1. The present two appeals have been filed against the Order-in-Original No. 9/2015 dated 20.02.2015. Information was received by the department that M/s. M.R. Tobacco Pvt. Ltd. (MRTPL), Sameypur Badli, Delhi were indulging in clandestine manufacture and removal of "Gutka" with brand "Pan King". It further alleged that such manufacture was taking place at the premises situated in Libaspur, Delhi. Search operations were carried out on 11.10.2009 at the factory premises, the premises at Libaspur and various other connected premises. Statements were recorded from various persons and investigation was undertaken. During the course of search, it was noticed that all the gutka packing machines found in the factory premises at Sameypur were in sealed condition. However, it was found that in the factory, the mix for Gutka was being manufactured. The Oven was found hot and in use. In the premises at Libaspur, Delhi, two packing machines were found working and engaged in packing gutka with brand "Pan King"
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of MRP rupee 1/-. The sealing machine was found hot. The packing material with brand "Pan King", raw material mix as well as packed gutka was found in ready-to-dispatch condition. Shri Chander Gupta was the Director of M/s. MRTPL. He claimed to have resigned from the Directorship on 15.07.2009 before the raid proceedings. Shri Himanshu Gupta, son of Shri Chander Kumar Gupta, was identified as the person looking after the illegal activities of manufacturing and clearing gutka without payment of excise duty, since his father, Shri Chander Kumar Gupta was ill and suffering from tongue cancer. At the end of the investigation, the department came to the conclusion that the raw material mix for making gutka was prepared at the factory premises of M/s. MRTPL and the same was transferred to the premises at Libaspur, Delhi clandestinely and using such raw material, gutka was manufactured and packed in the gutka packing machines illegally working there without any registration or intimation to the department. Accordingly, after issue of SCN, the adjudicating authority passed the following order:
i) Central excise duty of Rs. 5,87,50,000/- was demanded from M/s. MRTPL.
ii) Interest as well as penalty of an amount equal to duty, as above, was also demanded.
iii) Penalties were imposed under Rule 26 of Central Excise Rules on various persons including Rs. 50/- lakhs each on Shri Chander Kumar Gupta, Director as well as Sh. Himanshu Gupta, son of Shri Chander Kumar Gupta. Aggrieved by the impugned order, the present appeals have been filed by Shri Chander Kumar Gupta as well as Shri Himanshu Gupta, son of Shri Chander Kumar Gupta. No other appeals filed by any other person is under consideration before us.
2. With the above background, we heard Ms. Mehak Guta, Ld. Counsel representing the appellants as well as Shri H. Saini, DR, representing the Revenue.
3. On the strength of written statement, the Ld. Advocate argued the following main points in appeal:
i) Shri Chander Kumar Gupta had already resigned from the Directorship of M/s. MRTPL on 15.07.2009 on account of serious health issues. He suffered from cancer of tongue and was very ill and had also suffered paralysis. During his absence, the possibility of misuse of the brand by the employees cannot be ruled-out.
ii) Shri Anil Kumar Gupta and Hazi Habibullah were continuing as Directors of M/s. MRTPL. Accordingly, it was submitted that Shri Chander Kumar Gupta was not involved with the affairs of M/s. MRTPL and penalty imposed on him was not justified.
iii) The impugned order has been passed in gross violation of the principles of natural justice. The impugned order has been passed on the basis of statements of certain employees whose cross-examination has been disallowed by the Commissioner. This amounts to violation of provision of Section 9D.
iv) The investigation has failed to link whether Shri Chander Kumar Gupta or Shri Himanshu Gupta with the purchase of two machines found operating at Libaspur. Since there is nothing implicating the appellants to the alleged evasion, the penalties imposed may be set-aside.
4. The Ld. DR justified the impugned order. He submitted that two machines were found illegally manufacturing gutka, packing the same and clearing with brand name of M/s. MRTPL. On the basis of the statements of various persons recorded during investigation, it has clearly been established that the manufacture of gutka happened with the knowledge and at the instance of Shri Chander Kumar Gupta and Shri Himanshu Gupta. The machines were illegally purchased by these two persons and it has been stated that Hazi Habibullah, who was working as Director in M/s. MRTPL with Shri Himanshu Gupta, was looking after all illegal activities. Consequently, he submitted that the penalties are fully justified and may be upheld.
5. Heard both sides and perused the record. During the course of investigation, the department found at the premises at Libaspur, Delhi, two gutka packing machines which were installed and working in the packing and sealing of "Pan King" brand gutka. The evidence of such clandestine manufacturing activity was found in the form of storage of packing materials, raw material mix and even packed gutka. At the factory of M/s. MRTPL, at the time of search, the packing machines were found sealed. But there was evidence of the activity of preparation of gutka mix as evidenced by the presence of workers actively engaged as well as the oven which was found in hot condition.
6. During the course of investigation, the department recorded the statements of various persons including S/Shri Jitender Yadav, Vinay alias Rajan and Gunjan alias Nand Kishore at the premises situated at Libaspur, Delhi. All these people, working in the above premises, confirmed that the raw material mix was being received from the factory premises at M/s. MRTPL, and was used for making and packing gutka with brand name "Pan King". The statements clearly establish the clandestine manufacture of gutkha at the premises at Libaspur out of the raw material mix received from M/s. MRTPL factory. The statements of S/Shri Ashok Singh, Ramisuddin, Ram Babu, Sharwan Tiwari - various persons working at the factory premises of M/s. MRTPL - confirmed the fact that even though all the packing machines at the factory of M/s. MRTPL were sealed, gutka mix was being prepared at the factory premises and sent to the premises at Libaspur for ultimate packing and removal. Shri Hazi Habibullah, working as Director of M/s. MRTPL since October, 2009, stated that before such period, he was working as Manager and authorized signatory of M/s. MRTPL. Besides confirming the fact that raw material mix was being prepared in the factory of M/s. MRTPL and was transferred to Libaspur for packing, he also stated that the entire manufacture was being done as per the directions of S/Shri Chander Kumar Gupta and his son Himanshu Gupta. Shri Hazi Habibullah further confirmed in his statement that the illegal machines were purchased by S/Shri Chander Kumar Gupta and Himanshu Gupta and were got installed at Libaspur for illegal packing of gutkha. These statements clearly implicate S/Shri Chander Kumar Gupta and Himanshu Gupta to the illegal manufacturing and packing of gutka at Libaspur.
7. Shri Sharad Kumar confirmed, in his statement, that he was earlier working as Production Manager of M/s. MRTPL and used to supply labour to Shri Himanshu Gupta. He admitted that he was allowed to stay in the residential premises owned by Shri Himanshu Gupta in lieu of salary for supply of labour to the Libaspur premises.
8. Both S/Sh Himanshu Gupta and Chander Kumar Gupta refused to participate in the investigation proceedings and in spite of department summoning them repeatedly, they failed to appear before the departmental officers and cooperate in the investigation.
9. After perusal of the record of case, we are of the view that sufficient material has been brought on record by Revenue in their investigation, to establish the fact that S/Shri Chander Kumar Gupta and Himanshu Gupta have master-minded the evasion of excise duty by procuring packing machines illegally and installing the same at the premises at Libaspur and getting gutka manufactured and packed in the said premises. It has been clearly established that raw material mix for such gutka was prepared in the M/s. MRTPL factory and transferred to Libaspur. The entire activity has been carried-out and financed by S/Shri Chander Kumar Gupta and Himanshu Gupta. Consequently, their role in the evasion of excise duty stands fully established.
10. It has been submitted on behalf of Shri Chander Kumar Gupta that he was ill and suffering from cancer. It is claimed that he resigned from Directorship of company on 15.07.2009 but the relevant application in Form 32 shows that Shri Chander Kumar Gupta left the Directorship only on 15.10.2009 after the departmental search operations. Consequently, the ground advanced is without any basis.
11. It has been argued on behalf of the appellants that cross-examination was not permitted of the various witnesses whose statements have been relied upon by the adjudicating authority. Accordingly, it has been argued that the requirement of Section 9D of the Central Excise Act has not been satisfied. We note that the witnesses, whose cross-examination have been sought, have voluntarily given the statements. Since all the witnesses were under the control of the appellants, we are of the view that offering them for cross-examination will not serve any purpose since the witnesses can be easily manipulated to deny their earlier statements.
12. In view of the above discussions, we find no infirmity in the impugned order. The present appeals only challenge the penalties imposed on S/Shri Chander Kumar Gupta and Himanshu Gupta. We uphold the penalties imposed on these two persons and dismiss the appeals.
(Pronounced in Court on 16.01.2018