Radha Rani Trading Co. Vs. Commissioner of Central Excise, Lucknow - (Customs, Excise and Service Tax Appellate Tribunal) (31 Jul 2018)

Confessional statements solely in absence of any cogent evidences cannot make foundation for levying excise duty on ground of evasion of tax

MANU/CN/0081/2018

Excise

The brief facts of the case are that, the Appellant were engaged in the manufacture of Pan Masala and Pan Masala containing tobacco (Gutkha). Appellants were issued with a show cause notice calling up to show cause as to why said seized goods should not be confiscated and why Central Excise duty of Rs. 62,50,000 on said 5 undeclared pouch packing machines should not be demanded for the month of July, 2008 and why penalty should not be imposed. On contest, the said show cause notice was adjudicated through the impugned Order-in-Original wherein the Original Authority had confirmed the demand and ordered to confiscate the said seized goods and imposed a redemption fine of Rs. 1 lakh. Further, penalty of Rs. 62,50,000 was imposed on Appellant under Section 11AC of the Central Excise Act, 1944. Aggrieved by the said order, Appellant is before present Tribunal.

The Appellant submitted that, there were 20 declared pouch packing machines in the factory and revenue could not establish that the finished goods seized by them were not manufactured out of those declared 20 pouch packing machines and that after the discharge of duty on declared 20 pouch packing machines the goods manufactured through them are deemed to have been Central Excise duty paid and therefore, the confiscation is not sustainable. Further, the duty is on branded Gutkha whereas the loose Gutkha did not have any brand name and therefore, confiscation of loose Gutkha is also not sustainable. Packing materials were bought out items and the same were not used in the manufacture and they were not liable to pay Excise duty and therefore, confiscation of packing material is also not sustainable. He further submitted that only evidence with the revenue about manufacture of notified goods on 5 undeclared pouch packing machines during the month of July is confessional statement of Shri Manoj Hora recorded on 08.08.2008 and that there is no other evidence that during the month of July, 2008 there were any manufacture out of the said 5 pouch packing machines which were not declared.

Hon'ble Gujarat High Court has ruled in the case of Commissioner of Central Excise Vs. M/s. Saakeen Alloys Pvt. Ltd. that confessional statements solely in absence of any cogent evidences cannot make the foundation for levying the Excise duty on the ground of evasion of tax.

The confirmation of demand was solely on the basis of confessional statement of Shri Manoj Hora and therefore, in view of ruling by Hon'ble Gujarat High Court in the above stated case, it is held that, the confirmation of demand is not sustainable. Since the demand is not liable to be confirmed equal amount of penalty is also not liable to be imposed. Said goods are not liable for confiscation. The impugned Order-in-Original is set aside and appeal allowed.

Relevant : Commissioner of Central Excise Vs. M/s. Saakeen Alloys Pvt. Ltd. reported at MANU/GJ/0467/2014 : 2014 (308) E.L.T. 655 (Guj.)

Tags : DEMAND PENALTY LEGALITY