Commissioner of Central Excise Vs Kuber Tobacco Products Pvt. Ltd. & Anr. (Delhi High Court)
Delhi High Court held that charges relating to clandestine removal and undervaluation of goods cannot be sustained merely on the basis of assumptions and presumptions. Accordingly, addition rightly deleted.
Facts- M/s. Kuber Tobacco Products (P) Ltd. (KTPL) were engaged in the manufacture of Gutkha/Pan Masala bearing the brand name “Kuber Moolchand etc.”. M/s. Kuber International (India) Ltd. [KTIL] were engaged in the manufacture of chewing tobacco and Khaini.
Pursuant to the information received that the respondents were indulging in clandestine removal of goods and evasion of duty, the Investigating Agency of the Revenue Department conducted a search at six different places. Show cause notice was issued alleging short paid central excise duty from KTPPL chargeable on the goods cleared clandestinely without payment of duty during the period from 01.08.1995 to 28.02.1997 along with interest.
In the appeals filed by the respondents before the CESTAT, there was difference of opinion between Justice R.M.S. Khandeparkar, President (Judicial) and Mr. Rakesh Kumar, Member (Technical), who heard the appeals.
In view of the difference, the matter went before the third Member (Judicial) Mr. M.V. Ravindran. Mr. Ravindran agreed with the opinion of the President (Judicial) Justice R.M.S. Khandeparkar and disagreed with Mr. Rakesh Kumar, Member (Technical). The resultant position was that by majority of 2:1, the appeals were allowed. Present appeal has been filed against the majority view.
Conclusion- The charges of clandestine removal and under valuation against the respondents in this case cannot be sustained merely on the basis of assumptions and presumptions.
Held that there was clandestine manufacture and clearance of the goods from the factory premises of the respondents, in the facts and circumstances of this case, we hold that the impugned majority order of the CESTAT does not suffer from serious error and does not merit any interference.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The present appeal has been filed under Section 35 (G) of the Central Excise Act, 1944 against Order No. A/83-1 10/20 12 Ex (DB) dated 03.02.2012 passed by the Central Excise Sales Tax Appellate Tribunal [hereinafter referred to as “CESTAT”], Principal Bench, New Delhi, whereby, the appeal of the respondents herein was allowed vide Appeal No. E/560/06-574-06, 902/06, Ex (DB) & E/2039-2050/06-Ex dated 14.02.2012.
BACKGROUND
2. M/s. Kuber Tobacco Products (P) Ltd. (hereinafter referred as “KTPL”) were engaged in the manufacture of Gutkha/Pan Masala bearing the brand name “Kuber Moolchand etc.”. M/s. Kuber International (India) Ltd. [hereinafter referred as “KTIL”] were engaged in the manufacture of chewing tobacco and Khaini.
3. Pursuant to the information received that the respondents were indulging in clandestine removal of goods and evasion of duty, the Investigating Agency of the Revenue Department conducted a search at six different places on 09.10.1998 namely, 30-31-K, Siraspur, Delhi, office premises of respondents at 4130, Gali Barna, Sadar Bazar, Delhi, 6041-42, 2nd Floor, Basti Harphool Singh, Delhi, 5987, Plot No. 83, South Nawab Road, Basti Harphool Singh, Delhi and 463, Pocket-A (GF) Sarita Vihar, Delhi. As a result of search, various materials were seized and the same included 57 bags of Moolchand brand Gutka, weighing 877.800 kgs. valued at Rs. 3,76,000/-, being excess in stock of the balance recorded in statutory record at 31-K, Siraspur, Delhi; cash of Rs. 1.90 lakhs at 3909, Gali Barna, Sadar Bazar, Delhi; duplicate note books, Kacha challans, Hisaba book, photocopies of passbooks at 4103, Gali Barna, Sadar Bazar, some Kachcha documents and cash of Rs. 7.36 lakhs from Gangu Foods (P) Ltd., a sister concern of KTPL at 6041-42, 2nd Floor, Basti Harphool Singh, Delhi; blank invoices/bill books of four firms namely, M/s. Rishi Trading Co., Gali Pahar, Sadar Bazar, Delhi-110006, M/s. Swastik Trading Co., 1464, Qutab Road, Delhi-6, M/s. Shyam Tobacco , 6468-B, Basti Harphool Singh, Sadar Bazar, Delhi-6, M/s. Shukla Enterprises, 2861, Bagichi Raghunath, Sadar Bazar, Delhi-6 and 5987, Plot No. 83, South Nawab Road, Basti Harphool Singh, Delhi.
4. On 15.10.1998, 8 bags of Moolchand Super Gutka bearing Batch 012, manufactured in September, 1998, valued at Rs. 52,000/- were seized along with some documents from Mahamaya Trade Agencies, C/o Pawan Kkumar, Narbadpara, Gudiari Road, Raipur. On 16.10.1998, 31 packets of Kuber branch Gutka bearing Batch No. 013, manufactured in October, 1998, valued at Rs. 2015/- along with certain records were seized from M/s. Dalip Traders at Shop No. 23, Soot Market, Gandhi Bagh, Nagpur. On 27.10.1998, 30 bags of Moolchand Super Gutka bearing Batch No. 012, manufactured in September 1998, valued at Rs. 1,58,000/- along with certain records were seized from Bikaner Assam Roadlines, Gauhati. On 17.11.1998, 5200 pouches of Moolchand brand Gutka, valued at Rs. valued at Rs. 33 80/- as well as 49230 pouches of Gutka branch Khaini, valued at Rs. 52,184/- along with certain documents were seized from Mookambica Agencies, Shop No. 14, Bandi Madhu, Avenue Cross Road, Bangalore.
5. Show Cause Notice dated 3 1.07.2000 was issued to KTPPL and others for:-
(a) Recovery of alleged short paid central excise duty amounting to 11,99,33,571/- from KTPPL chargeable on the goods valued at Rs. 29,95,79,744/- cleared clandestinely without payment of duty during the period from 01.08.1995 to 28.02.1997 along with interest and for appropriation of an amount of Rs. 2 Crore already paid by them voluntarily;
(b) Revision and enhancement of the assessable value of the goods cleared during the period from 01.08.1995 to 28.02.1997, as detailed in the show cause notice and recovery of differential duty amounting to 45,45,084/- in respect of these clearances along with interest;
(c) Confiscation of land and building, plant and machinery of KTPPL used in connection with manufacture of branded goods;
(d) Imposition of penalty on KTPPL;
(e) Imposition of penalties on Shri Mool Chand Malu, Shri Vikas Malu, C.S. Baid, Shri Shubh Karan Bothra, Shri Mukesh Kapoor of M/s. Ganpati Agencies and M/s. Ganpati Mktg., Shri Gauri Shankar Khattar of M/s. Delhi Marketing Co. & M/s. New Delhi Mkgt. Co., Shri Jarnail Singh of M/s. RKRT Goods Carrier Shri Harmit Singh of M/s. RKRT Goods Carrier, Shri Harpal Sinhgh of M/s. RKRT Goods Carrier, Shkri Devji Bhai of M/s. Diamond Transport Corporation, Sh. Vijay Singh Daga of M/s. Bikaner Assam Roadlines, Shri Pawan Kumar Karnani of M/s. Mahamaya Trade Agencies, Shri Dilip Ram Vallabh Sarda of M/s. Dilip Traders, Shri Bhim Karan Jain of M/s., Snow View Exports Pvt. Ltd., Shri Akhay Chand Kothari of M/s. Kothari Agencies and Shri Ashok Chaudhary of M/s. Chaudhary Sales Corporation, Guwahati.
6. Show Cause Notice dated 23.11.2000 was issued to KI and other for: –
(a) recovery of central excise duty allegedly short paid central excise duty amounting to Rs. 3,47,22,118/- from KI in respect of the clearance of branded Khaini valued at Rs. 6,94,44,235/- during the period 12.1995 to 05.10.1998 along with interest;
(b) recovery of differential duty amounting to Rs. 1,06,61,306/- in respect of the consignments of branded Khaini cleared during 12.1996 to 31.03.1999 period, which was allegedly short paid along with interest;
(c) Confiscation of land and building and plant and machinery of KI used in the manufacture of goods;
(d) Imposition of penalty on KI;
(e) Imposition of penalty on Shri Vikas Malu, Mool Chand Malu, Shri C.S. Baid, Shri Subh Karan Bothra, Shri Mukesh Kapoor of M/s. Ganpati Agencies and M/s. Ganpati Mktg. Co. Shri Gowri Shankar Khattar of Delhi Mktg. Co. and M/s. New Delhi Mktg. Co., Shri P. Vishwanath of M/s. Mookambica Agencies, Shri Akhay Chand Kothari of M/s. Kothari Agencies and Shri Jarnail Singh, Shri Harmit Singh, Shri Harpal Singh of M/s. RKRT Goods Carriers.
7. Show Cause Notice dated 31.07.2000 issued to M/s. KTPPL was adjudicated by the Commissioner of Central Excise, Delhi vide Orderin-Original No. 59/05 dated 30.12.2005 by which:-
(a) total duty demand of Rs. 12,05,40,439/- on account clandestine removal and undervaluation was confirmed against M/s. KTPPL under proviso to Section 11 A (1) of the Central Excise Act, along with interest on this duty at the applicable rate under Section 11 AB ibid, and an amount of Rs. 2 Crores already paid during investigation was appropriated towards this demand;
(b) penalty of Rs. 12,05,40,439/- was imposed on KTPPL under Section 11 AC ibid;
(c) plant and machinery used by KTPPL, whose book value was Rs. 86,07,501/-, was ordered to be confiscated under Rule 173Q (2) of Central Excise Rules, 1944 with option to be redeemed on payment of redemption fine of Rs. 10 Lakh and;
(d) penalty under Rule 209 A of Central Excise Rules, 1944 was imposed on various noticees as under:-
