brand name “Patidar”. They also floated fictitious firm to cover up their illegal transaction. During the search proceeding at factory premises of M/s Patidar it was observed that one Mini Truck was lying loaded with finished goods. No documents/ records of the above said finished goods were found in the said factory premises or were produced. Hence, the said finished goods as well as the said Mini Truck were placed under seizure. During the search operation on 13.07.2011 at the residential premises of Proprietor of M/s Patidar, Cash amounting to Rs. 17,50,000/- was recovered. Accordingly the said cash was placed under seizure under panchanama dated 13.07.2011. It was held that as regarding the confiscation of the goods for which redemption fine had been imposed, it was found that the said goods were still within the premises and there was nothing on record to show that the same were to be cleared clandestinely by the appellant. Further officer conducted the panchanama proceeding in factory under the presence of watchmen of Appellant, no responsible person of Appellant was present during the panchanama proceeding. Moreover, Adjudicating authority in the present matter also not allowed the cross-examination of witnesses and panchas to find out the truth. Further, there was no justification for confiscation of the seized goods from the premises of M/s Radheshyam Transport Co, Surat. Revenue had not produced any evidence to reveal that the said goods found from the transport’s premises were cleared from the appellant’s factory without payment of duty. All the goods available in the market were deemed to be duty paid, unless proved otherwise. In the absence of any evidence to the contrary, the confiscation of the goods was set aside. Accordingly, the goods in question were not liable to confiscation. The demands of duty, corresponding interest and penalty, the confiscation of seized goods and seized cash were not sustainable, consequently, the imposition of penalties on all the co-appellants were also not sustainable. Accordingly, the impugned order was set aside and the appeals were allowed with consequential reliefs, if any, in accordance with law.

FULL TEXT OF THE CESTAT AHMEDABAD ORDER

The following Appeals are arising out of Order-In-Original No. BVR-EXCUS-000-PR.COM-002 & 003-17-18 dated 08.05.2017 wherein, common investigation/ evidences were relied upon therefore, they are taken up together for disposal. A chart showing the details of Appeals and demand therein are as under:

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