2026-VIL-485-CESTAT-MUM-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Duty demand and penalties on the appellants for alleged clandestine manufacture and clearance of pan masala/gutka - The Department alleged that the appellants were engaged in illicit manufacture and clearance of pan masala/gutka from the farmhouse without payment of central excise duty - Whether the duty demand and penalties imposed on the appellants are sustainable - HELD – The evidence on record clearly showed that the machines used for manufacturing of pan masala/gutka were installed at the farmhouse only on 16.05.2011 and the trial production commenced from that date, contrary to the department's allegation that the manufacturing activity started from February 2011 - The statements of various persons, including the supplier of the machines, the transporter, and the electrician who installed the electrical connections, corroborated the appellant's case that the machines were installed only on 16.05.2011. The department has not brought any independent evidence to controvert the appellants' case - Further, the statements of the Bhattad brothers, on which the department had relied, could not be considered in the absence of their cross-examination, as per the settled legal position. The discrepancies in the panchnama proceedings has also not been satisfactorily explained by the department - Regarding the contention that the documents were fabricated due to the absence of authenticated Form No. 402, the absence of such authentication alone cannot be considered as conclusive evidence against the genuineness of the documents. The duty demand can be confirmed only for the period from 16.05.2011 to 18.05.2011, as the machines were in operation during this period - The duty demand along with penalties are set aside, except for the period from 16.05.2011 to 18.05.2011 – The appeal is partly allowed
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