The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad set aside clandestine removal of Zafrani Zarda and Gutkha on lack of evidence.
An intelligence was gathered by the DGCEI, Ahmedabad 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”.
The chewing Tobacco are classifiable under Chapter 24 of the Central Excise Tariff Act, 1985 and are assessed to Central Excise Duty on the basis of MRP in terms of the provisions of Section 4A of the Central Excise Act, 1944. It was alleged that during the period 2008-09 to 2011-12 M/s Patidar have cleared Flavoured Tobacco valued at Rs. 13,61,46,017 to its various dealers without payment of Central Excise Duty of Rs. 5,68,12,975 and during the period 2008-09 to 2011-12 M/s Patidar have cleared Gutka valued at Rs. 4,88,56,896 to its various dealers without payment of Central Excise Duty, however the central excise duty on Gutka is leviable under Compounded Levy scheme, as stipulated in Notification No. 42/08- C.E.
Accordingly, Central Excise Duty payable by M/s. Patidar comes to Rs. 4,00,00,000 (for a total period of 32 months at Rs. 12.50 Lakhs per Month per Machine).A Show Cause Notice was issued to the appellant proposing demand of Central Excise Duty on Flavoured Tobacco (ZafraniZarda) and Gutkha. After due process, the matter was adjudicated vide Order-In-Original No. BVR-EXCUS-000-PR.COM002 and 003 -17-18 dated 08.05.2017. The Commissioner confirmed the duty demand, imposed equal amount of penalty and further penalties on various individuals. He also ordered confiscation of seized goods, Cash and the motor vehicle and allowed them to be redeemed on payment of fines.
The Bench consisting of Ramesh Nair, Judicial Member and Raju, Technical Member observed that “There is no record/ evidences to show that the appellant was working for manufacture of alleged Gutkha in the factory premises or any other premises. There is no evidence of additional employees having been employed to enhance the production, nor is there any evidence of excess wages having been paid to the existing employees. there is no evidence of purchase of main raw materials „Betel Nuts‟, Tobacco, Perfume, Lime, etc. in cash, brought to factory, and used in unaccounted manufacture of Pan Masala/Guthka in the factory premises, there being no further investigation of unaccounted purchases of supari, main ingredient.
“There is 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 is not sustainable for lack of evidences” the Tribunal said.
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