Anil G. Shakkarwar ORDER
Anil G. Shakkarwar, Member (T)
1. The present appeal is directed against Order-in-Original No. 74/Commr./LKO/CX/2009 dated 29/12/2009 passed by Commissioner of Central Excise & Service Tax, Lucknow.
2. The brief facts of the case are that the appellant were engaged in the manufacture of Pan Masala and Pan Masala containing tobacco (Gutkha) falling under Tariff Item No. 21069020 & 24039990 of First Schedule to Central Excise Tariff Act, 1985 respectively. The appellant were paying Central Excise duty under Pan Masala Packing Machines (Capacity Determination and Collection of duty) Rules, 2008. The appellant filed declaration dated 09.07.2008 with the Jurisdictional Assistant Commissioner of Central Excise and declared that they had 20 pouch packing machines, out of which 14 machines were declared for packing of Gutkha bearing brand name 'Raj Darbar' with MRP Rs. 1 and 6 machines were declared for packing Pan Masala (Raj Darbar of MRP Rs. 1.00). On 08.08.2008 Central Excise Officers checked the unit along with independent panchas. During the course of checking they found 5 pouch packing machines installed in the room behind the Kattha pulverizing hall in the factory premises which were in addition to the declared pouch packing machines. It was found that the said 5 machines were filled with loose Gutkha and the said machines were connected with power socket. Shri Manoj Hora, Proprietor of the appellant in his statement recorded under Section 14 of Central Excise Act, 1944 on 08.08.2008 stated that he had received the said 5 pouch packing machines in the evening of 30 July, 2008 and information in respect of the same was sent to Central Excise Office through Courier and informed that the machines were connected to electricity for conducting trial of the machines. In addition to the said undeclared 5 pouch packing machines 17 bags of Raj Darbar Gutkha of MRP Rs. 1.00 containing 1,88,870 pouches valued at Rs. 94,435/-, 775 kgs of loose Gutkha valued at Rs. 1,40,909/- and packing material valued at Rs. 5,79,840/- were found in the same room. The goods were seized on 08.08.2008. On the basis of said investigation, it appeared to revenue that in respect of said 5 pouch packing machines during the month of July, 2008 appellant did not discharge Central Excise duty amounting to Rs. 62,50,000/-. Therefore, appellants were issued with a show cause notice dated 29.01.2009 calling up to appellant 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 this Tribunal.
3. Heard the learned Counsel for appellant. He has 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. He has further submitted that packing materials were bought out items and the same were not used in........