The Customs Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi set aside demand of Rs. 163,06,00,000/- under Rule 19 of the Chewing Tobacco Rules read with Section 11A of the Central Excise Act, 1944 holding that demand cannot be made based on assumptions and presumption.
The appellant company, M/s Miraj Products PvtLtd is engaged in packing and clearance of branded lime mixed chewing tobacco falling under tariff item 2403 99 10 of the First Schedule of the Central Excise Tariff Act, 1985. Prakash Chand Purohitis the Managing Director of the appellant company. The appellant company is registered with the Central Excise Department and was operating under compounded levy scheme during the period of dispute from April, 2012 to April, 2013.
The issue in this appeal is whether Central Excise duty along with equal amount of penalty have been rightly demanded from the appellant company, and further whether penalty have been rightly imposed onPrakash Chand Purohit – Managing Director on the allegation of clandestine manufacture and clearance of chewing tobacco.
A Show Cause Notice dated 03.05.2017 was issued to the Appellant proposing to recover Central Excise duty amounting to Rs. 163,06,00,000/- under Rule 19 of the Chewing Tobacco Rules read with Section 11A of the Central Excise Act, 1944 along with interest, and penalty, by solely relying on the data mentioned under the „Red‟ column of „Survey sheet‟ alleging that such figures depict clearances of the final products manufactured discreetly by the Appellant in a clandestine manner, from presumed undeclared machines installed at a secret place.
A Coram consisting of Anil Choudhary, Judicial Member and P V Subba Rao, Technical Member observed that “The Income Tax Department have not drawn any adverse conclusion with regard to the receipt of defective packing material from M/s Uma Polymers, which is one of the basis for drawing adverse assumption and presumption against the appellant. We further find that the appellant has given a cogent explanation with regard to thesheet/ survey report found from the premises of Sh. Purohit, which have been arbitrarily rejected by the Adjudicating Authority.”
B. L. Narasimhan and Sukriti Das, appeared for the appellants and S. K. Mathur appeared for the respondent.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
