CX - Dept. has adopted short cut method of demanding duty on entire 63,346 gutka bags found in transporters godown when fact remains that assessee is responsible to pay duty on its trade marked stock only and not on others brands: CESTAT
By TIOL News Service
NEW DELHI, FEB 10, 2017. THIS is an appeal filed by the department against an order dated 30.11.2009 passed by the CCE, Delhi wherein the AA had confirmed the duty liability of only Rs.12.64 crores against the total CE duty demanded of Rs. 34.25 crores.
Both, the assessee, as well as the Revenue were aggrieved as regards the portion not in their favour.
Incidentally, the appeal filed by the assessee (respondent here) was dismissed as non-maintainable since they did not comply with the direction of pre-deposit ordered by the Tribunal.
Be that as it may, it is the department appeal that was heard recently.
The facts are that the respondent is engaged in the manufacture of pouches containing tobacco and bearing the brand name "Rajshree" and "Safal" [CET24039990]. The gutka was transported to Chhattisgarh through M/s Supreme Road Transport Pvt. Ltd. (M/s Supreme).
On 17/18.10.2006, a search was conducted at the two godowns of M/s Supreme situated at Raipur. During search, stock of nine bags lying in the godown were found. Three vehicles were also found parked in the premises of the godown, where gutka was loaded. A total of 2404 bags were found having the mark of "Rajshree" and "Safal" brand manufactured by the assessee-respondent. Along with the above, bags of gutka having the trade mark of Goa 1000/Talab/Kuber and Moolchand etc. were also found. In total, 63,346 bags containing Gutka were found.
In the SCDN, the department sought to recover CE duty from the respondent assessee on the entire quantity of gutkha found in 63346 bags.
The AA held that duty only on 2404 bags having the trade mark "Rajshree" and "Safal" brand gutka can be demanded and accordingly confirmed the CE duty demand of Rs.12.64crores. The rest of the duty demand on the remaining bags was dropped.
The AR submitted that as per the chart prepared from the unloading registers, M/s Supreme has received 63,346 bags of gutka during the period of April 2006 to October, 2006 from Delhi to Raipur; that entire load of the gutka mentioned in the registers of M/s Supreme belongs to the assessee - respondent and hence, the adjudicating authority is wrong in confirming the CE duty demand only on 2404 bags.
The respondent assessee submitted that the appellant has only fifty machines and even if had it run in three shifts basis then capacity of 12325 bags could have been produced per month so it is wrong to state that entire stock mentioned in the register (of 63346 bags) belongs to the respondent assessee. Furthermore, the entries of gutka of trade brand i.e. Goa 1000/ Talab/ Kuber & Moolchand etc. were also found during the search and the same do not belongs to the assessee. In the registers, gutka bags bearing the brand name of "Rajshree" and "Safal" [belonging to the assessee] were entered into the unloading register with the marks "LT?, "N?, "K?, "C? and "10? and they had nothing to do with the other brands of gutka.
The President, writing for the Bench observed -
++ In the instant case, it is alleged that the entries were pertaining to the total bags of 63,346 bags which were reflected in the thirteen unloaded registers where no name was mentioned. Only the number of bags with the code were mentioned. In the instant case, the department has not checked the manufacturing capacity of the manufacturing assessee and also the vouchers at the time of booking the gutka from Delhi. The entire duty demand was based on the entries made in the unloading registers and gate registers.
++ M/s Supreme was also transporting gutka of other companies which were having the different trademarks like Goa 1000/ Talab/ Kuber&Moolchand etc. No attempt was made by the department to examine the records of these manufacturers. Department has adopted a short cut method by demanding the duty of the entire 63,346 bags reflected in the 13 unloading registers and gate registers. But the fact remains that the respondent- assessee was having the brand name of "Rajshree" and "Safal" and responsible to pay the duty on its trade marked stock only. The bags containing these trade marks were counted by the adjudicating authority for the purpose of duty. So, the duty was levied only on 2404 bags which were having the trade mark of "Rajshree" and "Safal" brand (in code also). The respondent-assessee is not liable for the duty payment for the brands which were not manufactured by them. When it is so, then we find no reason to interfere with the impugned order passed by the adjudicating authority. The same is hereby sustained alongwith reasons mentioned therein.
The Revenue appeal was dismissed.
(See 2017-TIOL-388-CESTAT-DEL)
