आयुक्त का काया�लय, केन्द्रीय उत्पाद शुल्क, अहमदाबाद – १

७वी मंजि�ल , केन्द्रीय उत्पाद शुल्क भवन, पोलिलटेकनिनक के पास, आंबावाडी, अहमदाबाद -१५

OFFICE OF THE COMMISSIONER OF CENTRAL EXCISE,

7th FLOOR, CENTRAL EXCISE BHAVAN, NR. POLYTECHNIC, AMBAVADI, AHMEDABAD-15

नि�बन्धि�त पावती डाक द्वारा / By REGISTERED POST A.D.

फा. सं./ F. No. V.67/15-05/Rajshree/OA-1/2010

आदेश की तारीख/Date of Order :17 .11.2011

जारी कर�े की तारीख/Date of Issue :17 .11.2011

द्वारा पारिरत/Passed by:- राजू , आयुक्त RAJU, COMMISSIONER

मूल आदेश संख्या /

Order-In-Original No. : 09 -10/COMMISSIONER/RAJU/AHD-I/2011

1. जिजस व्यक्तिक्त(यों) को यह प्रनित भेजी जाती है, उसे व्यक्तिक्तगत प्रयोग के क्ति*ए नि�ःशुल्क प्रदा� की जाती है।

This copy is granted free of charge for private use of the person(s) to whom it is sent.

2. इस आदेश से असंतुष्ट कोई भी व्यक्तिक्त इस आदेश की प्राप्ति4त से ती� माह के भीतर सीमा शुल्क, उत्पाद शुल्क एवं सेवाकर अपी*ीय न्यायाधि9करण, अहमदाबाद पीठ को इस आदेश के निवरुद्ध अपी* कर सकता है। अपी* सहायक रजिजस्ट्रार, सीमा शुल्क, उत्पाद शुल्क एवं सेवाकर अपी*ीय न्यायाधि9करण, O-20, मेघाणी�गर, न्यु मेन्ट* हॉस्पीट* कम्पाउन्ड, अहमदाबाद-380 016 को सम्बोधि9त हो�ी चानिहए।

Any person deeming himself aggrieved by this Order may appeal against this Order to the Customs, Excise and Service Tax Appellate Tribunal, Ahmedabad Bench within three months from the date of its communication. The appeal must be addressed to the Assistant Registrar, Customs, Excise and Service Tax Appellate Tribunal, O-20, Meghani Nagar, Mental Hospital Compound, Ahmedabad-380 016.3. उक्त अपी* प्रारुप सं. इ.ए.3 में दाखिख* की जा�ी चानिहए। उसपर केन्द्रीय उत्पद शुल्क (अपी*) नि�यमाव*ी, 2001 के नि�यम 3 के उप नि�यम (2) में निवनि�र्दिदMष्ट व्यक्तिक्तयों द्वारा हस्ताक्षर निकए जाएगंे। उक्त अपी* को चार प्रनितयोँ में दाखिख* निकया जाए तथा जिजस आदेश के निवरुद्ध अपी* की गई हो, उसकी भी उत�ी ही प्रनितयाँ सं*ग्� की जाए ँ(उ�में से कम से कम एक प्रनित प्रमाणिणत हो�ी चानिहए)। अपी* से सम्बंधि9त सभी दस्तावेज भी चार प्रनितयोँ में अग्रेनिUत निकए जा�े चानिहए।

The Appeal should be filed in Form No. E.A.3. It shall be signed by the persons specified in sub-rule (2) of Rule 3 of the Central Excise (Appeals) Rules, 2001. It shall be filed in quadruplicate and shall be accompanied by an equal number of copies of the order appealed against (one of which at least shall be certified copy). All supporting documents of the appeal should be forwarded in quadruplicate.

4. अपी* जिजसमें तथ्यों का निववरण एवं अपी* के आ9ार शाधिम* हैं, चार प्रनितयों में दाखिख* की जाएगी तथा उसके साथ जिजस आदेश के निवरुद्ध अपी* की गई हो, उसकी भी उत�ी ही प्रनितयाँ सं*ग� की जाएगंी (उ�में से कम से कम एक प्रमाणिणत प्रनित होगी)।

The Appeal including the statement of facts and the grounds of appeal shall be filed in quadruplicate and shall be accompanied by an equal number of copies of the order appealed against (one of which at least shall be a certified copy.)5. अपी* का प्रपत्र अंग्रेजी अथवा निहन्दी में होगा एवं इसे संणिक्ष4त एवं निकसी तकY अथवा निववरण के निब�ा अपी* के कारणों के स्पष्ट शीUZ के अंतगYत तैयार कर�ा चानिहए एवं ऐसे कारणों को क्रमा�ुसार क्रमांनिकत कर�ा चानिहए।

The form of appeal shall be in English or Hindi and should be set forth concisely and under distinct heads of the grounds of appeals without any argument or narrative and such grounds should be numbered consecutively.6. अधि9नि�यम की 9ारा 35 बी के उपब�ों के अंतगYत नि�9ाYरिरत फीस जिजस स्था� पर पीठ स्थिस्थत है, वहां के निकसी भी राष्ट्रीयकृत बैंक की शाखा से न्यायाधि9करण की पीठ के सहायक रजिजस्ट्रार के �ाम पर रेखांनिकत माँग ड्राफ्ट के जरिरए अदा की जाएगी तथा यह माँग ड्राफ्ट अपी* के प्रपत्र के साथ सं*ग्� निकया जाएगा।

The prescribed fee under the provisions of Section 35 B of the Act shall be paid through a crossed demand draft, in favour of the Assistant Registrar of the Bench of the Tribunal, of a branch of any Nationalized Bank located at the place where the Bench is situated and the demand draft shall be attached to the form of appeal.7. न्याया*य शुल्क अधि9नि�यम, 1970 की अ�ुसूची-1, मद 6 के अंतगYत नि�9ाYरिरत निकए अ�ुसार सं*ग्� निकए गए आदेश की प्रनित पर 1.00 रूपया का न्याया*य शुल्क टिटकट *गा हो�ा चानिहए।

The copy of this order attached therein should bear a court fee stamp of ` 1.00 as prescribed under Schedule 1, Item 6 of the Court Fees Act, 1970.8. अपी* पर भी रु. 4.00 का न्याया*य शुल्क टिटकट *गा हो�ा चानिहए।

Appeal should also bear a court fee stamp of ` 4.00. ---------------------------------------------------------------------------------------------निवUयः - कारण बताओ सूच�ाः

Sub : Proceedings initiated with reference to Show Cause Notice No. DGECI/AZU/12(4)14/08-09 dated 28.02.2009 and DGCEI/AZU/36-02/2010-11 dated 01.04.2010 issued by the Additional Director General, Directorate General of Central Excise intelligence, Ahmedabad Zonal unit, Ahmedabad issued to M/s. Rajeshree Automeche, 285, Yadunandan Estate, Opp. Simla House, N.H. 8, Rakhial Ahmedbad.

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BRIEF FACTS OF THE CASE:

M/s. Rajeshree Auto Meche, 285, Yadunandan Estate, Opp: Simla House, NH 8, Rakhial, Ahmedabad (hereinafter referred to as “M/s. Rajeshree” for the sake of brevity) are engaged in the manufacture of three wheeled motor vehicles commonly/popularly known as “Chhakado rickshaw”, falling under CETSH No. 8704 21 20 of the Central Excise Tariff Act, 1985, which are used for transportation of goods and they are registered with the Central Excise department having Registration No. AAHPH 6775 J XM 001.

2 Intelligence was gathered that the manufacturers of three wheeled transport carriers commonly known as “Chhakado Rickshaw” are evading payment of Central Excise duty by way of suppressing production and clandestine clearances. The said “chakkda rickshaw” is not covered under Notification No. 08/2003 CE dated 01.03.2003 as amended. Therefore, the manufacturers are required to pay Central Excise duty from the very first clearance.

3 Based on the above intelligence, DGCEI conducted detailed investigation against the manufacturers of chhakada rickshaws, including M/s. Rajeshree. The officers of DGCEI, Ahmedabad Zonal Unit (AZU), Ahmedabad as well as officers of Central Excise Commissionerates conducted searches on 06.10.2009 at various premises of Chhakado rickshaw manufacturers, including the factory premises of M/s. Rajeshree Auto Meche. Simultaneous search was also conducted at the premises of M/s. Arihant Automobiles, Opp: Simla House, Viratnagar, NH 8, Naroda, Ahmedabad in the presence of independent panchas and Shri Suresh Ramjibhai Humbal, father of Shri Gunvant S. Humbal, Proprietor of M/s. Rajeshree Auto Meche.

4 During the course of panchnama dated 06.10.2009, drawn at the factory premises of M/s. Rajeshree Auto Meche, two Chhakado rickshaws were placed under detention, as Shri Sachin Sureshbhai Humbal, present at the time of search could not produce any documents in respect of these two Chhakado rickshaws.

5 During the course of panchnama dated 06.10.2009, drawn at the premises of M/s. Arihant Automobiles, the records/documents pertaining to M/s. Rajeshree Auto Meche were recovered under said panchnama. The preliminary scrutiny of records/documents, as mentioned in Annexure-A to the panchnama dated 06.10.2009 revealed that during the period from December, 2005 to September, 2009, M/s. Rajeshree have shown clearance of 41 Chhakado rickshaws only. The scrutiny of sales invoices also revealed that besides, the clearance of Chhakado rickshaws, they have also shown clearance of diesel engines, showing inputs cleared as such.

6 The respective State Governments ensure the compliance of the Central Motor Vehicle Act and Rules framed thereunder. Accordingly, the registration of vehicles with Regional Transport Offices is compulsory. The Govt. of Gujarat has established Regional Transport Offices under the office of the Commissioner of Transport in different cities for the compliance of the Central Motor Vehicle Act and Rules framed thereunder. Section 39 of the Central Motor Vehicle Act, 1988 stipulates that “No person shall drive any motor vehicle and no owner of a motor vehicle shall cause or permit the vehicle to be driven in any public place or in any other place unless the vehicle is registered in accordance with Chapter IV and the certificate of registration of the vehicle has not been suspended or cancelled and the vehicle carries a registration mark displayed in the prescribed manner”. Rule 42 of the Central Motor Vehicles, Rules, 1989 stipulates that “No holder of a trade certificate shall deliver a motor vehicle to a purchaser without registration, whether temporary or permanent”. Further, Rule 47 of the Central Motor Vehicle Rules, 1989 stipulates the documents to be submitted for registration of vehicles.

6.1 Further Rule 44 of Central Motor Vehicle Rules, 1989 stipulates that “the registering authority shall before proceeding to register a motor vehicle or renew the certificate of registration in respect of motor vehicle, other than a transport vehicle, require the person applying for registration of the vehicle or, as the case may be, for renewing the certificate of registration to produce the vehicle either before itself or such authority as the state government may appoint in order that the registering authority may satisfy itself that the particulars contained in the application are true and that the vehicle complies with the requirements of this Act and the rules made there under. The above provision stipulates the need of production of vehicle before RTO authority for registration.

6.2 Rule 43 of Central Motor Vehicle Rules, 1989 stipulates that “Notwithstanding anything contained in section 40, the owner of a motor vehicle may apply to any registering authority or other prescribed authority to have the vehicle

temporarily registered in the prescribed manner and for the issue in the prescribed manner of a temporary certificate of registration and a temporary registration mark”.

6.3 The said rule further stipulates that a temporary registration made shall be valid only for a period not exceeding one month and shall not be renewable provided that where a motor vehicle so registered is a chasis to which a body has not been attached and the same is detained in a workshop beyond the said period of one month for being fitted, the period may, on payment of such fees, if any, as may be prescribed, be extended by such further period or periods as the registering authority or other prescribed authority as the case may be, may allow.

6.4 From the above, it is clear that registration of all vehicles with the RTO is a statutory requirement. Each vehicle with maker’s name gets registered with RTO authorities functioning under the respective state governments. Hence it is inferred that the details provided by RTOs, regarding the vehicles registered during a particular period, are accurate and reliable in all respect. The temporary registration takes place where the factory of the vehicle manufacturer is situated and permanent registration takes place where buyer of the vehicle resides. 7. The officers of DGCEI along with Officers of Central Excise conducted searches at the premises of various manufacturers of Chhakado rickshaw including M/s. Rajeshree Auto Meche, Ahmedabad. The preliminary scrutiny of records/documents, as mentioned in Annexure-A to the panchnama dated 06.10.2009 revealed that during the period from December, 2005 to September, 2009, M/s. Rajeshree have shown clearance of 41 Chhakado rickshaws only. Looking to the very few clearances shown by M/s. Rajeshree, it necessitated to verify the genuineness of the sales of Chhakado rickshaws, to compare the same with the number of vehicles of M/s. Rajeshree registered with the RTO, Ahmedabad

7.1 Accordingly, the details of auto rickshaw delivery vans, registered with RTO, Ahmedabad were called for. The RTO, Ahmedabad, vide letter dated 03.12.2009 has submitted the details of registration of such vehicles, manufactured by various manufacturers, including M/s. Rajeshree Auto Meche. In case of vehicles manufactured by M/s. Rajeshree Auto Meche, the maker’s name has been mentioned as “Rajeshree” or “Rajeshree Auto Meche”. The scrutiny of details submitted by RTO, Ahmedabad revealed that 1792 Chhakkdo rickshaws, manufactured and cleared by M/s. Rajeshree Auto Meche have been registered with RTO, Ahmedabad, during the period from 26.12.2005 to 06.10.2009, whereas, as per C. Ex. Invoices and ER-1 returns filed by M/s. Rajeshree Auto Meche, during the period from December, 2005 to September, 2009, they have shown clearance of 41 chakkda rickshaws only. The above Chhakado rickshaws were manufactured and cleared by them and have been registered with RTO, Ahmedabad. The chart showing details of Chhakado rickshaws, manufactured and cleared by M/s. Rajeshree Auto Meche and registered with RTO, Ahmedabad, showing maker’s name as “Rajeshree” or “Rajeshree Auto Meche”, during the period from 26.12.2005 to 06.10.2009 is enclosed as Annexure-A to the show case notice.

7.2 It is obligatory on the part of the vehicle manufacturers to obtain compliance certificate from Automotive Research Association of India (ARAI), Pune, under the provisions of Rule 126 of Central Motor Vehicle Rules, 1989. As the Chhakado rickshaw manufacturers also have to comply with the provisions of Central Motor vehicle Rules, 1989, they have to supply “Base Model” to the Automotive Research Association of India (ARAI), Pune for approval and obtain requisite certificate from ARAI, Pune. ARAI, Pune approves the design of chhakdo rickshaw on the basis of Base Model supplied by the vehicle manufacturer. The chhakado rickshaws are permitted to be manufactured only by those persons/firms who possess such certificate issued by Automotive Research Association of India (ARAI), Pune. The certificate issued by ARAI, Pune is non transferable and the certificate holder can only manufacture the vehicle approved by ARAI. As per rule 122 of CMVR, 1989, the location of chassis number and code for month and year of manufacture are defined by ARAI, Pune. Accordingly, the manufacturers give chasis No. to the vehicles manufactured by them. The chasis No. contains name of manufacturer in short, Sr.

No. of vehicle in a calendar year and year of manufacture. For illustration, in chasis No. RAM/01/09, ‘RAM’ represents name of manufacturer viz. Rajeshree Auto Meche, ‘01’ shows the Sr. No. of vehicle manufactured in a calendar year and ‘09’ shows year of manufacture.

7.3 On perusal of the certificate issued by ARAI, Pune it was revealed that it contained the base model. It also contained the details of diesel engine to be fitted in the Chhakado rickshaw. The certificate reveals that the diesel engine used is Greaves Cotton Ltd make GL-400 II A having power 5.51 KW @ 3600 rpm. Para 3 of the certificate clearly indicates that the certificate is issued as per CMV Rule 126 to establish compliance with Central Motor Vehicles Rules, 1989 & shall not be construed as a certificate of compliance to any rules other than those listed in Annexure I & IA. It is also mentioned that the compliance to these rules has been verified based on use of specific components/parts/assemblies etc. It is specifically mentioned that “it is the vehicle manufacturer’s responsibility to ensure fitment of same components/parts/assemblies etc. before submission of the vehicle for registration.

7.4 From the conditions listed in the certificate granted by ARAI, it is evident that the vehicle manufacturer has to use the same components/parts/assemblies etc. prescribed in the certificate issued by ARAI.

7.5 The RTO registers the vehicles of those manufacturers who are having such certificate from ARAI, Pune. The certificate holders of ARAI, Pune can only issue form 21 and form 22, required for registration of vehicles before RTO. Requisite certificates issued by ARAI, Pune, and the Jt. Director of Transport, Gujarat state to M/s Rajeshree to manufacture the Chhakado and to get the same registered with RTO respectively. The Commissioner of Transport, Gujarat State, Gandhinagar approves any new model of the vehicle to be registered with the Regional Transport Office only after getting compliance certificate required under provisions of the Motor Vehicle Act, 1988 and the Rules in respect of Goods Vehicles, from ARAI for manufacture of the said model. :

7.6 All manufacturers who possess requisite certificate from ARAI, Pune have to declare production volume on regular basis to ARAI, Pune. The purpose of this declaration is to enable the agency to carry out verification regarding conformity of production (Cop) as per the specified periodicity under the law and to verify compliance to emission performance. Hence, the production declaration submitted by various manufacturers of Chhakado rickshaw to ARAI, Pune was called for vide letter F. No. DGCEI/AZU/12 (4) 29/2009-10 dated 03.11.2009. ARAI, Pune vide letter F. No. ARAI/HMR/Govt-Corr/09-10/11 dated 11.12.2009 submitted the details of Chhakado rickshaws, manufactured by various manufacturers, including M/s. Rajeshree Auto Meche. The details of production of Chhakado rickshaws furnished by M/s. Rajeshree Auto Meche, in their half yearly return to ARAI, Pune for the period from 2005-06 to 2008-09 are as under:

Year 1st half 2nd half2005-06 --- ---2006-07 52 402007-08 --- ---2008-09 56 60

7.7 As per the above M/s. Rajshree have reported production figures of 92 and 116 vehicles, during the years 2006-07 and 2008-09, respectively to ARAI, Pune. Whereas they shown production and clearance in their ER-1 returns as 43 Nos. and 41 nos. respectively for the corresponding period. As against the manufacture and clearance of 1792 Chhakado rickshaws registered with RTO, Ahmedabad, during the

period 26.12.2005 to 06.10.2009, they have reported manufacture of 208 chhakdos only to the ARAI, Pune. The figures of production and clearance submitted to C. Ex. and ARAI, Pune are far lower than the actual quantity of vehicles manufactured and cleared by them as per the details obtained from RTO.

7.8 During the course of panchnama dated 6.10.2009, drawn at the factory premises of M/s. Rajeshree Auto Meche, two Chhakado rickshaws were placed under detention, as Shri Sachin Sureshbhai Humbal, present at the time of search could not produce any documents in respect of these two Chhakado rickshaws. The details of these two Chhakado rickshaws are as under:

Sr. No. Registration No. Chasis No. Engine No. Value (Rs.)1 GJ 1 TCA 35 RAM/0613/09 R9F 2635239 700002 GJ 11 Y 1607 RAM/843/08 R8D 516454 35000

7.8.1 Later on, the said detained Chhakado rickshaws were placed under seizure vide panchnama dated 04.02.2010. A separate Show Cause Notice proposing confiscation of these two Chhakados was issued vide F. No. DGCEI / AZU / 36-02 / 2010-11 dated 01.04.2010,

7.9 During the course of panchnama dated 6.10.2009, drawn at the premises of M/s. Arihant Automobiles, the records/documents pertaining to M/s. Rajeshree Auto Meche were recovered. Shri Suresh Ramjibhai Humbal, father of Shri Gunvant S. Humbal, Proprietor of M/s. Rajeshree Auto Meche informed the officers that M/s. Rajeshree Auto Meche is owned by his elder son Shri Gunvat S. Humbal and is engaged in the manufacture of Chhakado rickshaw. He also informed that being a family member, the records of M/s. Rajeshree Auto Meche were kept at his shop. The records/documents recovered under panchnama are mentioned in Annexure-A to the panchnama dated 06.10.2009

7.10 The sales invoices of M/s. Rajeshree Auto Meche so recovered from M/s Arihant Automobiles have shown the description of goods as ‘Three Wheeler Delivery van’. Besides, they have also shown sale of diesel engines which amounts to clearance of input as such.

7.11 During the course of investigation, to determine the quantity of Chhakado rickshaws manufactured by each manufacturer, the details of registration of Chhakado rickshaws were obtained from different RTOs. Some of the invoices issued by M/s. Rajshree for diesel engines cleared by them as input as such were compared with the details of Vehicles registered with RTO and found that they have exactly matched with name of the buyer and date of registration. For eg. one such auto rickshaw delivery van was registered in the name of Shri A. P. Makvana on 15.07.2006 at Ahmedabad RTO against invoice No., 8 dated 15.7.2006 The details of temporary registration of the same Chhakado rickshaw are as under:

Registration No. GJW 1 ZI 7850Date of Registration 15.07.2006Name of Registrant A. P. Makwana

Make RajeshreeChasis No. RAM/127/06Engine No. 259494

RTO for Permanent Registration Rajkot

7.12 The comparison of details of above invoice with the RTO details revealed that the details such as name of the buyer, date exactly matched with each other. As per RTO details the vehicle is ‘Rejeshree’ make three wheeled auto delivery van. However, in the invoice, M/s. Rajeshree Auto Meche have shown clearance of diesel engine cleared as input as such. Thus, it is evident that though M/s. Rajeshree Auto Meche have cleared Chhakado rickshaw, in the guise of diesel engine. Thus, M/s. Rajeshree Auto Meche had mis-declared the description of the goods in the invoices in order to avoid the payment of duty of Central Excise and other taxes. Investigation shows that the above modus was adopted by M/s Rajeshree in most of the invoices.

7.13 The scrutiny of C. Ex. Invoices and ER-1 returns revealed that during the period from December, 2005 to September, 2009, M/s. Rajeshree Auto Meche have cleared 322 Nos. diesel engines, showing as duty paid clearance of input as such. The fact that such Chhakado rickshaws are registered in the name of M/s. Rajeshree Auto Meche shows that they have cleared Chhakado rickshaws, but, in the invoices, they have shown clearance of diesel engines. Investigation shows that the above modus was adopted by M/s Rajeshree in most of the invoices with an intent to avoid payment of central excise duty on the Chhakado rickshaws. Hence, Central Excise duty is required to be recovered on such Chhakado rickshaws, cleared in guise of diesel engines by them.

7.14 The premises of M/s. Manish Auto situated at Nagarpalika Shopping Centre, Keshod who is a broker of Chhakado rickshaw and engaged in the RTO registration, Insurance etc. was searched simultaneously by the officers of DGCEI, AZU, Ahmedabad as well as C. Ex. Commissionerates under panchnama dated 06.10.2009. The records which appeared relevant for further investigation of the case were recovered from the said premises as detailed in Annexure-A and Annexure-B to the said panchnama. 31 RC (Registration Certificate) books were recovered from the premises of M/s. Manish Auto, Keshod under panchnama proceedings as detailed in Annexure-B to the said panchnama. Out of 31 RC books, 2 RC books, mentioned at Sr. No. 12 & 31 of Annexure-B to the panchnama bear chasis number of M/s. Rajeshree Auto meche. The above RC books, recovered from the premises of M/s. Manish Auto, Keshod were issued by RTO, Junagadh. On scrutiny of the RC books, it was found that the chasis no. and make of M/s. Rajeshree Auto Meche were mentioned in the said RC books. The said vehicles were temporarily registered with RTO, Ahmedabad appearing at Sr.No. 1072 and 1416 of Annexure-A. to the show cause notice.

7.15 From the above, it is evident that the vehicle was manufactured by M/s. Rajeshree Auto Meche, Ahmedabad and bears chasis no. of M/s. Rajeshree Auto Meche. The RC book contains Chasis No. starting with ‘RAM’ (Name in short by taking first alphabets from the name of manufacturer i.e. M/s. Rajeshree Auto Meche) and maker’s name as M/s. Rajeshree Auto Meche, Ahmedabad. The above mentioned vehicle was manufactured in May, 2008 and was temporarily registered with RTO, Ahmedabad on 29.08.2008. Whereas the scrutiny of C. Ex. invoices issued by M/s. Rajeshree Auto Meche in the years 2008 and 2009 revealed that no invoice was issued either in the name of M/s. Manish Auto, Keshod or in the name of the buyer mentioned in the above two RC books, having month and year of manufacturer as May, 2008 and May, 2009. This indicated that the Chhakado rickshaws have been clandestinely manufactured and cleared by M/s. Rajeshree Auto Meche without payment of Central Excise duty.

7.16 The scrutiny of C. Ex. Invoices of M/s. Rajeshree Auto Meche for the year 2008-09 revealed that during the whole year they have shown clearance of 6 (Six) three wheeler delivery vans only. In remaining cases, they have issued invoices showing clearances of inputs as such, mostly of diesel engines. The scrutiny of C. Ex. Invoices for the year 2009-10 (upto 22.09.2009) revealed that during above period, they have not shown clearance of any Chhakado rickshaw. They have issued invoices, showing clearance of input as such i.e. diesel engines.

7.17 Further, the page NO. 151 of register 07 recovered during the panchnama dated 06.10.2009 at Manish Auto, Keshod placed at Annexure-A to the panchnama showed the details of the Chhakado rickshaw dealt with various manufacturers of Chhakado rickshaws including Rajshree by M/s. Manish Auto. Sr. NO. 20 & 21 of the said page show that they have dealt two Rajshree make Chhakado rickshaw which matched with the details shown at Sr. No. 1180 & 1281 of the Annexure-A to the Show cause Notice i.e. the chart showing vehicles temporarily registered with RTO, Ahmedabad.

8. Statement of Shri Govindbhai Hirabhai Myatra, Karta of M/s. Manish Auto, Keshod was recorded under section 14 of the Central Excise Act, 1944 on 19.02.2010 wherein he had stated that they deal with the work relating to RTO and do the sale-purchase of Chhakados manufactured by various manufacturers including M/s. Rajeshree. He also deposed that after getting the temporary registration of Chhakado rickshaws by the Chhakado manufacturers, they get the documents such as Form 21 & 22, sales Invoices from the manufacturers to be given to the buyers for the permanent registration., that sometimes they also get the Chhakado in dismantled condition, that they assembled the same and get permanent registration. He also stated that they recover the price of the Chhakados from vehicle owner/buyer thereafter the same was sent to Chhakado manufacturers and intern get commission. Further, on being questioned regarding the registers listed at 4,5,6 and 7 of Annexure-A to the said panchnama, he had categorically stated that the details of the Chhakados received from different Chhakado manufacturers are noted in the registers for which they have undertaken the RTO and Insurance work. He also stated that they do not manufacture any new Chhakados and only undertake the body work of Chhakados and fitting of some accessories.

9. The premises of M/s. Parishram Marketing, 64, Mayur Market, Opp. Police Station, Keshod were simultaneously searched under panchnama dated 06.10.2009. M/s. Parisham Marketing is an RTO/Insurance agent and financer of Chhakado rickshaws. Records relevant for investigation were recovered from the said premises and detailed in Annexure-A to the said panchnama.

10. On scrutiny of the registers mentioned at Sr. No. 4 and 6 of Annexure-A to the panchnama dated 06.10.2009 revealed the details of Chhakado rickshaws, manufactured by various manufacturers, including M/s. Rajeshree Auto Meche dealt by M/s. Parishram Marketing and on comparing with the details, submitted by RTO, Ahmedabad and the Chhakado having chasis Nos. RAM/253/06, RAM/403/09, RAM/405/09, RAM/406/09 dealt by M/s. Parishram Marketing, Keshod matched with the vehicle registered with RTO, Ahmedabad appearing at Sr.NO. 188, 1502, 1503 and 1504 respectively of Annexure-A to the SCN for which M/s. Rajshree have neither issued any invoice nor paid any central excise duty on the said vehicles. The details pertaining to vehicles manufactured by M/s. Rajeshree Auto Meche, as appearing in the seized regsiters mentioned at Sr. No. 4 and 6 have been summarised and are enclosed as Annexure-C to the show cause notice. In all M/s. Parishram Marketing have dealt with 188 Numbers of Chhakado rickshwas manufactured and cleared by M/s. Rajshree for which they have issued invoices for few Chhakado rickshwas only.

11. Statement of Shri Nathubhai Gajera, Proprietor of M/s. Parishrma Marketing, Keshod was recorded under section 14 of the C. Ex. Act, 1944 on 20.11.2009 wherein he interalia stated that they are RTO/Insurance agent and undertake the work relating to passing of new Chhakado rickshaws and insurance thereof and they act as a financier and give loan to purchasers of Chhakado rickshaws. The job of financing is done under the name of M/s. Parth Finance, Keshod. He also stated that, at the time of permanent registration of the vehicle they were submitting Form 21 & 22 and Sales invoice issued by the registered manufacturer, insurance slip and ID proof of the buyers to the RTO. He also confirmed the details mentioned in the registers 4 & 6 of Annexure-A to the panchanama dated 6.10.2009 drawn at M/s. Parishram Marketing. In rare cases, they have got the Chhakado rickshaws in dismantled conditions after getting the

temporary RTO passing from various manufacturers and they have got the same assembled from local technicians. This is done only for easy transportation. He also stated that during the period from January 2005 to Sept. 2009 they have received 578 chhakodas rickshwas of various manufactures out of which 188 are of Rajshree Automeche. . 12. As per the certificate of ARAI, Pune to M/s. Rajshree Auto Meche they were required to use the diesel engine of Greaves Cotton Limited make GL-400 II A having power 5.51 KW @ 3600 rpm for manufacture of Chhakado rickshaw. Information regarding sale of model GL-400 ‘Greaves’ make diesel engines was gathered under summons proceedings from the various dealers. On the basis of data received from such different dealers, it was noticed that M/s. Rajeshree Auto Meche had totally purchased 471 Nos. ‘Greaves’ make GL-400 model Diesel Engines from various dealers during the period from 01.08.2005 to 06.10.2009 whereas the details submitted by the RTO, Ahmedabad 1792 Chhakados were manufactured by M/s. Rajshree Automeche and temporarily registered with RTO, Ahmedabad.

13. It was also noticed from the information gathered from the dealers of Greaves Cotton during the investigation, that M/s. Rajeshree Auto Meche have also purchased and used other models of ‘Greaves’ make diesel engines viz. Model Nos. G 1080, G 1450, G 1510, G 5520, G 5530 etc. to manufacture Chhakado rickshaw. The investigation also revealed that all the above models except GL-400 are originally meant for water handling, agriculture or other purposes. It was also revealed during the investigation that the manufacturers of Chhakado rickshwas have also used and fitted assembled diesel engines assembled by various local mechanics.

14. The investigation further extended to such mechanics, who are engaged in the assembly work of diesel engines. In this regard, a statement of Shri Kasambhai Umarbhai Kaida, Proprietor of M/s.Kamal Auto Centre, Vijay Plot, Main Road, Sheri No.11, Rajkot was recorded under Section 14 of CEA, 1944 on 12.05.2010. Shri Kasambhai in his statement had stated that he undertakes the work relating to diesel rickshaw, diesel engine and gear box and their assembly and repairing work.

14.1 He further stated that the Chhakado rickshaw manufacturers purchase the necessary parts of diesel engines and give him the same for fitting / assembly work; that thereafter, he assembled the parts to prepare the diesel engine. He also stated that the plate required to affix on diesel engine for engine number and its manufacturers name & logo is available in local market and it is possible that chhakda manufacturers may be affixing such type of locally procured plates on their own on the diesel engines assembled by him.

15. M/s. Dattatrey Auto Centre situated at 8, Rajput Para, Opp. Lodhawad Police Station, Rajkot are engaged in the trading activity of spare parts of Chhakado rickshaw & bullet. The premises of M/s. Dattatrey Auto Centre, Rajkot were searched by the officers of DGCEI, AZU, Ahmedabad under panchnama dated 22.07.2010. During the search, the officers found one set comprising of name plate and monogram of M/s. Greaves Cotton & Co. Limited, which was placed under seizure. The scanned image of the said plate and monogram is produced below:

16. Further a statement of Shri Mansukh Patel, Proprietor of M/s. Dattatrey Auto Centre, Rajkot was recorded under section 14 of the Central Excise Act, 1944 on 22.07.2010 wherein he interalia stated that they are trading in spare parts of Bullets (two wheeler) and three wheeled motor vehicle commonly known as “Chhakado rickshaw”, and they were selling the monograms. He further stated that such monograms are used by local technicians who use such monogram to affix on the diesel engines locally assembled by them. The parts such as crank shaft, crank case, cylinder head, connecting rod, cylinder, housing etc. are the main parts of the diesel engines. He further stated that the price of the GL-400 model engine is about Rs.35000/-. The cost of engine assembled locally is approximately Rs.20,000/- to Rs.22000/- per engine. The local mechanics, who are engaged in the assembly business use some parts of Greaves Cotton & Co and some parts procure from local manufacturers in Rajkot. They use crank case of Greaves Ltd and use other parts such as crank shaft, cylinder head, connecting rod, cylinder, housing, piston etc. manufactured by local manufacturers.

17. Statement of Shri Kishor Gordhanbhai Chandra, Partner of M/s. New Chandra Motor Cycle House, an authorised distributor of M/s. Greaves Cotton Ltd and Royal Enfield, situated near Town Hall, Jamnagar was recorded under Section 14 of Central Excise Act, 1944 on 23/07/2010 wherein he had submitted that the details of sales engines to various manufacturers of “Chhakado rickshaws” are as under:

Sr. No.

Name of the manufacturers

Model No.GL 400 5520 5530 1450 1510 1080 Total

01. Atithi Gokul Automobile Works, A’bad.

298 0 0 6 2 14 320

02. Atul Auto Industries, Jamnagar

28 0 0 4 0 4 36

03. Dilavar Auto Industries.

171 1 1 17 15 3 208

04. Five Star Auto Industries

36 2 0 11 1 3 53

05. Hakikat Auto Inds.

28 0 0 28 1 10 67

06. KISMAT Auto Inds.

43 0 0 85 28 8 164

07. New Shreeji Engg. Works

319 0 9 9 0 13 350

08. Raj Auto Inds. 193 5 1 32 1 6 23809. Rajmandir Auto

Inds.43 0 0 0 1 7 51

10. Rajshree Auto Meche, A’bad

97 0 0 1 0 0 98

11. Shri Ram Diesel Pvt. Ltd.

343 0 0 5 0 1 349

12. Shri Rajshakti Automobile Works

133 0 0 2 0 0 135

13. Somanth Auto Inds.

34 1 0 1 0 2 38

14. Vaibhav Auto Inds.

63 0 1 6 2 3 75

15. Vishwakarma Engg. Works

214 0 6 0 0 0 220

18. Statements of various dealers of M/s. Greaves Cotton Ltd. viz. Shri Pankaj Jagatnabhai Panara authorized signatory of M/s. Deepak Sales Agency, Junagadh, Shri Maganlal Hansraj Dadhania, Partner of M/s. Swastik Electric Corporation, Keshod and Shri Pradhneshbhai Jitendra Shah, Proprietor of M/s. Electro Trading Corporation, Ahmedabad have been recorded under section 14 of Central Excise Act, 1944 and the outcome of the statements show that the Chhakado manufacturers also used other models of Grieves Cotton besides locally assembled engines which are cheaper than the prescribed version of engine i.e. GL-400. It also shows that the price of GL-400 varied between Rs. 33,000/- to Rs. 35,000/-, other models is around Rs. 23,000/- and the locally assembled engines varied between Rs. 19,000/- to Rs. 21,000/- The outcome also shows that the main buyers of the diesel engines and pump sets are the manufacturers of Chhakado rickshaw in the state of Gujarat and the payments are received by the said dealers through cheques, cash and through DDs from the Chhakado manufacturers.

19. From the foregoing paras it is clear that the manufacturers of Chhakado rickshaws have also used different types of diesel engines other than the prescribed GL-400 diesel engines. Thereby the manufacturers of Chhakados have violated the various norms and terms prescribed by the different government agencies to manufacture vehicle.

20. Statement of Shri Gunvant Sureshbhai Humbal, Proprietor of M/s. Rajeshree Auto Meche were recorded under section 14 of Central Excise Act, 1944 on 31.3.2010 and 24.9.2010 wherein he interalia stated they manufacture the Chhakado rickshaw of brand “Super”, that he had neither accounted for the two Chhakados rickshaws seized under panchnama dated 06.10.2009 in any of the records nor he could produce any duty paying documents in respect of the two Chhakado rickshaws, that he had not prepared any central excise invoices in respect of seized rickshaws. He also confirmed vide his statement dated 24.9.2010 that during the period from 26.12.2005 to 6.10.2009 they have manufactured 1792 Chhakados and got the same temporarily registered with the RTO, Ahmedabad. He also stated that they have cleared 41 Chhakados by preparing central excise invoices and remaining chhakados were cleared without preparing central excise invoices and without payment of central excise duty. He also stated that he had not submitted the correct figures to ARAI, Pune with regards to the manufacture and clearance. He also admitted that they have actually cleared Chhakados rickshwas in the guise of diesel engines in order to reduce the burden of duty of excise and other taxes. He also confirmed that M/s. Manish Auto, Keshod and M/s. Parishram Marketing have dealt with their chhakadas rickshwas and agreed to the facts mentioned in the statements of Shri Govindbhai Hirabhai Myatra of Manish Auto and Nathubhai Gajera of M/s. Parishram Marketing. He also stated that they used to purchase other parts and spares from open market on cash payments and the same were not accounted for. He also confirmed that he had sold the Chhakado rickshwas in cash and had utilized the cash to purchase the spare parts from open market. He had also confirmed that they arranged to purchase the engines and other parts in the name of buyers directly from the dealers and payment for the same was made in cash or DD to the dealers. He had also given the approximate value of the accessories used by them in the manufacture of the Chhakados amounting to Rs. 71,900/- whereas he has

declared the assessable value of Chhakados in their invoice is Rs. 45,000/- to Rs. 50,000/-.

20.1 The above statements of Shri Gunvant Sureshbhai Humbal, Proprietor of M/s. Rajeshree Auto Meche proved that they have also undervalued the Chhakado rickshaws manufactured and cleared by them licitly or illicitly.

21. After initiation of investigation, it was noticed that M/s. Rajeshree have shown more clearances. They have also increased the value of the Chhakados thereafter. However, the scrutiny of ER-1 Returns for the period October, 2009 to June, 2010 reveals that they have not declared the actual value of chhakados in their central excise invoices. During the said period, M/s. Rajeshree have manufactured and cleared 145 and 144 Chhakados respectively by declaring assessable value of Rs.88,24,500/-. As discussed hereinabove, the actual value of the Chhakado is Rs.71900/-. Therefore, the Central Excise duty short paid on 144 Chhakados cleared during the period October, 2009 to June, 2010 on account of under valuation is calculated by considering the value of Rs.71900/- shown in Annexure D-3. which is enclosed to the said SCN. Therefore, C. Ex. Duty short paid on the 144 Chhakados amounting to Rs.1,36,551/- is required to be recovered from them along with interest.

22. For above contraventions a show cause notice bearing NO. DGCEI/AZU/36-93/2009-10 dated 29.09.2010 for demand of (i) Central Excise duty of Rs.1,66,93,593/- under Section 11 A of CEA,1944 as detailed in Annexures D-1 to D-3 and M. V. Cess of Rs.1,93,998/- as detailed in Annexure D-4 to this notice, (ii) The interest at appropriate rate on the aforesaid duty amount should not be recovered from them under section 11AB of the said Act and (iii) The penalty under section 11AC of the said Act read with rule 25 of the said Rules should not be imposed upon them (iv) Personal penalty under Rule 26 of CER 2002 on Shri Gunvatbhai S. Humbal, Proprietor of M/s. Rajshree Auto Meche for the above discussed contraventions committed by them. was issued by the Additional Director General, DGCEI, AZU, Ahmedabad and in respect of the seizure portion, another show cause notice bearing No. DGCEI/AZU/36-02/2010-11 dated 01.04.2010 was issued to them for (i) two Chhakado rickshaws valued at Rs.1,05,000/- seized at their factory premises under panchnama dated 04/02/2010 should not be confiscated under Rule 25 of the Central Excise Rules, 2002, (ii) penalty should not be imposed upon them under Rule 25 of the Central Excise Rules, 2002 and (iii) Personal penalty under Rule 26 of CER 2002 on Shri Gunvatbhai S. Humbal, Proprietor of M/s. Rajshree Auto Meche for the above discussed contraventions committed by them.

Defence Reply:

23. The noticee in their defence reply dated 01/07/2011 has submitted that there was absolutely no manufacturing activity going on in the premises of M/s. Rajeshree Auto Mech, when the officers of DGCEI visited at the relevant point of time. That M/s. Rajashree Auto were utilizing only a small workshop admeasuring 17 1/2 x 20 ft, and that there was no machine whatsoever at the premises of Rajashree. There was no electricity consumption at that time. There was no labour working. There were only three old Chhakados in the premises. Apart from this, there was absolutely nothing to demonstrate that any kind of manufacturing activity was going on at the premises of Rajashree Auto. The aforesaid would demonstrate beyond any doubt that there was no manufacturing activity going on at the said premises. They contented that they were not manufacturing any Chhakados at all. In the least, they just get the assembling done and at most of the times, they are only issuing sales letters but are not manufacturing Chhakados.

23.1 Further they also submitted that there was no evidence recovered from the premises of Rajashree Auto which demonstrate that any additional Chhakados were manufactured and sold. There is absolutely no incriminating evidence found either of sale of Chhakados or of purchase of excess raw-material or of receipt of additional consideration which is not accounted or of making payment by cash. Further that there was no evidence of purchase of any raw-material which is required to make the Chhakados that is not accounted for. That no raw-material at all was found at the premises. There is also no evidence of any of these raw-materials being purchased from any place

clandestinely. There is also no proof of transportation of any Chhakados or any of these raw-materials without invoice etc.

23.2 In other words, of all the aforesaid evidences which are required to be there and which would directly show that Chhakados were being manufactured illicitly, not a single of these factors was found to exist. Furthermore, there are no chits, slips, records, registers etc. found even from the factory premises or the office premises of the unit which would demonstrate illicit manufacture and sale of Chhakados and receipt of money in this regard.

23.3 They contented that there is not even an iota of proof or evidence found from the premises of the assessee which would demonstrate that there was any clandestine removal or clandestine purchase of any material. That there was nothing to demonstrate clandestine removal. They contented that they clarified at that stage that it was only to keep their licence for manufacturing under the Motor Vehicles Act alive that the unit used to get some Chhakados made from outside and show that the same were being manufactured and cleared by them and the fact remained that substantially their entire business was for selling sale letters and sale of diesel engines.

23.4 Further they added that at the relevant point of time, it was very difficult to get even diesel engines which were always in short supply. However, the manufacturers were given priority. Therefore, almost the entire production of the relevant diesel engines was only sold to manufacturers of Chhakados and motor vehicles. As a matter of fact, the department made detailed investigations with regard to all the diesel engines which were supplied to Rajeshree through distributors. It was found that all the diesel engines were duly accounted for in the accounts of Raejshree.

23.5 They further added that there is a going trade of manufacture of Chhakados by various persons who are not registered at all under the Motor Vehicles Act. All these craftsman had their own small fabrication units. where these Chhakados are made. These are people like skilled labour who assemble Chhakados at low profit margins. Thus a person who wants to buy cheap Chhakados would go to such persons. He would purchase diesel engine from persons like the present assessee, purchase other spare parts from the market and get it assembled at such places. Now these Chhakados can not get registered because the manufacturer who has made them is not duly registered under the Motor Vehicles Act. It is due to this that such a purchaser will need sale letters from persons who are registered under the Motor Vehicle Act so that the Chhakados can be registered. There was a regular practice of sale of such sale letters at around Rs. 1000/- to Rs.1500/-. These sale letters are prescribed under the Motor Vehicles Act. These are forms 21 and 22.

23.6 They submitted that this is a very well known practice in the business of manufacture of Chhakados. As a matter of fact, there are x agents who get Chhakados manufactured by such persons but who also arrange for purchase of diesel engines and sale letters. These persons then contact RTO and also get Chhakados passed. It is submitted that such two persons have already been investigated in the present SCN being persons of Parishram Marketing and Manish Auto. It is hence submitted that the entire case of the department is purely based on third party evidence. As submitted above, there is no evidence found from the premises of the assessee. The entire evidence is of third party evidence. The only evidence that the department relies upon is the information from RTO regarding registration of Chhakados and documents from the premises of Manish Auto and Parishram Marketing. Except of the aforesaid, there is absolutely no evidence. The other evidences are much more of a secondary nature and are not connected with the basic case.

23.7 They also submitted that a perusal of paras 3 and 4 of SCN and its sub-paragraphs demonstrate that the same are only an analysis of the provisions of the motor Vehicle Act and the details obtained from RTO to the effect that for the period from December 2005 to September 2009, 1792 Chhakados Rickshaws were registered with the RTO, Ahmedabad showing the manufacturer as Rajashree Auto whereas the assessee has only shown official clearance of 41 Chhakados. It is only these basic figures which constitute the foundation of the demand. Thus, the demand sought to be raised for 1751 Chhakados which are alleged to be clandestinely removed. Reference is made to various provisions of the Motor Vehicles Act to aver that it is compulsory to register with the RTO the name of the manufacturer of Chhakados. It is also compulsory to manufacture the

Chhakados only out of parts which are pre-passed with ARAI, Pune. It is also then averred in para 3.1.6 that the details with RTO are accurate and reliable in all respects with regard to the vehicles manufactured.

23.8 They also submitted that what is necessarily there on paper may not actually be facts for the purpose of excise. It is quite incorrect to aver that the RTO information is accurate and conclusive when the facts would clearly demonstrate that there is a going trade practice of getting Chhakados manufactured from cheap sources and only buying sales letters to get such Chhakados registered. It is, therefore, submitted that the averments based upon the provisions of the Motor Vehicles Act and the provisions of the registration with ARAI can not necessarily and factually demonstrate that all Chhakados registered with RTO are manufactured only by the concerned manufacturer. They crave liberty to produce evidence to demonstrate that there is a going practice of purchasing sales letters only and get the Chhakados manufactured outside.

23.9 They also contented that as a matter of fact it is stated in para 4.5 that as per the condition of certificates, only parts which are prescribed in the certificate can be used. Now if this be the case, there is absolutely no evidence that the assessee has purchased all these prescribed parts to have made so many Chhakados. This fact itself shows that the department's case is not sustainable. It is hence submitted that if the department relies upon the Certificate and the provisions of the Motor Vehicles Act, then the department is bound to demonstrate that the assessee had purchased these various parts that are certified parts to make so many Chhakados. There is absolutely no evidence to this effect. It is hence submitted that the department's case is on the face of it, not sustainable.

23.10 In the above context, they also submitted that it is also pertinent to note that in para 4.7.1 and 4.7.2, it is averred that the details of Chhakados said to be manufactured and cleared supplied to ARAI is also found to be erroneous in as much as that only shows 208 Chhakados. It is submitted that thus on the department's own averments in para 4.7.2, it demonstrates how risky it is to merely rely upon figures given to such authorities or to RTO figures and conclude that these many Chhakados are manufactured. It is hence submitted that if one looks at the contents of para 4.7.2 and para 4.5, this itself demonstrates that reliance on figures of RTO cannot be an accurate indication of Chhakados manufactured. Furthermore, the requirement of using the specified parts itself shows that so many Chhakados could not have been manufactured, in as much as, there is no proof of purchasing of these certified parts.

23.11 They further added that the department then relied upon the fact that as per para 5 of the SCN and sub-para 5.1 and 5.3 there were two Chhakado rickshaws found there. A separate SCN is issued which is replied separately. The contents of the said reply be taken as incorporated in the present reply as well. In light of the said reply, it is submitted that the averments in this regard are even otherwise inconsistent and they do not demonstrate any clandestine manufacture and removal in any view of the matter.

23.12 They further added that the department seeks to rely upon documents seized from the premises of Arihant Automobiles. Arihant Automobiles is not a manufacturing firm at all. It is a proprietory firm of the father of Sureshbhai. All these are recorded under invoices showing sale of diesel engines. The department then seeks to compare it with the details of registration in RTO. It is alleged that the details in this regard tally. It is hence sought to be averred that this shows that in the guise of sale of diesel engines, complete Chhakados are sold.

23.13 In the above context, they further submitted that the aforesaid is ex-facie erroneous. The conclusion thus sought to be arrived can not be arrived at on the basis of these documents. In the first place, there is no statement recorded of any of the buyers that the names of the buyers and their addresses are very much mentioned in the invoice. There is also no proof of any cash payment to show that what was sold was Chhakados but the invoice is made for sale of diesel engine. None of such additional amounts are recorded in any documents at the premises of the assessee. On this short point, without there being any investigation at the end of the customer, these averments can not forward the department's case as they are only based upon assumptions and presumptions. On various occasions, diesel engines are purchased on cash basis. So cash is given and diesel engines are taken away. However, these parties come to take the invoices only at the stage of registration. Thus, the supply of diesel engine has no direct connection with the invoicing

thereof. In any view of the matter, it takes around 2 to 3 days only to manufacture one Chhakado. Just because the invoice shows sale of diesel engine and just because the registration shows the name of some person to whom diesel engine is sold, cannot mean that the Unit has themselves made Chhakados.

23.14 In the aforesaid context, they added that it is most pertinent to note that a total of 322 diesel engines have been sold as stated in para 13.6 of the SCN. However, the sales letters have only been issued in case of 128 diesel engines. The sale letter and the diesel engines are also issued together almost at the same date to the same party. It is submitted that this is not like a sale of normal consumer goods where they are sold in the quantity of hundreds. A party may pay money, take away the diesel engine, come some other day to purchase sale letter etc. documentations in this regard may also be done on the same date subsequently. As a matter of fact, in all these cases, the Unit has also issued sale letters i.e. why Chhakados are registered at the office of the RTO. It is hence submitted that it is not as if the aforesaid evidence suggests that what is sold is actually Chhakados but the invoices are for sale of diesel engines. As submitted above, for 194 numbers of sales of diesel engines, there are no sales letter issued. We crave liberty to produce a list of the sales letters issued and the invoices for diesel engine.

23.15. They further submitted that it is pertinent to note that as opposed to the aforesaid, as per the department's case itself, there have been 1792 Chhakados which are registered in the RTO. Thus, there are 1792 sales letters issued during the relevant time even as per the department. However, the total diesel engines sold are only 322. It is hence submitted that there is clearly no connect or co-relation between the sale of sales letters and sale of diesel! engines and the sale of Chhakados etc. The one to one correspondence sought to be drawn by the department is not supported by any evidence recorded by the department itself.

23.16 The department then primarily relied upon investigations from the premises of Manish Auto and Parishram Marketing, Keshod. The department primarily relied upon documents seized from the premises of Manish Auto and Parishram Marketing. It is submitted that even the documents recovered from the said premises do not support the department’s case. The documents read as they stand under no circumstances suggest clandestine removal. As a matter of fact, they are consistent with the facts as stated in this reply that there is a going business of sale of sales letters and of diesel machines and manufacturer of Chhakados at the premises of third party manufacturers. This is more than abundantly clear from the documents which the department seized from the premises of Manish Auto as well as the premises of Parishram Marketing. The department has however, sought to turn a blind eye to the documents seized and have merely sought to record statements to support their case.

23.17 In the aforesaid context, they vehemently submitted that the department has neglected and discounted the documents which support the case of the assessee and are still refusing to give copy thereof. We have time and time again requested the department to hand over copies of all documents recovered from the premises of Parishram Marketing and Manish Auto. However, even till date, these documents are not being given. Documents of some registers which are given are also not complete. The photo copies that are given also do not support the full facts and some relevant details are cut off. In these premises, it is obvious that the department does not seem to be concerned about arriving at the truth of the matter but is more concerned about confirmation of the demand. In any view of the matter, it is submitted that the documents which are supplied will even otherwise demonstrate the aforesaid facts. As a matter of fact, even while drafting the SCN the department has chosen to place only part of the documents, instead of correctly reflecting the entire true documents. This again demonstrates that the department is aware of the fact that there is only business of sale of sales letters but the department purposely wants to confirm the demand in some or the other way by misreading the documents and only relying upon a part thereof. The following further submissions may be noted in this regard.

23.18 A perusal of para 6.1 and its sub-paragraphs as well as para 6.2 upto para 6.2.10 refer to some alleged documents as per Annexures A & B to the Panchnama. The first document pertains to RC books where name of the dealer is shown as Rajshree Auto.

The name of registered owner is shown as Vinod Garg. Registration No, is GJ-11- Y-1855. It is dated 29/8/08. In this context, it is averred in para 6.2.7 that there is no invoice issued by the assessee for this sale. It is submitted that this because the Unit has already given a sales letter in favour of the said party. This is only a case of sale of sales letter. As a matter of fact, there is no invoice issued even for the sale of diesel engine to this party. Thus the only connection which this transaction has with the assessee is the sale letter. In light of the explanation given above, it is submitted that Manish Auto who is himself a broker and he does the business of registration in RTO etc. As a matter of fact, his main business is to get sales letters from parties. He also purchases diesel engines and trades in them. He actually does this work for manufacturers of Chhakados who are not registered with the RTO and ARAL This fact is totally supported by the documents which are recovered from his premises which the department is refusing to give at this stage.

23.19 As a matter of fact, even his reference is made to registers at serial No.7 as per para 6.2.11, a copy whereof is given which will show that it is an account for specific persons whose names appear on the top. In some cases, this name is cut off from the top. We crave liberty to rely upon the original register and we hereby require the department to produce the same at the time of the hearing. Now this register would itself show that this broker takes specific sums from these persons and gets sales letters issued in favour of private parties. All these private parties are customers of the main person from whom he has taken the lumpsum. The lumpsum is taken for obtaining sales letters and their supply of diesel engines also. These documents shall demonstrate beyond a doubt that there is a clear business of sale of sale letters which is flourishing in the trade. The individual purchaser whose name appears in this document is the individual customer and the document also shows that the person of Manish Auto has purchased the diesel engine for supply to the relevant parties. Most importantly, the entry shows that the amount which is paid to the present assessee is just Rs.6000/-. it is submitted that this is the totalsum of the amount of around Rs.1500/- to Rs. 1200/- charged for supply of sale letters plus RTO registration charges which are approximately Rs.3200/- + profit of this middleman. In any case, it is absurd to suggest that Rs.6000/- only are to be given by him to the present assessee for supply of the entire Chhakados. It is most important to note that there is not a single piece of evidence from the premises of either of these two parties showing anyamount which is big enough to relate to the sale of a full Chhakados. Thus, it would be absolutely absurd to suggest that any document or record which shows receipts and payments of money, there is no entry of any big amounts being given to the assessee which would show amounts paid for sale of Chhakados.

23.20 . It is, therefore, submitted that the aforesaid evidence on the contrary shows that the person of Manish Auto is himself a broker and a middleman for supplying sales letters and engines. He does this work for other fabricators of Chhakado. The aforesaid evidence, therefore, on the contrary supports what is stated in the present reply. It is, therefore, pertinent to note that there is not an iota of evidence to show that any single amount of commission is paid by the present assessee to him Thus, this story that commission is paid is a figment of imagination of the department and is a story which is got up just to take the statement of person-in-charge of Manish Auto and Parishram Marketing so as to make out a case against the present assessee. The same is also true to the knowledge of the department and to the knowledge of the person concerned with these two parties.

23.21 With regard to the contents of the documents in question as per para 6.2.12 etc. it is obvious that they are half reproductions which are done only to confirm the case. They require the department to produce full documents in this regard at the time of the hearing. In this context, the department has recorded statement of Govindbhai Hirabhai Myatra on 19/2/2010. His statement is ex-facie erroneous. They vehemently denied that the registers show that all these Chhakados have been manufactured by Rajashree. His statement to this effect is ex-facie erroneous and thereby denied. The department has either coerced him to make such statements or has sought to give him incentives for making these statements, merely with the purpose of framing the present assessee.

23.22 The department has then again visited the premises of Parishram Marketing as per para 7 and has relied upon certain documents. What is stated hereinabove with regard to Manish Auto applies mutatis mutandis to the investigation at Parishram Marketing. The

same defence is reiterated herein. However, the extracts on pages 23 and 25 are important. It shows that the second last column gives the same or similar names being repeated over and over again. All these persons are actually fabricators of Chhakados. As a matter of fact, again the department has given half documents to our clients. The registers on top states " Malik nu nam" (name of the owner). Even the telephone numbers are given. These are actually manufacturers. A perusal of these documents again shows that these are the work carried out by Parishram for various manufacturers who are not registered with ARAI. Even the amounts stated therein are not consistent with the sale of Chhakados. It is surprising that despite all these names being there, the owner of Parishram, Nathubhai Gajeria is not asked a single question nor the premises of this person visited. This itself shows that the department is aware that these are manufacturers. The department has chosen not to go there or to investigate this line. It is submitted that in the absence of any such investigation, it is ludicrous to suggest that these documents pertain to sale of Chhakados manufactured by the present assessee.

23.23 Even with regard to the statement of Natubhai Gajera, the contents thereof are vehemently denied. They craved liberty to cross examine Mr.Natubhai Gajera. He may be made available at the time of the hearing. His statement is recorded under duress and pressure or incentive and is certainly not binding on the present assessee. The department seeks to then make an investigation with regard to purchase and sale of diesel engines. It is submitted that this investigation itself demonstrates that the department is itself aware of the shortcomings of its own matters and is grasping a straw. It is obvious that a Chhakado can not be manufactured without a diesel engine. It is the very heart of the Chhakado. The facts of this case demonstrate that the department has despite a detailed investigation, not been able to unearth even a single diesel engine that has been purchased by the present assessee without accounting the same. We require the department to place on record the written interrogatories and written requests made to various persons dealing in diesel engines to supply the details of engines sold by them to the present assessee. It is submitted that in keeping with the department's approach in this case, the department has purposely sought to keep away all these aspects from the present case. Thus, it is submitted that the department is itself aware that without proof of purchase of so many diesel engines, it is impossible to suggest that the assessee manufactured Chhakados. This fact would clearly prove what is stated in the reply i.e. that there is a going practice of selling sales letters and that merely because a sale letter is issued does not mean that Chhakado is manufactured by the present assessee.

23.24 They further submitted that the fact that the department carried out investigation itself shows the relevance of the existence of diesel engine at the premises of the assessee are therefore purchases by them to show that they actually manufactured 1792 Chhakados during the relevant period. It is submitted that the department has not been able to demonstrate that even a single piece of engine has been purchased by the assessee which is not accounted for. It is submitted that this is again further to be read in the context of para 4.5 of the SCN itself wherein it is accepted and stated that a Chhakado can only be made from components, parts and accessories that are prescribed. It is submitted that in the absence of any evidence whatsoever of purchase of diesel engine that are not accounted for, the department's case is bound to fall. In the aforesaid context, the contents of paras 8.1 to 8.6 demonstrate the piquant situation in which the department itself found itself.

23.25 In this context, the department recorded statement of Kasambhai Umarbhai Kaida of Kamal Auto Centre as per para 8.8. They crave liberty to cross examine the said Kasambhai U.Kaida. He may be made available for cross examination at the time of the hearing. It is most pertinent to note that even otherwise, he does not state that he has sold a single assembled diesel engine to Rajashree. This also shows that this kind of machines is being sold to various non-licensed manufacturers. Again his statement in para 8.9 is that it is only possible that Chhakado manufacturers may be using such machines. The department then investigated the premises of Duttatrey Auto Centre, Rajkot. They actually found various name plates, monograms etc. Statement of Mansukh Patel was recorded. Even in this regard, it was not possible that a single piece of duplicate diesel engine was sold to Rajshree. In answer 6, again, he lays bare the different parts of diesel engines. Even at this premises, there is no proof found of any assembled diesel engine being sold to the present assessee.

23.26 From para 8.11 onwards, the department has recorded various statements of authorised dealers but no-one has stated that they have supplied any engine to Rajashree which is not accounted for. Their statement that apart from registered machines, other machines may be used by Chhakado manufacturers may be relevant to other unlicensed assemblers but not certainly relevant in so far as the present assessee is concerned. It is submitted, therefore, that the generalization of the averments contained in para 8.12 can under no circumstances take the department's case any further. There is absolutely no proof, despite a detailed investigation, that any of the authorised dealers have sold unauthorized machines to the present assessee or that any person manufactured assembled engines and has sold the same to the present assessee. It is, therefore, submitted that there is absolutely no evidence whatsoever gathered by the department to show that the assessee purchased even a single piece of authorised evidence or assembled engine from the market, without accounting for the same. It is obvious that the department has carried out a detailed investigation and they have even visited and raided the premises of the persons who are assembling diesel engines like the premises of Duttatrey as per para 8.10. There is also no proof of any payment being made by the present assessee for purchase of any such diesel engine. It is submitted that if so many diesel engines can justify that manufacture of almost 1800 Chhakados were purchased; the payment made would be almost Rs.3.75 crores. There is absolutely no proof of any such payment being made. This again disproves the case of the department.

23.27 They further submitted that the aforesaid is the most important fact which goes to the very root of the matter. The fact that there is no purchase of any additional raw-material, including engine and the fact that not a single unaccounted raw-material or engine is even found at the premises of the assessee, taken with the fact that the premises of the noticee is visited, showed no manufacturing activity being carried out, and the fact that there is no proof of any cash being received or paid, for sale of Chhakado and purchase of material, conclusively goes to show the unsustainability of the department's case. The premises of the assessee were visited on 6./10/2009. There is not a single Chhakado which is manufactured and cleared from March 2009 till the raid. This fact conclusively supports the fact that there is no manufacturing activity found. If the department's case was correct, there is manufacture and sale of 598 Chhakados in the year 2009-10. Manufacture of one Chhakado itself takes around 2 1/£ to 3 days. It would establish that active manufacturing process is being carried out at the premises of the assessee if the department's case is correct. The department visited the premises with the expectation that there would be manufacturing activity going on. But the fact demonstrates as a matter of fact that no activity was going on. This demonstrates beyond a doubt the unsustainability of the department's case.

23.28 Now the only other evidence as a matter of fact which has any connection with Rajashree is two statements of Gunvant Humbal recorded on 31/3/10 and 24/9/10. These statements are clearly recorded under duress and pressure. The said statements are retracted hereby. They wish to cross examine Gunvant Humbal. They crave liberty to produce his affidavit at the time of the hearing. It is submitted that the departmental officers coerced him into making statements and told him that unless he makes that statements he will be arrested. He was also told that whatever he wants to say he can say so through his lawyer in the proceedings. The contents of his statements are wholly incorrect and false. In any case, the aforesaid demonstrate beyond a doubt that such statements extracted by the department can have little value. There is absolutely no corroboration or independent proof to support the statements. It is submitted that the statements even otherwise can not take the department's case any further.

23.29 The facts of this case demonstrate that there is not an iota of evidence whether direct or indirect which shows a single Chhakado is sold to any of the persons that are manufactured at Rajashree without accounting for the same. Despite the fact there are addresses of fabricators and assemblers, and despite the fact that their telephone numbers are on records and despite the fact that there are full details and addresses of purchasers as shown in the records of the RTO as well as records of various brokers, dealers etc. the department has not visited the premises of any of these persons. There is thus not a single piece of evidence which directly or indirectly demonstrates that a single Chhakado is clandestinely manufactured and cleared by the present assessee. Thus except for misinterpretation of documents and statements elicited by the department, there is absolutely no proof in this case to substantiate the charges. The statements of

Gunvatbhai have only been recorded to tide over the shortcomings and fill in the blanks which are left by the fact that the department did not find any proof to link any evidence. It is submitted that merely statements recorded in such a manner can not take the department's case any further.

23.30 It is further submitted that the department has chosen to make out a case that 1792 Chhakados were manufactured only on the basis of RTO records. There is no proof of purchase of parts or even the machines which justify such a huge demand. Even with regard to valuation, the department makes out a case that the valuation must be Rs.71900/-. This is again information elicited from recording statements. There is no proof of the actual value at which Chhakados are sold in the market. This can easily be deciphered. As a matter of fact, the invoices issued by the assessee and others show Chhakados being sold at Rs. 65,000/-. These transaction value are not even outraged. There is nothing to show that any ‘ON’ money is received over and above the invoices. It is, therefore, submitted that excess valuation is also ex-facie incorrect. On this ground also the demand is not sustainable.

23.31 In light of the aforesaid, it is submitted that the present SCN is required to be quashed and set aside. We wish to be heard in person and to produce evidences both documentary and testamentary at the time of the hearing. They wish to cross examine the following persons:-

[1] Investigating officers

[2] Panchas [1] Mr.Suresh M. Patel [2]Mr. Govind V Savaliya

[3] Sachin Humbal,

[4] Govindbhai Hirabhai Myatra of Manish Auto

[5] Natubhai Gajera of Parishram Marketing

[6] Kasambhai Umarbhai Kaida of Kamal Auto Centre

[7] Mansukh Patel of Duttatrey Auto Centre

[8] Kishore Chandra of New Chandra Motors

[9] Pankaj Panera of Deepak Sales Agency and

[10] Gunvantbhai Humbal

24. They further submitted in their written reply dated 12/10/2011 that two Chhakado-rickshaws were detained vide Panchnama dated 6/10/2009 and were placed under seizure vide Panchnama dated 4/2/2010. They submitted that out of the aforesaid two Chhakados, one was registered with the RTO authority in the year 2008. The same was detained on 6/10/2009. In this regard, they submitted that the said Chhakado, even though bearing chassis manufactured by Rajeshree was sold to buyer in the year 2008, needless to state, the same belongs to some other person. As per section 124 of the Customs Act, read with rule 25 of Central Excise Rules 2002, notice is required to be issued to the owner of the Chhakado and if the same is not issued, confiscation of such Chhakado is not permissible under the act. Hence, they submitted that the entire confiscation of Chhakado bearing registration No. GJ-11-Y-1607 is not sustainable in law as SCN is not issued to the owner of the Chhakado. They further submitted that merely because the Chhakado was lying in the premises of their client, their client would not become owner of aforesaid Chhakado. In the above circumstances, the seizure of aforesaid Chhakado is clearly required to be set aside. A copy of the RTO book is annexed hereto and marked as Annexure "A".

24.1 They also submitted that the Chhakado was seized on 4/2/2010 and no notice has been issued to the owner of the Chhakado. Hence, as per the provisions of sub-

section 2 of section 110, the aforesaid Chhakado, is required to be returned to the person from whose possession the same was seized.

24.1.1 Further they submitted that in para 4 of the SCN, it is mentioned that their clients clear Chhakado in guise of Diesel engine. An invoice is produced bearing name of Arvindbhai Makwana showing that diesel engine was sold on 15/7/2006 and Chhakado was also registered with the RTO on 15/7/2006. They submitted that the aforesaid invoice has no relevance with the aforesaid two Chhakados seized. Further, with regard to Chhakado bearing registration number GJ-11-Y 1607, they submitted that no such sales invoice of diesel engine or such RTO details is provided. Hence, the aforesaid notings made in para 4, is clearly not relatable to the present seizure and hence, observations made in para 4 are clearly irrelevant as far as the present seizure is concerned.

24.2 As regards to other Chhakado,bearing registration No.GJ-1-TCA-35, they submitted that the same was a brand new Chhakado which was not sold to any person and was lying in the premises for fitting of additional accessories which are required to be fitted. They submitted that in the aforesaid circumstances, the same was incomplete as far as manufacturing of the same is concerned and hence, was not entered even in the books of accounts maintained by the assessee for central excise purposes. It is also mentioned in answer No.7 that additional accessories were to be fitted in both the Chhakados. It is submitted that the first Chhakado had come to our premises for fitting of additional accessories, after initial clearance and the second Chhakado was never cleared from our premises. Even RTO details obtained by the department from the RTO authorities would ratify our stand that no Chhakado bearing chassis No. RAM/0613/09 and engine No. R9F2635239 was ever registered with the authorities prior to their seizure. In the circumstances, they submitted that the officers have wrongly seized the brand new Chhakado mistakenly. They also submitted that registration GJ-1-TCA-35 is a permanent number issued to them by the RTO authorities for movement of any Chhakado from their premises to the RTO authorities for initial registration purpose. As per the rules of Registration, a manufacturer of vehicles, or dealers of vehicles are granted a permanent registration number for clearance of vehicles from their premises to the RTO authorities for initial registration. The aforesaid registration number is a registration number granted to them by RTO by the aforesaid rules. A copy of permission granted by RTO authorities to mention aforesaid temporary RTO registration number is annexed hereto and marked as Annexure "B". This number will be mentioned in each and every Chhakado cleared from their premises for initial registration purpose. After initial registration, the RTO authority will grant a temporary registration number and permanent registration number will be granted by the authority having jurisdiction over the residential premises of the buyer. Hence, the Chhakado seized was bearing a registration number granted to my clients and was not registered or sold to any other person. As a matter of fact, the same was not a complete Chhakado and accordingly the seizure of the same is clearly bad in law and requires to be set aside. They further submitted that their clients have executed necessary bonds with the departmental authority but till date, the Chhakados seized are not allowed to be released. Accordingly, it is once again requested that the seized goods may please be released immediately as necessary bank guarantees have already been furnished with the department. Copy of the same is annexed hereto and marked as Annexure "C". Hence they submitted that the entire seizure is bad in law and the Chhakados are required to be released immediately.

24.3 In continuation to their letter dated 1st July, 2011, M/s. Rajesjree ha ve further submitted on 18/10/2011 that they had vehemently sought for copies of someadditional documents which were directly related with their case. They had soughtfor copies of registers seized from the premises of Parishram Marketing as wellas Manish Auto. The statements of both the persons were relied upon for

issuance of demand. They had also sought for documents recovered from theirpremises. However, copies of the same have not been given to them on the groundthat the same are not relied upon documents. It is submitted that the presentshow cause notice for confirming demand of duty is issued solely on the dataobtained from RTO authorities as well as statements of the Proprietors ofParishram Marketing and Manish Auto as well as documents recovered from thepremises of above two persons. Hence, the aforesaid registers were mostrelevant documents as far as the present SCN is concerned. However, copies ofthe same are not given to them. Hence, the same amounts to denial of principles of natural justice. They had further requested for copies of statements made bv proprietor of Manish Auto as well as Parishram Marekting. However, copies of the same were not given to them. Further to the above, vide their reply dated 1st July, 2011, they had specifically sought cross examination of the panchas. Proprietors of Manish Auto and Parishram Marketing as well as concerned persons of Kamal Auto, Duttatray Auto, New Chandra Motors, Deepak Sales Agency, Sachin Humbal and Gunvantbhai Humbal. They have submitted that the entire case is made against us on the basis of statements of the aforesaid persons. Hence, the cross examination of above persons, ought to have been granted, which is denied by your honour. This also amounts to violation of principles of natural justice. Even after denial of cross examination we had requested for a detailed personal hearing in which we wanted to furnish some additional proof concerning the matter. However, the same is also denied by your honour. However, we produce herewith the aforesaid proofs in continuation to our reply dated 1st July, 2011.

24.4 In the reply dated 1st July 2011, in para 3, it is submitted that when the departmental officers visited the premises on 6/10/2009 no manufacturing activity was going on in the premises of Rajeshree Auto. As a matter of fact, the premises admeasuring 17 1/2 x 20 ft is not sufficient to manufacture such a large quantity of Chhakados alleged to have been manufactured. They have submitted that even no machinery was installed at the premises of their clients on the day of the surprise visit by the departmental officers. As a matter of fact, there was no electricity consumption at all and no labour was working in the premises. There were only two old Chhakados and one new Chhakado undergoing repairing activity in the premises. This is also noted in the Panchnama also that no manufacturing activity was going on, on the day of the visit. In this regard, they also produce the affidavits of panchas, Shri Sureshbhai M.Patel and Govindbhai Sawalia, as Annexure "A" stating on oath that at the time of the visit, there was no raw-material in the premises, no manufacture was undergoing, no machineries were there and no labour was working. They further submitted that Sachin Humbal, the brother of the Proprietor, who was present at the time of the visit had also mentioned the aforesaid fact to the Central Excise officers that they are involved in selling sales letters only as well as selling engines as such to various Chhakado manufacturers and that they very rarely manufacture Chhakado on their own. However, this was not noted by the central excise officers in the Panchnama. This statement of Sachin Humbal is also filed along with the reply on affidavit as Annexure "B". Hence, they submitted that the panchas as well as brother of the Proprietor who was present during the visit, all have stated on oath that there was no manufacturing activity going on in the premises and they were involved in selling sales letters as well as in trading of engines required for manufacture of Chhakados.

24.5 Further to the above, they rely on affidavit of Shri Kritibhai Laxmibhai Patel who was having his workshop and business premises at shed No.5 of Yedunandan Estate, Rakhial. He has stated on oath that he is running the aforesaid workshop since 2007. The aforesaid premises are just adjoining to shed No.6 which is occupied by their clients, Mis. Rajeshree. Mr.Kirtibhai stated that he has not seen any manufacturing activity ever going on at shed No.6 of Yedunandan Estate. He has never seen any raw-material going in or out or any labour working in shed No.6. Hence, this Affidavit also proves beyond doubt that there was no manufacturing activity going on at shed No.6 of Yedunandan Estate the premises which is

occupied by Rajeshree Autometche. In the aforesaid circumstances, it is proved beyond any doubt that their clients, Rajeshree Autometche were not manufacturing Chhakados on their own but were only selling sales letter which is required to register the Chhakado manufactured by other persons with the RTO authorities. A copy of the said affidavit is annexed hereto and marked as Annexure "C".

24.6 They submitted in the SCN that some clearances of engines are matching with the RTO registration details in which name of manufacturer is shown as Rajeshree and sales invoices date of diesel engine, and name of manufacturer shown in forms 21 and 22 submitted to RTO authority both are containing the same date and hence it cannot be said that diesel engines were alone cleared. In this regard, it was submitted in the reply that we are regularly involved in selling of sales letters as well as trading of diesel engines. In the case where the sales letter and diesel engine sale invoice containing the same date, they submit that they sold the diesel engine, much earlier to the date to the date of the sales invoice. However, the customer of the diesel engine who has got manufactured the Chhakado from outside manufacturers situated in or around Keshod required the invoice at the time of registration of Chhakado. Hence, the sales invoices were prepared when the Chhakado was manufactured by other manufacturers and had been sent for registration to the RTO authorities. As submitted above, their clients are also selling sales letters to the concerned manufacturers through agents like M/s. Manish Auto and Parishram Marketing. Such kinds of sales letters were being sold by the persons having authority to manufacture Chhakados regularly to such unregistered manufacturers of Chhakados. As a matter of fact, there are more than 100 manufactures in or around Keshod in the districts of Junagadh and Rajkot who manufacture Chhakados and are also not registered with ARAI Poona. For registration of Chhakados with RTO authority, they require sales letters of concerned manufacturers registered with ARAI. There are only 15 manufacturers who are registered with ARAI, Poona. Hence to get the Chhakados registered with RTO authority, these manufacturers were buying sales letters from these registered manufacturers and accordingly a trade practice was developed in or around Keshod to manufacture Chhakados and get them registered on some other manufacturer's name. They have vehemently submitted that M/s. Parishram Marketing and Manish Auto were the persons who were involved in trading such sales letters and who were undertaking the activity of registration based on sales letters issued by registered manufacturers. In this regard their clients rely on affidavit of one such manufacturer annexed hereto at Annexure "D", Mr.Ashok Kumar Laxmidas who has stated on oath that he is involved in manufacture of Chhakados, and for registration purposes, he used to purchase sales letters from an agent of registered manufacturer. He has stated that he used to manufacture the entire Chhakado on his own and only at the time of registration with RTO authority, he used to buy a sale letter from a person registered with ARAI. This affidavit itself shows that there are a number of manufacturers, working in and around Keshod, who do offer such kind of activity. This affidavit itself proves beyond doubt that their clients are involved in selling of sales letters. Further to the above, the departmental officers had recorded statements of the Proprietor of their clients, Rajeshree Automeche on 24/9/2010 and 31/3/2010 in which he was forced to accept manufacture of Chhakado rickshaws as mentioned in RTO records. They submitted that these statements were recorded under duress and pressure and their client has retracted the same on oath. The same is annexed here and marked as Annexure-D1.

24.7 They further submitted that the case of the department is based on the date of sales invoice of the diesel engine and date of sales letter. As stated above their clients are involved in trading of diesel engine. They are producing herewith a detailed worksheet; showing the invoice number, date of invoice and name of buyer to whom they sold the diesel engine only. Against the aforesaid sale of diesel engine, no "sales letter" has been issued by them. Even the records obtained from RTO authority will also prove that on the date of sale of diesel engine, no Chhakado is shown as manufactured by Rajeshree. This detailed list will prove beyond doubt that Rajeshree is actively involved in sale and purchase

of diesel engine. The detailed worksheet is annexed hereto and marked as Annexure "E". The case of the department is not sustainable on the ground that evidences which are relied upon by the department also prove to the contrary. The evidence in the form of sales invoices clearly prove beyond doubt that Rajesrhee was involved in trading of diesel engine, as no Chhakado is registered on the date of sale of diesel engine in the name of Rajeshree. As a matter of fact, it is submitted that we have sold only diesel engine and the engine number is required to be mentioned at the time of registration with RTO authority. These buyers' names and engine numbers would have been registered with the RTO authority showing manufacturer of Chhakado as some other person. Copies of few such purchase invoices, showing engine number, are annexed hereto and marked as Annexure 'F". The same engine numbers are shown for demanding duty on the basis of RTO registration details. Copies of such RTO details are also enclosed herewith, duly co-related with Annexure H. This fact proves beyond doubt that they are involved in trading of engines for Chhakado. Hence, they have correctly cleared engines and have not cleared any Chhakado as alleged in the show cause noitce. Hence also, the demand requires to be dropped.

24.8 They further rely on the statements of the proprietors of Manish Auto and Parishram Marketing wherein they have stated that they have got Chhakado rickshaws assembled from local technicians and have also done the RTO passing by sales letter of some other persons. These statements of Natubhai Gajera of Parishram Marketing and Govindbhai Myatra of Manish Auto clearly support the stand of their client that they are involved in selling of sales letters. A copy of the statements of Govindbhai and Natubhai is annexed hereto and marked as Annexure "G". It is submitted that their clients have sold only sales letter to the above persons and no Chhakado is sold to Parishram or Manish. They themselves got Chhakado manufactured from various manufacturers and got the same registered on the basis of sales letters issued by their clients. My clients have specifically sought cross examination of aforesaid two persons. However, the same is denied in gross violation of principles of natural justice. When these persons themselves admit that they assembled the Chhakado, there was no other proof required to prove that my clients had sold only sales letters to these persons. They have further stated that they dismantled the Chhakado after assembling the same. It is submitted that this statement is absolutely false because once the Chhakado is manufactured, the same can not be dismantled in a manner so that they can be re-assembled for further purpose. Further, it is submitted that Chhakado itself is a vehicle and the same does not require dismantling for movement from one place to another place. On the contrary, the vehicles temporarily registered at Ahmedabad are moved by driving the same by the owner to his home district and the same is registered there finally with RTO. Hence, the statements of aforesaid two persons are half truth meant to transfer their liability on some other person who has sold sales letter to them. However, these statements themselves prove that they have assembled Chhakado and their clients have not manufactured the same. Hence, the demand is required to be dropped.

24.9 Further, they contended that the owner of Parishram was specifically asked to question regarding details mentioned in the registers maintained by him. He was specifically asked that what is the meaning of KONI mentioned in his register and he has answered that the same mentions the name of guarantor. Their clients say and submit that the name mentioned in the register in "KONI" column, are of various manufacturers of Chhakados whose Chhakados were registered by obtaining sales letters from their clients. They were not permitted to cross the owner of Parishram so as to arrive at the truth with regard to details mentioned in aforesaid register. However, it is vehemently submitted the names mentioned against "KONI" column are the names of manufacturers of Chhakados against whom the demand should have been issued by the department. However, the demand is wrongly issued on their clients and hence the same is required to be dropped.

24.10 They submitted that as per RTO records, approximately 1792 Chhakados have been registered in the name of Rajeshree. However, against the aforesaid sales, there is no corresponding purchase of diesel engine which is the heart of Chhakado rickshaw. There is also no purchase of other raw-materials, such as, gear boxes, steel sheets, tyres etc. The case of the department is that as per ARAI norms, a particular make is approved only if Chhakado is manufactured out of raw-materials which are also approved by ARAI. However, no proof regarding purchase of such approved raw-materials in huge quantities to manufacture 1792 Chhakado rickshaws has been provided or mentioned in the SCN.

24.11 Further to the above if 1792 Chhakado rickshaws each having valuation of Rs.71900/- is shown to have been manufactured in the premises of Rajeshree, then, approximately Rs.12.00 to Rs.13.00 crores must have been shown to be received by the Proprietor. However, there is no evidence showing receipt of such huge quantity of cash by the manufacturer. Hence also, the case of the department is not sustainable. Further, it is submitted that the names of all the buyers of Chhakado rickshaws along with their addresses are available in the RTO records. The department has not taken any statement of any of the buyers of such Chhakado rickshaws who have stated that they have bought Chhakados from Rajeshree. It is vehemently submitted that Rajeshree has only sold sales letters and the Chhakados are manufactured by some other person. If the department would have gone to record statements of any of the buyers, then also, it could have easily been established that Rajshree is only issuing sales letters and they are not manufacturing Chhakados and the Chhakados were manufactured by some other person. Further to the above, they rely on investigations made by the department in the case of Shree Rajashakti Automobiles wherein the investigation was conducted at the premises of Chirag Auto Industries, Jamnagar and Hakikat Auto Industries, Rajkot who have stated that they are manufacturing Chhakado rickshaws on job work basis. It is submitted that this investigation itself proves the submissions made above that there are more than 100 manufacturers of Chhakado in and around Keshod who manufacture such Chhakados and get the same registered on some other person's sale letter. If those manufacturers submit that they are only job workers, then also, as per their statements, the entire work of manufacturing is conducted in their premises and hence, as per the definition of manufacturer, under the Central Excise Act, they are the persons who are actually manufacturers of goods as they are required to pay central excise duty on such manufacture. It is submitted that the Chhakados were manufactured by persons like Chirag and Hakikat and the same were registered with RTO authority under sale letter issued by persons like Rajeshree. However, as far as central excise act is concerned, persons like Chirag and Hakikat are the manufacturers of Chhakado and they are required to pay central excise duty. Merely because same are registered with RTO authority, showing name of Rajeshree, the burden of proof of manufacturing is not discharged by the department. Copies of statements of Hakikat and Chirag are annexed hereto and marked as Annexure "I". Hence also, the demand is required to be dropped. They also rely on submissions made earlier during the personal hearing. In view of the above, they prayed that the show notice issued to their clients, M/s. Rajeshree AutoMeche be dropped in the interest of justice.

Personal hearing

25. The 1st Personal Hearing was granted on 04.01.2011, but no one appeared on the grounds that they were not supplied with the copies of documents relating to M/s. Manish Auto and M/s. Parishram Marketing and various dealers. 2nd

Personal Hearing was granted on 2/6/2011 but no one appeared on the grounds that they still did not receive the required RUDs. 3rd Personal hearing was granted on 22/6/2011 but no one appeared. 4th Personal hearing was granted on 11/7/2011, no body appeared but their advocate had filed the defence reply on the same date. PH again fixed on 26/7/2011 wherein Shri Devan Parikh and Shri Nirav Shah, Advocates and Shri Gaurav Humbal, authorised person of the noticee have appeared. They have made a request for whole copies and inspection of some RUDs lying with DGCEI. They have also sought inspection of non RUDs. Another PH was fixed on 12/10/2011 wherein Shri Nirav Shah Advocate attended the hearing. During the course of hearing, he stated that they will submit the written submission by 14/10/2011 in respect of SCN issued for confiscation. In respect of SCN issued for demand, he insisted for cross examination which was denied. He further submitted that they will

file the written submission by 19/10/2011. They have filed their written submission on 12/10/2011 and 18/10/2011 respectively.

Discussion and findings:

26. I have carefully gone through the records of the case and oral as well as written submission made by M/s. Rajeshree Automeche in the matter. The issue in brief is that the assessee alleged to have evaded central excise duty by resorting to clandestine manufacture and clearance of the goods i.e. Chhakado Rikshaws from December 2005 to September 2009 and also alleged to have undervalued the goods cleared by them licitly or illicitly from Dec 2005 to June 2010.

26.1 At the outset I take up both the show cause notices issued to M/s. Rajshree in a common adjudication order as both of them have a bearing on each other. Let me start with the discussions in respect of SCN issued for clandestine manufacture and clearance and for under valuation.

26.2 I find it a mandatory requirement for a vehicle manufacturer that they should be registered with ARAI (Automotive Research Association of India) Pune, under the provisions of Rule 126 of Central Motor Vehicle Rules, 1989 (CMV)and as a compliance to the provisions of Central Motor Rules 1989 (CMV) have to supply a base model for approval of the design by ARAI, Pune. The certificate issued by ARAI, Pune is non-transferable and the certificate holder can only manufacture the vehicle approved by ARAI as detailed in para 4.1 of the show cause notice (supra). Also, as per Rule 122 of CMVR, 1989 the location of Chasis No. month and year of manufacture are defined by ARAI.

26.3 The registration of vehicles with the Regional Transport Officer (RTO) is compulsory as per the Central Motor Vehicles Act,1988. Section 39 of the Central Motor Vehicle Act, 1988 stipulates that “No person shall drive any motor vehicle and no owner of a motor vehicle shall cause or permit the vehicle to be driven in any public place or in any other place unless the vehicle is registered in accordance with Chapter IV and the certificate of registration of the vehicle has not been suspended or cancelled and the vehicle carries a registration mark displayed in the prescribed manner”. Rule 42 of the Central Motor Vehicles, Rules, 1989 stipulates that “No holder of a trade certificate shall deliver a motor vehicle to a purchaser without registration, whether temporary or permanent”. Further, Rule 47 of the Central Motor Vehicle Rules, 1989 stipulates the documents to be submitted for registration of vehicles. Accordingly, the following documents are required to be submitted for vehicle registration.

01. Sale certificate in form 21,02. Valid Insurance Certificate,03. Copy of the proceedings of the state Transport Authority or Transport

Commissioner or such other authorities as may be prescribed by the state Government for the purpose of approval of the design in the case of a trailer or a semi trailer,

04. Original sale certificate from the concerned authorities in Form 21 in the case of ex-army vehicles,

05. Proof of address by way of any one of the documents referred to in rule 4,06. Temporary registration, if any,07. Roadworthiness certificate in Form 22 from the manufacturers (Form 22A from the

body builders),08. Customs clearance certificate in the case of imported vehicles along with the

licence and bond, if any, and09. Appropriate fee as specified in rule 81 of Central Motor Vehicle Rules,1989. 26.4 Further Rule 44 of Central Motor Vehicle Rules, 1989 stipulates that “the registering authority shall before proceeding to register a motor vehicle or renew the certificate of registration in respect of motor vehicle, other than a transport vehicle, require the person applying for registration of the vehicle or, as the case may be, for

renewing the certificate of registration to produce the vehicle either before itself or such authority as the state government may appoint in order that the registering authority may satisfy itself that the particulars contained in the application are true and that the vehicle complies with the requirements of this Act and the rules made there under. The above provision stipulates the need of production of vehicle before RTO authority for registration.

26.5 Rule 43 of Central Motor Vehicle Rules, 1989 stipulates that “Notwithstanding anything contained in section 40, the owner of a motor vehicle may apply to any registering authority or other prescribed authority to have the vehicle temporarily registered in the prescribed manner and for the issue in the prescribed manner of a temporary certificate of registration and a temporary registration mark”.

26.6 The said rule further stipulates that a temporary registration made shall be valid only for a period not exceeding one month and shall not be renewable provided that where a motor vehicle so registered is a chasis to which a body has not been attached and the same is detained in a workshop beyond the said period of one month for being fitted, the period may, on payment of such fees, if any, as may be prescribed, be extended by such further period or periods as the registering authority or other prescribed authority as the case may be, may allow. It may be mentioned that the term Chassis means the frame plus the “running gear” like engine, transmission, driveshaft, differential and suspension. A body which is usually not necessary for integrity of the structure is built on the chasis to complete the vehicle. Commercial vehicle manufacturers may have “Chasis only” versions that can be outfitted with specialized bodies.

26.7 The temporary registration takes place where the factory of the vehicle manufacturer is situated and permanent registration takes place where buyer of the vehicle resides. From the above, it is clear that registration of all vehicles with the RTO is a statutory requirement. Each vehicle with maker’s name gets registered with RTO authorities functioning under the respective state governments. Hence it is inferred that the details provided by RTOs, regarding the vehicles registered during a particular period, are accurate and reliable in all respect.

26.8 M/s. Rajeshree vide their written submission had sought for inspection of some relied upon documents and also copies of certain RUDs. They have also sought cross examination of officers as well as witnesses as mentioned in Para 23.31.

26.8.1 Regarding their request for RUDs, I find from the acknowledgement received from Shri Gunvat Suresh Humbal, Proprietor of M/s. Rajeshree Automeche dated 24/8/2011 and forwarded by DGCEI vide their letter DGCEI/AZU/12(4)35/2009-10 dated 14.09.2011 that M/s. Rajeshree have inspected the RUDs to the show cause notice No. DGCEI/AZU/36-93/2009-10 dated 29.09.2010, obtained photocopies of documents wherever required and also received the details of purchase of diesel engines from various dealers. Hence, I consider that all the necessary documents sought by M/s. Rajeshree have been provided to them.

26.8.2 M/s Rajeshree have vehemently insisted for cross examination of the investigating officers and all witnesses. I find no reason to allow them for cross examination of the persons when evidences available on records and all the statements of the witnesses corroborating the said evidences emphatically proving beyond doubt that M/s Rajeshree with a malafide intent have clandestinely manufactured and cleared and also undervalued the goods to avoid the appropriate Central Excise duty . In my view, lack of cross Examination does not change the evidence on hand i.e. the details of chhakkados manufactured by them and registered with RTO and various records recovered from Manish Auto and Parishram Marketing which prove that Manish Auto and Parishram Marketing have dealt with Rajeshree make chhakados for which neither central excise invoices have been prepared nor central excise duty has been paid on them by M/s Rajeshree. Hence , I reject their request for cross examination of the persons as the same is not a matter of right. I also take various judgments in favour of my view.

In the case of Jagdish Shnakar Trivedi V/s. Commissioner of Customs, Kanpur reported at 2006 (194) E.L.T. 290 (Tri. - Del.) (Final Order Nos. 763-767/2005-Cus.(PB), dated 27-7-2005 in Appeal Nos. C/360, 376, 381/99 & C/30-31/2000) wherein the hon’ble Tribunal has held that adjudication - Cross-examination of witness - It cannot be claimed as a right under Section 124 of Customs Act, 1962. [1983 (13) E.L.T. 1486 (S.C.) followed]. [para 7.1]

Adjudication - Cross-examination/natural justice - All material relied against noticee referred in show cause notice - On number of opportunities of hearing when desired persons were also called, adjournment taken or irrelevant enquiries raised - HELD : There was no need to prolong adjudication and natural justice principles were not violated by rejection of request for cross-examination of witnesses as adequate opportunity of hearing was given - Section 124 of Customs Act, 1962. [paras 7.1, 7.2]

26.8.3 Further the tribunal held that The question as to whether there was any contravention of natural justice by the customs authorities when the persons whose statements were recorded were not produced to enable their cross-examination, came up for consideration by the Supreme Court in Kanungo's case (supra) in the context of the provisions of confiscation made under Section 167(8) of the Sea Customs Act read with Section 3(2) of Imports and Exports (Control) Act, 1947 and the Supreme Court in paragraph 12 of the judgment rejected that contention in the following terms:

“We may first deal with the question of breach of natural justice. On the material on record, in our opinion, there has been no such breach. In the show cause notice issued on August 21, 1961, all the material on which the Customs Authorities have relied was set out and it was then for the appellant to give a suitable explanation. The complaint of the appellant now is that all the persons from whom enquiries were alleged to have been made by the authorities should have been produced to enable it to cross-examine them. In our opinion, the principles of natural justice do not require that in matters like this the persons who have given information should be examined in the presence of the appellant or should be allowed to be cross-examined by them on the statements made before the Customs Authorities. Accordingly we hold that there is no force in the third contention of the appellant.”

The decision in Kanungo & Co. was followed by the Calcutta High Court in Tapan Kumar Biswas v. Union of India (supra) in paragraph 17 of the judgment and it was held that in a proceeding under the Customs Act the proceedees are not entitled to cross-examine the witnesses. The decision in Ashutosh Ghosh and Another v. Union of India and Others reported in 1977 Criminal Law Journal N.O.C. 67, was also relied upon and it was observed in paragraph 20 of the judgment that the Supreme Court in Ashutosh Ghosh’s case has categorically held that a proceedee is not entitled to cross-examine the witnesses. The decision of the Division Bench of the Calcutta High Court in Kishan Lal case (supra) was also referred in paragraph 18 of the judgment and it was held to be laying down the proposition that cross-examination of the witnesses (in the matter under the Sea Customs Act) was not comprehended. Referring to all these decisions, the Court held, that a proceedee was not entitled to cross-examination of any witnesses under Section 124 of the said Act which lays down the extent of applicability of the principles of natural justice and under which a proceedee was not entitled to cross-examine any witnesses (para 11). Thus in view of the decisions of the Hon’ble

Supreme Court in Kanungo & Co., Ashutosh Ghosh and of the Calcutta High Court, in the above two decisions, it is abundantly clear that a noticee cannot claim a right to cross-examine under Section 124 of the said Act.

In another case, the

Tribunal in the case of Ishwarlal C. Surana V/s. Commissioner of Customs, Madras reported at 2003 (162) E.L.T. 300 (Tri. – Chennai) (Final Order Nos. 614-616/98 and Misc. Order No. 112/98, dated 20-3-1998 in Appeal Nos. C/371-372/96) has held that “Evidence - Cross-examination vis-a-vis documentary evidence - Evidentiary value - Lack of cross-examination of person giving statement not vitiates the documentary evidence. In the instant case I find no retraction of statements by the persons whose statements were recorded under Section 14 of CEA,1944 except for shri Gunavat Sureshbhai Humbal, Proprietor of M/s Rajeshree which has been discussed in the later paras. I also do not find any contradiction in their statements with the facts available on records. Hence, I deny the cross examination sought by M/s. Rajeshree Automeche.

27 I find that, as per the intelligence rested with the officers of DGCEI regarding clandestine production and clearances by chhakkado manufacturers , to verify the genuineness of the same the details of auto rickshaw delivery vans, registered with RTO, Ahmedabad were called for, Since the registration of chhakkdo rickshaws are compulsory with the RTO authorities before they start plying on roads, Accordingly, RTO, Ahmedabad, vide letter dated 03.12.2009 has submitted the details of registration of such vehicles, manufactured by various manufacturers, including M/s. Rajeshree Auto Meche. In case of vehicles manufactured by M/s. Rajeshree Auto Meche, I, observe that the maker’s name has been mentioned as “Rajeshree” or “Rajeshree Auto Meche”. On scrutiny of details of chart showing details of Chhakda rickshaws, manufactured and cleared by M/s. Rajeshree Auto Meche and registered with RTO, Ahmedabad, showing maker’s name as “Rajeshree” or “Rajeshree Auto Meche”, during the period from 26.12.2005 to 06.10.2009 which is enclosed as Annexure-A to the show case notice, as per the details submitted by RTO, Ahmedabad, I find that 1792 Chhakkdo rickshaws, manufactured and cleared by M/s. Rajeshree Auto Meche have been registered with RTO, Ahmedabad, during the period from 26.12.2005 to 06.10.2009. However, as per C. Ex. Invoices and ER-1 returns, filed by M/s. Rajeshree Auto Meche, during the period from December, 2005 to September, 2009, they have shown clearance of 41 chhakkdo rickshaws only. Thus, I find that M/s. Rajeshree Auto Meche have cleared 1751 Chhakado rickshaws, without accounting for, without preparing any invoices and without any payment of C. Ex. Duty.

28 The scanned images of certificate granted by ARAI, Pune, and Commissionerate of Transport, Gujarat state to M/s. Rajeshree Auto Meche are reproduced below :-

Scanned image of certificate issued by ARAI, Pune to M/s Rajeshree:

.

Scanned image of letter/certificate issued by Joint Director of Transport, Gujarat state to M/s Rajeshree :

28.1 From the certificates issued by ARAI, Pune, and the Jt. Director of Transport, Gujarat state to M/s Rajeshree to manufacture the chhakkado and to get the same registered with RTO respectively, I observe that, the Commissioner of Transport, Gujarat State, Gandhinagar approves any new model of the vehicle to be registered with the Regional Transport Office only after getting compliance certificate required under provisions of the Motor Vehicle Act, 1988 and the Rules in respect of Goods Vehicles, from ARAI for manufacture of the said model. I also find that the certificate holders of ARAI, Pune can only issue form 21 and form 22, required for registration of vehicles before RTO.:

28.2 On further perusal of the above certificate issued by ARAI, Pune, I, observe that it contains the base model and the details of diesel engine to be fitted in the Chhakda rickshaw. The certificate also makes it compulsory that the diesel engine fitted should be “Greaves Cotton Ltd make GL-400 II A having power 5.51 KW @

3600 rpm.” Para 3 of the certificate clearly indicates that the certificate is issued as per CMV Rule 126 to establish compliance with Central Motor Vehicles Rules, 1989 & shall not be construed as a certificate of compliance to any rules other than those listed in Annexure I & IA. It is also mentioned that the compliance to these rules has been verified based on use of specific components/parts/assemblies etc. It is specifically mentioned that “it is the vehicle manufacturer’s responsibility to ensure fitment of same components/parts/assemblies etc. as prescribed in the certificate before submission of the vehicle for registration.

29 On perusal of the letter No. ARAI/HMR/Govt-Corr/09-10/11 dated 11.12.2009 received from ARAI, Pune I find that the production declaration submitted by M/s. Rajshree to ARAI, Pune is as under:

Year 1st half 2nd half2005-06 --- ---2006-07 52 402007-08 --- ---2008-09 56 60

29.1 I also find that M/s. Rajeshree have reported production figures of 92 and 116 vehicles, during the years 2006-07 and 2008-09, respectively whereas in the ER-1 returns during the period from December, 2005 to September, 2009, they have shown production of 43 Chhakado rickshaws and cleared 41 only. From the above, it is evident that they have not submitted correct figures to ARAI, Pune. As against the manufacture and clearance of 1792 chhakda rickshaws registered with RTO, Ahmedabad, during the period 26.12.2005 to 06.10.2009, they have reported manufacture of 208 chhakdos only to the ARAI, Pune. The comparison of figures submitted to ARAI, Pune, figures of production mentioned in ER-1 returns and actual quantity of Chhakado rickshaws manufactured as per RTO details I find that they have not disclosed correct figures to either the C. Ex. Department or to ARAI, Pune. I find that the figures of production and clearance submitted to C. Ex. and ARAI, Pune are far lower than the actual quantity of vehicles manufactured and cleared by them. From the above, it is clear that M/s. Rajeshree Auto Meche have manipulated the figures of production and clearance and have submitted different figures to different agencies with a malafide intent to suppress their production.

29.2 My observation that M/s Rajeshree have suppressed the production and clearances with a malafide intent further take strength as all the records/ documents pertaining to M/s Rajeshree were recovered from M/s Arihant Automobiles which belong to one of the family members, which indicate that they have kept all the records at M/s. Arihant Automobiles intentionally to avoid any investigating agency to recover the same. The records/documents, as mentioned in Annexure-A to the panchnama dated 06.10.2009 recovered from the premises of M/s. Arihant Automobiles, Ahmedabad have been scrutinized and have been discussed in the following paras.

30 I find from the seized file mentioned at Sr. No. 2 contained sales invoices of M/s. Rajeshree Auto Meche. M/s. Rajeshree Auto Meche have shown in their invoices the description of goods as ‘Three Wheeler Delivery van’. Besides, they have also shown sale of diesel engines which amounts to clearance of input as such.

30.1 On scrutiny of Invoice No. 8 dated 15.07.2006 , I, find that there was a sale of diesel engine valued at Rs.30,500/- to Shri Makvana Arvindbhai Pithabhai of Upleta. The remarks ‘input as such cleared’ appear on the body of the invoice. They have paid C. Ex. Duty @ 16% and Edu. Cess @ 2% on the same. The time of removal of goods was 4.45 pm and date 15-07-2006. The scanned image of the above invoice is reproduced below:

Scanned image of invoice No. 8 dated 15.07.2006:

On scrutiny of details received from RTO, Ahmedabad, it was noticed that one such auto rickshaw delivery van was registered in the name of Shri A. P. Makvana on 15.07.2006 at Ahmedabad RTO. The details of temporary registration of the same Chhakado rickshaw are as under:

Registration No. GJW 1 ZI 7850Date of Registration 15.07.2006Name of Registrant A.P. Makwana

Make RajeshreeChasis No. RAM/127/06Engine No. 259494

RTO for Permanent Registration Rajkot

On comparing the details of above invoice with the RTO details, it came to light that the details such as name of the buyer, date exactly matched with each other. As per RTO details the vehicle is ‘Rejeshree’ make three wheeled auto delivery

van. However, in the invoice, M/s. Rajeshree Auto Meche have shown clearance of diesel engine cleared as input as such. Thus, it is evident that though M/s. Rajeshree Auto Meche have cleared Chhakado rickshaw, but, in the invoice, they have shown clearance of input as such i.e. diesel engine. Thus, it is abundantly evident that M/s. Rajeshree Auto Meche had mis-declared the description of the goods in the invoices in order to avoid the payment of duty of Central Excise and other taxes.

30.2 Whereas I find in the SCN at Para Nos. 5.4.5 and 5.4.6 the invoice No. mentioned is NO. 8 dated 14.4.2007 showing the sale of diesel engines valued at Rs. 26,500/- to Shri Raval Bhagvan Dayabhai is given inadvertently. In fact the scanned image of invoice no. 08 dated 16.4.2007 in the name of Shri Raval Ramesh Manibhai is to be considered and discussed. Accordingly, invoice No. 8 dated 16.04.2007 shows sale of diesel engine valued at Rs.26,500/- to Shri Raval Ramesh Manibhai. The remarks ‘input as such cleared’ appear on the body of the invoice. They have paid C. Ex. Duty @ 16% and Edu. Cess @ 2% and S. Higher Edn. Cess @1% on the same. The time of removal of goods was 11.35 AM . For ease of reference, the scanned image of the above invoice is reproduced below:

Scanned image of invoice No. 8 dated 16.04.2007:

The scrutiny of details received from RTO, Ahmedabad revealed that one such auto rickshaw delivery van was registered in the name of Shri R.M. Raval on 16.04.2007 with Ahmedabad RTO. The details of temporary registration of the same Chhakado rickshaw are as under:

Registration No. GJW 1 ZL 6076Date of Registration 16.04.2007Name of Registrant R.M. Raval

Make RajeshreeChasis No. RAM/102/07Engine No. 375199

RTO for Permanent Registration Palanpur

The comparison of details of above invoice with the RTO details appearing at 463 of the chart of Annexure-A to the SCN revealed that the details such as name of the buyer, date exactly matched with each other. As per RTO details the vehicle was ‘Rajeshree’ make three wheeled auto delivery van. However, in the invoice, M/s. Rajeshree Auto Meche have shown clearance of diesel engine cleared as input as such. Thus, it is evident that though M/s. Rajeshree Auto Meche have cleared Chhakado rickshaw, but, in the invoice, they have shown clearance of input as such i.e. diesel engine by mis-declaring the description of the goods in the invoices in order to avoid the payment of duty of Central Excise and other taxes. The scrutiny of remaining invoices, where they have shown clearance of diesel engines and comparison of the same with the details of RTO revealed that in many cases M/s. Rajeshree Auto Meche had in fact cleared Chhakado rickshaws, but, in order to avoid the payment of duty of excise and other taxes, they have shown clearance of input as such i.e. diesel engines as detailed in the chart showing clearances of input as such i.e. diesel engines and which is marked as Annexure-B to the show cause notice.

31 On scrutiny of C. Ex. Invoices and ER-1 returns I, find that that during the period from December, 2005 to September, 2009, M/s. Rajeshree Auto Meche have cleared 322 Nos. diesel engines, showing as clearance of input as such. Thus, evidencing that M/s. Rajeshree Auto Meche have cleared many Chhakado rickshaws in guise of diesel engines. The fact that such Chhakado rickshaws registered in the name of M/s. Rajeshree Auto Meche shows that they have cleared Chhakado rickshaws, in the guise of of diesel engines. I observe that M/s. Rajeshree Auto Meche have done it with an intent to avoid payment of duty on the Chhakado rickshaws, manufactured and cleared by them. Hence, Central Excise duty is required to be recovered on such Chhakado rickshaws, cleared in guise of diesel engines by them.

32 I, further find from the records for the years 2008-09 and 2009-10 recovered from M/s. Manish Auto, Keshod, who is a broker of Chhakado rickshaws i.e. from the register mentioned at Sr. No. 07 of Annexure-A to the panchnama dated 06.10.2009 drawn at M/s. Mamnish Auto Keshod that they have dealt with 16 Nos. Chhakado rickshaws, manufactured by M/s. Rajeshree Auto Meche. The Chhakados mentioned in the register bear the chasis No. of M/s. Rajeshree Auto Meche. However, the Central Excise invoices and ER-1 returns of M/s. Rajeshree Auto Meche show clearance of only 6 Chhakados, during the years 2008-09 and 2009-10 (upto September, 2009), which prove that M/s. Rajeshree Auto Meche have cleared Chhakado rickshaws, illicitly without any central excise invoice and without payment of central excise duty.

32.1 I also find that 31 RC (Registration Certificate) books were recovered from the premises of M/s. Manish Auto, Keshod under panchnama proceedings as detailed in Annexure-B to the said panchnama. Out of 31 RC books, 2 RC books, mentioned at Sr. No. 12 & 31 of Annexure-B to the panchnama bear chasis number of M/s. Rajeshree Auto meche. were issued by RTO, Junagadh. The said vehicles were temporarily registered with RTO, Ahmedabad appearing at Sr.No. 1072 and 1416 of Annexure-A. to the show cause notice for which no central excise invoices have been issued by M/s. Rajeshree Automeche either in the name of Manish Auto or in the

name of buyers mentioned in the RC books. This indicated that the chhakda rickshaws have been clandestinely manufactured and cleared by M/s. Rajeshree Auto Meche without payment of Central Excise duty.

32.2 Further, I find from page No. 151 of register A/7 recovered during the panchnama dated 06.10.2009 at Manish Auto, Keshod placed at Annexure-A to the panchnama showed the details of the chhakoda rickshaw dealt with various manufacturers of Chhakado rickshaws including Rajshree by M/s. Manish Auto. Sr. NO. 20 & 21 of the said page show that they have dealt with two Rajshree make chhakdo rickshaw which matched with the details shown at Sr. No. 1180 & 1281 of the Annexure-A to the Show cause Notice i.e. the chart showing vehicles temporarily registered with RTO, Ahmedabad. The scanned image of Page No. 151 is as under which clearly indicate that Manish Auto have dealt with Rajeshree make chhakadas.

32.3 I also find from the statement of Shri Govindbhai Hirabhai Myatra, Karta of M/s. Manish Auto, Keshod recorded under section 14 of the Central Excise Act, 1944 on 19.02.2010 that they deal with the work relating to RTO and are in the business of sale/purchase of Chhakados manufactured by various manufacturers including M/s. Rajeshree. I find from his statement that they have undertaken the permanent registration work with RTO and after getting the temporary registration of Chhakado rickshaws by the Chhakado manufacturers, along with the documents such as Form 21 & 22, sales Invoices from the manufacturers to be given to the buyers for the permanent registration. I also find that they were recovering the price of the chhakados from vehicle owner/buyer and the same was sent to Chhakado manufacturers and in turn got commission.

32.4 From the records recovered from M/s. Manish Auto, Keshod and from the statement of Shri Govindbhai Hirabhai Myatra, Karta of Manish Auto, I find that the statement is corroborating the facts of records recovered as evidence and it is abundantly clear that they have dealt with M/s. Rajeshree Automeche in purchase and sales of chhakadas clandestinely manufactured and cleared by M/s. Rajeshree Automeche.

33 Similarly, I also find from the registers detailed at 4 & 6 of Annexure-A to the panchnama dated 06.10.2009 drawn at the premises of M/s. Parishram Marketing, Keshod that the details, submitted by RTO, Ahmedabad and the Chhakado having chasis Nos. RAM/253/06, RAM/403/09, RAM/405/09, RAM/406/09 dealt by M/s. Parishram Marketing, Keshod which are mentioned in the above register matched with the vehicle registered with RTO, Ahmedabad appearing at Sr.NO. 188, 1502, 1503 and 1504 respectively. I also find that for the above mentioned chhakadas there were no corresponding central excise invoices. I further find that in all they have dealt with 188 Rajeshree make chhakadas as per the details of the above registers for which M/s. Rajeshree have issued central excise invoices for few chhakado rickshwas only. .33.1 I further find from the statement of Shri Nathubhai Gajera, Proprietor of M/s. Parishram Marketing, Keshod recorded under section 14 of the C. Ex. Act, 1944 on 20.11.2009 that they are RTO/Insurance agent and undertake the work relating to passing of new Chhakado rickshaws and insurance thereof and they act as a financier and give loan to purchasers of Chhakado rickshaws. The job of financing is done under the name of M/s. Parth Finance, Keshod. I also find from the confirmatory statement that they have dealt with 188 Rajeshree make chhakado richskwas for which M/s. Rajeshree have issued central excise invoice for few chhakdo rickshwas during the period from January 2005 to Sept. 2009.

33.2 From the records recovered from M/s. Parishram Marketing, Keshod and from the statement of Shri Nathubhai Gajera, Proprietor of M/s. Parishram Marketing, I find that the statement is corroborating the facts of records recovered as evidence, and it is abundantly clear that they have dealt with M/s. Rajeshree Automeche in purchase and sales of chhakadas clandestinely manufactured and cleared by M/s. Rajeshree Automeche.

34 Further, I find that the data received from different dealers of Greaves Cotton, M/s. Rajeshree Auto Meche had totally purchased 471 Nos. ‘Greaves’ make GL-400 model Diesel Engines from various dealers during the period from 01.08.2005 to 06.10.2009 whereas they have manufactured 1792 chhakadas and got the same temporarily registered with RTO, Ahmedabad.

35 It was also noticed from the information gathered from the dealers of Greaves Cotton during the investigation, that M/s. Rajeshree Auto Meche have also purchased and used other models of ‘Greaves’ make diesel engines viz. Model Nos. G 1080, G 1450, G 1510, G 5520, G 5530 etc. to manufacture chhakda rickshaw which models actually meant for water handling, agriculture or other purposes. From the statement of Shri Kishore Gordhanbhai Chandra, Partner of M/s. New Chandra Motor Cycle House, Jamnagar an authorised distributor of M/s. Greaves Cotton Ltd. I find that M/s. Rajeshree have also dealt with other diesel engines.

35.1 From the statements of various dealers of M/s. Greaves Cotton Ltd. viz. Shri Pankaj Jagatnabhai Panara authorized signatory of M/s. Deepak Sales Agency, Junagadh Shri Maganlal Hansraj Dadhania, Partner of M/s. Swastik Electric Corporation, Keshod and Shri Pradhneshbhai Jitendra Shah, Proprietor of M/s. Electro Trading Corporation, Ahmedabad recorded under section 14 of Central Excise Act, 1944 I find that the outcome of the statements show that the chhakada manufacturers also used other models of Grieves Cotton besides locally assembled engines which are cheaper than the prescribed version of engine i.e. GL-400. It also shows that the price of GL-400 varied between Rs. 33,000/- to Rs. 35,000/-, other models is around Rs. 23,000/- and the locally assembled engines varied between Rs. 19,000/- to Rs. 21,000/- The outcome also shows that the main buyers of the diesel engines and pump sets are the manufacturers of Chhakado rickshaw in the state of Gujarat and the payments are received by the said dealers through cheques, cash and through DDs from the Chhakado manufacturers.

36 Further, from the statements of local mechanics recorded under section 14 of CEA, 1944 I find that the chhakado manufactures also used assembled engines and that the plate required to affix on diesel engine for engine number and its manufacturers name & logo which is available in local market. I find it is very easy for

the chhakado manufacturers to buy the logo from local market for affixing on their own.

37 I further find that during the search under panchnama dated 22.07.2010 at M/s. Dattatrey Auto Centre situated at 8, Rajput Para, Opp. Lodhawad Police Station, Rajkot by the officers of DGCEI, Ahmedabad , one set comprising of name plate and monogram of M/s. Greaves Cotton & Co. Limited, was placed under seizure. The scanned image of the said plate and monogram is produced below:

37.1 Further from the statement of Shri Mansukh Patel, Proprietor of M/s. Dattatrey Auto Centre, Rajkot recorded under section 14 of the Central Excise Act, 1944 on 22.07.2010 I find that they were selling the mono grams to local Chhakado manufacturers .

37.2 The seized monograms and the statement of Shri Mansukh Patel, go on to show that the logo/monogram of Greaves Cotton is easily available in local market and the chhakado manufacturers can buy and affix them on the assembled engines on their own in order to use cheaper version of diesel engines instead of prescribed version by ARAI, Pune.

38 Further, I find from the statements of Shri Gunvant Sureshbhai Humbal, Proprietor of M/s. Rajeshree Auto Meche recorded under section 14 of Central Excise Act, 1944 on 31.3.2010 and 24.9.2010 that they manufacture the Chhakkdo rickshaw of brand “Super”, that he had neither accounted for the two chhakado rickshaws seized under panchnama dated 06.10.2009 in any of the records nor could he produce any duty paying documents in respect of the two chhakado rickshaws, that he had not prepared any central excise invoices in respect of seized rickshaws. I also find that he had confirmed and admitted vide his statement dated 24.9.2010 that during the period from 26.12.2005 to 6.10.2009 they have manufactured 1792 chhakados and got the same temporarily registered with the RTO, Ahmedabad. He also stated that they have only cleared 41 chhakadas by preparing Central Excise invoices and remaining 1751 chhakadas were cleared without preparing central excise invoices and without payment of central excise duty. He also stated that he had not submitted the correct figures to ARAI, Pune with regards to the manufacture and clearance. He also admitted that they have actually cleared chhakado rickshwas in the guise of diesel engines in order to reduce the burden of duty of excise and other taxes. He also confirmed that M/s. Manish Auto, Keshod and M/s. Parishram Marketing have dealt with their chhakadas rickshwas and agreed to the facts mentioned in the statements of Shri Govindbhai Hirabhai Myatra of Manish Auto and Nathubhai Gajera of M/s. Parishram Marketing. He also stated that they used to purchase other parts and spares from open market on cash payments and the same were not accounted for. He also confirmed that he had sold the chhakado rickshwas in cash and had utilized the cash to purchase the spare parts from open market. He

had also confirmed that they arranged to purchase the engines and other parts in the name of buyers directly from the dealers and payment for the same was made in cash or DD to the dealers. He had also given the approximate value of the accessories used by them in the manufacture of the chhakadas including their profit margin amounting to Rs. 71,900/- and also stated that this amount remained almost same for years2006-07 to 2009-10 whereas he has declared the assessable value of chhakdas in their invoice is Rs. 45,000/- to Rs. 50,000/-. The details of approximate value of the parts & accessories used by M/s. Rajeshree to manufacture ‘“Chhakado rickshaws’ vide statement of Shri GUnvatbhai S. Humbal dated 31/03/2009 are as under:-

Description of parts & accessories used by us to manufacture

Chhakado Rickshaw

Value (Rs.)

Greaves make Diesel Engine Rs.32500/-

Gear Box along with Clutch Rs.10000/-

Iron & Steel (100-125 kg) Rs.4000/-

Wood Rs.1500/-

Tyre & Tube Rs.3950/-

Fuel Tank Rs.275/-

Handle Rs.125/-

Differential Rs.3750/-

Frame Rs.1000/-

Moro Rs.1000/-

Wheel Plate & Rim Rs.800/-

Electrical (Lights, Elec. Wiring) Rs.1000/-

Nut & Bolts Rs.500/-

Paints Rs.1000/-

Kamani Rs.500/-

Labour Charges Rs.2000/-

Expenditure on ARAI Registration Rs.2000/-

Office Exp & other overheads Rs.1000/-

Profit Margin Rs.5000/-

Total Rs.71900/-

38.1 I find and hold from the above voluntary and confirmatory statements of Shri Gunvant Sureshbhai Humbal, Proprietor of M/s. Rajeshree Auto Meche that they have clandestinely manufactured and cleared 1751 Chhakado rickshaws. I also find that as per his statement regarding valuation of chhakadas comes to Rs. 71,900/-per chhakado , whereas they have sold the same showing the assessable value of Rs.45,000/- to 50,000/-. Thereby proving beyond doubt that they have undervalued the Chhakado cleared by them licitly or illicitly.

39 I also find that M/s. Rajeshree are required to pay MV Cess @ 1/8% adv. on the chhakados manufactured by them as per Appendix III of Central Excise

Tariff Act, 1985 and notified by Ministry of Industry, Department of Industrial Development Notiifcation S.O. No. 247(E) dated 22.3.1990 as amended by Notification S.O. 852(E) dated 26.5.1994. Whereas they have not paid the said MV Cess on their clearances made by them licitly or illicitly.

40 I also examined the purchase and sales invoices of M/s. Rajeshree for diesel engines. I find from the purchase invoices that the make and number of the diesel engines were clearly mentioned in the purchase invoices whereas in the sales invoices M/s. Rajeshree have not specified the make and serial number of the diesel engines cleared by them as input as such. I also find that the value of the said diesel engines procured by them varied from Rs. 28,000/- to Rs. 33,000/- . I have carefully examined the purchase invoices of Diesel engines of make M/s Greaves cotton purchased from various dealers by M/s Rajeshree for the years 2005 to 2009 and find that not even a single diesel engine is priced below Rs. 27,900/- whereas M/s Rajeshree have cleared most of them at the value of Rs. 26000/- to Rs. 26500/-. I failed to find any reason as to how the same goods could be sold for a lower amount thereby making loss to their business. It is pertinent to mention here even for an argument sake that they have sold 322 diesel engines during the period from 2005-2009 and not the chhakados , it could not have been for making loss to their business. I find that these diesel engines should have been sold at least at the same price or higher than the actual price, or if they say these diesel engines sold at the lower rate are not of the prescribed version then the question arises is from where these goods have been procured, whether they were accounted for or not. Now, I find that there is no accountal for the diesel engines which they procured @ Rs. 26,000 to Rs. 26500/-. Hence it is inferred on the preponderance of probability that they are in the practice of procuring diesel engines from local market other than the prescribed versions and fitting the same in the chhakadas manufactured by them I find that it is only with the malafide intention that the diesel engines procured by them have not been accounted for to show that no excess raw materials have been procured by them.

41 I also find from the ER-1 returns filed by M/s. Rajeshree that they have shown the manufacture of 145 chhakdas and clearances of 144 during the period from October 2009 to June 2010. The total manufacture of the chhakadas shown by them is only 43 numbers in almost five years whereas they have manufactured 145 chhakdas in eight months time. Interestingly their production has increased by many folds i.e. 145 in eight months after the search conducted by DGCEI .

42 I find that during the period December, 2005 to 06.10.2009, M/s. Rajeshree have shown clearance of only 41 Chhaksado rickshaws, on payment of duty. During the period from 26.12.2005 to 06.10.2009, 1792 chhakkdo rickshaws bearing the name of ‘Rajeshree Auto Meche’ have been temporarily registered with RTO, Ahmedabad. However, M/s. Rajeshree Auto Meche, in their invoices and ER-1 returns have shown clearance of 41 Chhakado rickshaws only. Thus, M/s. Rajeshree have clandestinely manufactured and cleared 1751 Chhakado rickshaws, without preparing C. Ex. invoices and without payment of C. Ex. Duty. They have not accounted for these 1751 illicitly cleared Chhakado rickshaws in any of their records. Therefore, C. Ex. Duty on 1751 Chhakado rickshaws clandestinely manufactured and cleared, without payment of duty is required to be recovered from M/s. Rajeshree along with interest. Besides, M/s. Rajeshree have not declared actual value of the Chhakado rickshaw in their invoices. During the entire period of 2006-07 to 2009-10 (Upto September, 2009), they have declared assessable value of Rs.45000/- or Rs.50000/-. Shri Gunvant S. Humbal, Proprietor of M/s. Rajeshree in his statement dated 24.09.2010 admitted that the value declared by them was much lower than the actual value. He admitted that the actual value of the Chhakado was Rs.71900/- and has remained same over a period from 2006-07 to 2009-10. Therefore, the value of Rs.71900/- has been rightly considered to calculate the duty not paid on Chhakado rickshaws, cleared illicitly, without payment of duty. The chart showing calculation of duty on the Chhakado rickshaws, cleared illicitly, during the period December, 2005 to 06.10.2009 is as per Annexure D-1 enclosed to the show cause notice No. DGCEI/AZU/36-93/2009-10 dated 29.9.2010. Therefore, C. Ex. Duty amounting to Rs.1,64,10,183/- is required to be recovered from them under Section 11 A along with interest under Section 11AB of CEA,1944 respectively.

42.1 From the discussions hereinabove, I find that even the 41 Chhakado rickshaws cleared by them during the period from Dec 2005 to 6-10- 2009 by paying central excise duty also have been undervalued and duty short paid by them. Hence I hold that M/s Rajeshree are required to pay the central excise duty of Rs. 1,46,859/- on the differential value as shown in Annexure-D2 to said SCN, which is required to be recovered from them under Section 11 A along with interest under Section 11AB of CEA,1944 respectively. 43 I also find that after initiation of investigation, M/s. Rajeshree have shown more clearances. They have also increased the value of the Chhakados thereafter. However, the scrutiny of ER-1 Returns for the period October, 2009 to June, 2010 revealed that they have not declared the actual value of chhakados in their central excise invoices. During the said period, M/s. Rajeshree have cleared 144 Chhakados by declaring assessable value of Rs.88,24,500/-. As discussed hereinabove, the actual value of the Chhakado is Rs.71900/-. Therefore, the Central Excise duty short paid on 144 chakdos cleared during the period October, 2009 to June, 2010 on account of under valuation is calculated by considering the value of Rs.71900/- shown in Annexure D-3. which is enclosed to the said SCN. Therefore, C. Ex. Duty short paid on the 144 Chhakados amounting to Rs.1,36,551/- is required to be recovered from them under Section 11 A along with interest under Section 11AB of CEA,1944 respectively. 44 I find that M/s. Rajeshree have not paid M. V. Cess on any of the Chhakado Rickshaws manufactured and cleared by them licitly or illicitly during the entire period from December, 2005 to June, 2010. Therefore, M. V. Cess is required to be recovered from them on 1936 Chhakado rickshaws cleared by them during the period from December, 2005 to June, 2010. The value of Rs.71,900/- is considered to calculate the M. V. Cess not paid by them. The chart showing calculation of M. V. Cess not paid is annexed as Annexure D-4 to the said notice. Therefore, M. V. Cess amounting to Rs.1,73,998/- is also required to be recovered from them along with interest. However, I find that as per Annexure D-4 M/s. Rajeshree are required to pay Rs. 1,73,998/- as M.V. Cess whereas it was alleged in para 15(i) of the SCN that they were required to pay Rs. 1,93,998/- which I view as a typographical error and I hold that they are required to pay only Rs. 1,73,998/- as M.V. Cess.

45 Now I come to the SCN bearing No. DGCEI/AZU/36-02/2010-11 dated 1/4/2010 given for two chhakados seized by the officers of DGCEI under panchnama dated 04.02.2010.

45.1 I find from the panchnama dated 06.10.2009 drawn at the factory premises of M/s. Rajeshree Automeche two chhakado rickshaws were placed under detention as Shri Sachin Sureshbhai Humbal, brother of Shri Gunvat S. Humbal, Proprietor of M/s. Rajeshree Automeche present at the time of search could not produce any documents in respect of these two chhakados. The details of two chhakados are as under:

Sr. No. Registration No. Chasis No. Engine No. Value (Rs.)

1 GJ 1 TCA 35 RAM/0613/09 R9F 2635239 70000

2 GJ 11 Y 1607 RAM/843/08 R8D 516454 35000

45.2 Further, the same were placed under seizure on 04.02.2010 under the panchnama dated 04.02.2010 drawn at the factory premises of M/s. Rajeshree Automeche for confiscation and the said goods were given back to M/s. Rajeshree Automeche, Rakhial under Supratnama dated 04.02.2010 for safe custody.

45.3 I find from the panchnama dated 06.10.2009 and 04.02.2010 and from the statement of Shri Gunvatbhai S. Humbal, dated 31.03.2010 Proprietor of M/s. Rajeshree Automeche could not produce any evidencing documents in respect of

these two chhakados. Further, I find from the statement that these two chhakados were lying in their factory for want of some accessories to be fitted. In the absence of any duty paying documents produced by them the officers of DGCEI rightly have placed both the above mentioned chhakados valued at Rs. 1,05,000/- under seizure with a reason to believe that the same are liable to confiscation.

45.4 At the beginning of the discussions, I have mentioned that I am taking both the SCNs in one common adjudication order since both of them have a bearing on each other, Now, I find that M/s. Rajeshree Automeche have adopted a modus for illicit manufacture and clearance stands proved by the fact that these two chhakados lying in their premises were not supported by any of the duty paying documents. I find that the seizure of the chhakdas have been rightly placed and are liable to confiscation and hence both the SCNs have bearing on each other..

46 The noticee vide their defence reply dated July 01, 2011, 12/10/2011 and 18/10/2011 mainly contended for both the SCNs that;

i) They could not have produced 1792 chakkdos as alleged in the SCN for the reasons that they were not having any machinery, labour and also there was no consumption of power. Another reason is that since the manufacturing area is situated in a small shed where such huge manufacturing activity is not possible.

ii) They have not removed the goods clandestinely but they have only sold the sale letters.

iii) There was no proof of raw material or any accessories which have been bought by them to show that they have manufactured 1792 chhakados.

iv) No cash flow over and above the invoice price has been detected by the investigating agency.

v) They have also contented that even from the records obtained from RTO authority proves that on the date of sale of diesel engines no Chhakado is shown as manufactured by Rajeshree and registered with RTO. They have also submitted vide Annexure-A, A1, B, C, D and D1 of their written submission dated 18/10/2011, some affidavits filed by panchas, some persons who are neighboring M/s. Rajeshree stating to the effect that till the date filing of affidavits they have never seen any manufacturing activity going on at the premises of M/s Rajeshree and also not seen any labour working, to prove that M/s Rajeshree have not manufactured and cleared so many chhakkados as alleged in the SCN. Also they have submitted an affidavit filed by a chhakkado repairer/mechanic of Keshod .Also they have submitted an affidavit filed by Shri Gunavat Sureshbhai Humbal retracting his statements recorded by the officers under Section 14 of CEA,1944.

.vi) Chhaka NO. GJ11Y 1607 having chasis No. RAM/843/08 and engine NO.

R8D 516454 seized for confiscation is not sustainable in law as per Section 124 of the Customs read with Rule 25 of Central Excise Rules, 2002 as M/s Rajeshree is not the owner of the chhakda for the reason that it has been permanently registered with RTO, Junagadh in the name of some other person. The RC book for the said chhakda is also enclosed to show that the same is registered with RTO, Junagadh on 24.6.2008 in the name of Hareshbhai Kalabhai Sinhar .

vii) Chhakada NO. GJ-1-TCA-35 having chasis NO. RAM/0613/09 and engine No. R9F 2635239 also cannot be confiscated as the same is lying in their premises and has not been cleared. The No. TCA-35 is a permanent number issued to them by the RTO authority for movement of any chhakda from their premises to the RTO for initial registration purpose.

46.1 Now, with regard to production, their contention was that they could not have manufactured 1792 chhakados due to space constraint , lack of machinery and due to absence of labour during the period from 01-12-2005 to 06-10-2009. I observe that in almost five years they have manufactured only 43 chhakdos and cleared 41.

where as they have manufactured and cleared 145 and 144 chhakados respectively during the period from October 2009 to June 2010 i.e. with in eight months time. I have noticed that they have increased the production and clearances after the visit of DGCEI officers to their factory/unit as could be seen from their monthly returns filed by them. This fact alone goes on to show that space and labour is no constraint for them to manufacture 1792 chhakados as alleged in the SCN. Hence I find their contention is not tenable.

46.2 As regards their argument put forward that there was no proof of excess raw material or any accessories which have been bought by them to show that they have manufactured 1792 chhakadas as alleged and also no evidence to show that cash flow over and above the invoice price from the buyers to them I, opine that when the intention is to clandestinely manufacture and clear it is obvious that no records/proof is kept nor is expected from the investigating agency that they should recover such records. My opinion further stands supported by the hon’ble Tribunal’s decision.

In the case of M/s. Bute Cosmetics V/s. Commissioner of Central Excise, Trichy reported at 2001 (135) E.L.T. 886 (Tri. - Chennai) (Final Order Nos. 612-616/2000, dated 5-5-2000 in Appeal Nos. E/3325-3329/90-C) wherein the hon’ble Tribunal has held that As against these, ld. Advocate has stressed that in the absence of  any evidence to show receipts of extra raw-materials, the Revenue cannot prove almost 30% excess production and clandestine clearances. There is force in this submission, as logically, goods must be produced before they can be clandestinely removed, and extra production presupposes extra raw materials. Yet it is equally true that in modus operandi concerning suppressed production and clandestine clearances, the persons concerned may not keep any records of receipt of raw-materials purchased normally through cash payments. Therefore, absence of any evidence alone on this count, ipso facto, cannot rule out clandestine removal. Instead, the totality of the picture which emerges is to be clearly analysed.

In support of my view, another decision in the case of COMMR. OF C. EX., LUCKNOW V/s. J.M. AGARWAL TOBACCO CO. PVT. LTD. reported at 2010 (261) E.L.T. 1008 (Tri. - Del.) (Final Order No. 191/2010-SM(BR)(PB), dated 1-2-2010 in Appeal No. E/2784/2007-SM(BR)) the Hon’ble Tribunal has held that Revenue need not establish its case by mathematical precision. In this case, although there was no direct evidence of clandestine removal came to record, but the evidence demonstrated that the tobacco product was removed from factory for no explainable reason. No inference was drawn by learned Adjudicating Authority by mere presumption. Circumstances of the case, clearly depicts that the Respondent from day one of the investigation had a pre-determined mind to prevent the investigation to examine the shortage found during investigation. Sufficiency and weight of evidence contributes to the degree of proof. This has an important bearing on the incidence of burden of proof. Weight of evidence is to be considered on the facts and circumstance of each case. Clandestine removal is an activity resulting in avoidance of legal duties to the State. Secrecy and stealth being its covering guards, it is impossible for Investigation to unravel every link of the process. Many facts relating to the illicit business remain in the special or peculiar knowledge of the person concerned in it. The burden to establish those facts is cast on the person concerned; and if he fails to establish or explain those facts, an adverse inference of facts may arise against him, which coupled with presumptive evidence adduced by Revenue would rebut the initial presumption of innocence in favour of that person and in the result prove him guilty. Once the principles laid down by Apex Court in the case of

CC, Madras v. D. Bhormull reported in 1987 (13) E.L.T. 1546 (S.C.) come to rescue of Revenue, the Respondents fail to succeed.

In the case of Collector of Customs, Madras and Others versus D. Bhoormull, reported in 1983 (13) ELT 1546 the Hon’ble Supreme Court held that the Department is not required to prove its case with mathematical precision to a demonstrable degree; for, in all human affairs absolute certainty is a myth. The law does not require the prosecution to prove the impossible. All that it requires is the establishment of such a degree of probability that a prudent man may, on its basis, believe in the existence of the fact in issue. Thus legal proof is not necessarily perfect proof often it is nothing more than a prudent man’s estimate as to the probabilities of the case. In the instant case, I find that the evidences on hand and the voluntary statements of various persons involved, which show that M/s. Rasjeshree have clandestinely manufactured and cleared the chhakdas even by undervaluing will not vitiate by lack of cross examination. Hence, I reject the request of the assessee to cross examine the above mentioned persons.

46.3 I find that the contention of selling of sale letters is not licit in nature and the whole concept cooked out is only to mislead the department and other Taxing departments so as to avoid all legal dues to the Government. Hence I do not find it a valid contention.

46.4 As regards their contention that even as per the records obtained from RTO, Ahmedabad regarding number of vehicles registered with RTO, Ahmedabad will prove that on the date of sale of diesel engines, no Chhakado is shown as manufactured by Rajeshree and registered with RTO on the same date to contend that they only sold diesel engines but not Chhakado, I hold that it would prove them wrong as they have got the Chhakado temporarily registered with RTO, Ahmedabad on the date of sale of diesel engines. This can be illustrated by their sales invoice No. 8 dated 15.7.2006 that in the name of A.P. Makwana, one Diesel Engine was sold by them and on the same date one chhakado was registered in the name of the same person i.e. of Shri A.P.Makwana appearing at Sr.no.89 of annexure A to the SCN. I find there are number of cases of similar fashion. Hence, I hold that their contention holds no good.

46.5 .. As regards their submission of affidavits filed by panchas and some persons who are neighbors to M/s Rajeshree, I find that all these affidavits dated 12 th

and 13th July, 2011 propped up only at the last stage of adjudication proceedings and these were not filed and submitted to the investigating agency at any point of time during the investigation. I also find from these affidavits that the persons stated on oath that they have neither seen any manufacturing activity going on nor any labour working nor any incoming or outgoing of any raw material in the premises of M/s. Rajeshree till the date of filing of the affidavits i.e. 12 th and 13th of July, 2011. I find that these affidavits prove contrary to the production of 145 chhakdas and clearance of 144 chhakadas made by M/s. Rajeshree during the period from October 2009 to June 2010 as per their statutory records. Now the question arises that if there was no manufacturing activity going on as per the affidavits, how and where M/s. Rajeshree have manufactured these 145 chhakdas Thus, I hold that either the persons have filed false affidavits or M/s. Rajeshree have manufactured these chhakdas somewhere else. Hence, I find that by these affidavits M/s. Rajeshree attempted to take shield from any adverse inferences against them. I also find that these affidavits are cooked up only to evade payment of duty on the clandestine clearances made by them. Hence I find no force in their contentions and I do not consider their affidavits.

46.6 Regarding the affidavit dated 03.08.2011 filed by Shri Ashokkumar Laxmidas of Keshod , that he is a repairer/mechanic of chhakada and he can manufacture the chhakados on his own by buying the locally available raw material and only purchases sale letters from the agents of chhakda manufacturers in order to get the chhakada registered with RTO., I find that the statement on oath of the affidavit is very vague in nature as it does not mention from which agent he had obtained the sales letters. I view that if M/s. Rajeshree would want to gain any benefit from this affidavit they should have filed the same at the time of investigation and not at the time of adjudication. Hence I do not consider this affidavit.

46.7. M/s Rajeshree vide their written submissions dated 01-07-2011 and 18-10-2011 and also vide the affidavit dated 04.07.2011 of Shri Gunvatbhai S. Humbal have contended that the statements of Shri Gunavat Sureshbhai Humbal were recorded by the officers under duress and coercion and thereby retracting the same.

46.8 I find no force in their contention that the said statements have been retracted as they could not prove a point or brought on record that indeed the same were recorded under duress or by applying coercion by the officers. Moreover the retraction was neither intimated to the officer recording the statement nor to any of the superior officers nor have been brought on record during the investigation. Hence, I view that merely stating and filing the affidavits that the statements were retracted holds no good and will not help them in their favour. In this regard I rely upon the decision taken by Hon’ble Tribunal (Mumbai)

in the case of Commissioner of C.Ex., Mumbai V/s. Champion Confectionary reported at 2010 (262) E.L.T. 865 (Tri. - Mumbai) (Final Order Nos. A/37-39/2010-WZB/MUM/C-II/EB, dated 19-2-2010 in Appeal Nos. E/2829 and 2846/2003 and Cross Objection No. E/CO/208/2004) wherein the tribunal has held that One of the main issues to be considered is whether the retraction said to be contained in the affidavits was rightly relied upon by the Commissioner (Appeals). As already mentioned, there was seizure of clandestinely removed goods in the transit and there was unaccounted stock of about Rs. 5 lakhs in the factory premises and that there were slips Sr. No. 43 to 50 all dated 30-6-2000 indicating clandestine clearance of goods valued at Rs. 1,40,575/-. In these circumstances, there can be no doubt about the fact of clandestine removal indulged in by the respondent firm. It is only the quantum of such clearances, which can be in dispute. Several persons concerned with the respondent firm and the marketing firm have admitted and corroborated the clandestine clearance by the respondent firm. Some of the dealers who purchased from the marketing firm also confirmed receipt of goods without bills. These admissions have been made in the statements recorded under Section 14 of the Central Excise Act on different dates. The retraction of any statement, in our opinion, should be made to the authority before whom the statements were given. Thus, it is between the giver of the statement and the person before whom the statement was given. Any communication addressed to others can only be considered as representation or compliant. It is not their case that any retraction was given to the officer, who has recorded the statements. It is also not their case that they made any representation to the senior officers, who supervise the work of the officers, who recorded the statements alleging any threat or compulsion on the part of the officers while recording the statements. The affidavits have been signed before the Special Metropolitan Magistrate one set on 4-7-2000 and another set on 6-7-2000. These affidavits have been kept as a closely guarded secret and revealed for the first time in their reply to show-cause notice dated 11-4-2001. Even in these affidavits, it was not being denied that there were clandestine clearances. These affidavits cannot be considered as retraction of statements given under Section 14 of the Central Excise Act. At any rate, even if they were to be considered as retraction, the same cannot

be considered as retraction made promptly as they surfaced only in April, 2001 for the first time. Further, the clandestine removal is not totally denied in the affidavits. After swearing the affidavits on 4-7-2000, confessional statements have been given subsequently without referring to such affidavits. These affidavits containing retractions are not worth relied upon and should have been ignored by the Commissioner (Appeals). Further, it is noticed that the respondent deposited a sum of Rs. 1 lakh on 7-7-2000 by TR-6 challan after the swearing in of affidavits on 4-7-2000 and 6-7-2000. In other words, the statements given on 1-7-2000, 3-7-2000, 5-7-2000 etc. stand acted upon by payment of part of the disputed amounts. Having suppressed the production and clearance, having chosen to destroy the slips under which clearances have been made and having used the cash memo of M/s. Globe Food Products, the quantum of clearances clandestinely removed have to be revealed only by the respondent and the connected persons. In this case, it was revealed by the authorized signatory of the respondent firm that nearly 50% of the clearances were made without payment of duty and corroborated by others concerned. Considering the evidence relating to excess unaccounted stock found in the factory on the date of visit and the quantum of unaccounted clearances effected on 30-6-2000 and 1-7-2000, it is reasonable to conclude that the clandestine clearances are substantial. Hence I do not consider it to be a retraction of statements recorded under Section 14 of Central Excise Act, 1944.

46.9 Further I learn from para no.10 of their written submission dated 01-07-2011 that they were getting some chhakados assembled from others in order to keep their certificates issued by ARAI, Pune alive. In my view, if they had sufficient proof to substantiate their contention they could have submitted the same to the investigating agency during the period of investigation and investigation could have been extended to that effect. After having gone through the records, various statements corroborating the evidences and the discussions made in the foregoing paras , I consider their contention only as an attempt to mis lead the adjudicating authority and avoid any adverse inference against them.

47. As regard to their contention that (i) Chhakado NO. GJ11Y 1607 having chasis No. RAM/843/08 and engine NO. R8D 516454 seized for confiscation is not sustainable in law as per Section 124 of the Customs read with Rule 25 of Central Excise Rules, 2002 as M/s Rajeshree is not the owner of the chhakado for the reason that it has been permanently registered with RTO, Junagadh in the name of some other person. The RC book for the said chhakado is also enclosed to show that the same is registered with RTO, Junagadh on 24.6.2008 in the name of Hareshbhai Kalabhai Sinhar and (ii) Chhakada NO. GJ-1-TCA-35 having chasis NO. RAM/0613/09 and engine No. R9F 2635239 also cannot be confiscated as the same is lying in their premises and has not been cleared. The No. TCA-35 is a permanent number issued to them by the RTO authority for movement of any chhakda from their premises to the RTO for initial registration purpose.

48 I find from the above discussions that M/s. Rajeshree have resorted to a modus of selling chhakados under the guise of diesel engines. The seizure of the two chhakados proved this point beyond doubt as they could not produce any evidence i.e. record/accountal of manufacturing and duty paying documents in support of these two chhakdas manufactured by them. In my view ,the contention of the assessee does not stand the test of Rule 25 of CER 2002, whereunder any finished excisable goods kept without accountal in the factory of production is liable to confiscation. I further find that in the absence of any supporting documents of the goods manufactured could be seized under a reasonable belief that they are intented for clandestine removal. My view is further supported by the Hon’ble Tribunal

in the case of K. Selvaraj Vs. Commissioner of C.Ex., Coimbatore reported at 2009 (238) E.L.T. 502 (Tri. - Chennai) (Final Order Nos. 1017-1018/2008, dated 19-9-2008 in Appeal Nos. E/752-753/2005) wherein the hon’ble Tribunal has held that  After examining the

records and hearing both sides, I have found hardly any case against the demand of duty inasmuch as the entire demand is on goods which was found to have been clandestinely removed from the factory. No duty was demanded on the fabrics found in the factory. The fabrics found in the factory without accountal were, however, confiscated. The learned consultant submits that only those goods which were found to have been cleared from the factory should have been confiscated and that any goods found within the factory was not liable to confiscation. This argument does not stand the test of Rule 25 , whereunder any finished excisable goods kept without accountal in the factory of production is also liable to confiscation.

Hence in the instant case, I hold that the two chhakados lying in their premises without the support of record/accountal of manufacturing and duty paying documents rightly deserve the seizure and are liable to confiscation under rule 25 of CER2002.

49. Now, I conclude and hold from the evidences available on records and various voluntary and confirmatory statements as discussed above that during the period from 26.12.2005 to 06.10.2009 M/s. Rajeshree Automeche have manufactured licitly or illicitly 1792 chhakado rickshaws and got them temporarily registered with the RTO, Ahmedabad, out of which 41 chhakdas were cleared on payment of duty. The rest 1751 Chhakados have not been accounted in their statutory records and the same were clandestinely removed tantamounting to clandestine manufacture and clearance by them by evading central excise duty on the said illicit clearances. They have also undervalued the Chhakados manufactured and cleared by them licitly or illicitly. They also failed to pay MV cess on the said clearances made by them illicitly or illicitly. Thus, M/s. Rajeshree Auto Meche have contravened the following provisions of Central Excise Act, 1944 and the Rules made thereunder:

(i) Section 3 of the Central Excise Act, 1944 in as much as they have cleared the excisable goods without payment of appropriate central excise duty (ii) Rules 4 and 8 of the Central Excise Rules, 2002 (here-in-after referred to as “CER, 2002”), in as much as they failed to discharge appropriate Central Excise duty payable on the finished excisable goods viz. Chhakado rickshaws, cleared to various buyers, at the appropriate time and in the manner prescribed under the said Rules (iii) Rule 6 of CER, 2002, in as much as they have failed to remove the excisable goods on payment of appropriate Central Excise duty and follow proper procedure regarding self determination of duty as prescribed in the said Rules (iv) Rule 10 of CER, 2002, in as much as they have not maintained the account of such stock of finished excisable goods manufactured and clandestinely removed by them, without making appropriate entries in the statutory stock register in Form ‘Daily Stock Account’ and/or private Stock Account of finished excisable goods, as prescribed under the said Rules (v)Rule 11 of CER, 2002, in as much as they failed to prepare proper Central Excise invoices in respect of goods clandestinely cleared, as prescribed under the said Rules (vi) Rule 12 of CER, 2002, in as much as they have furnished false monthly returns without including the details of manufacture and clearance of such finished excisable goods which were clandestinely cleared (vii) They have procured and consumed required raw materials for manufacture of the Chhakado Rickshaw, but did not account for all such raw materials in their records and thereby contravened the provisions of the Central Excise Rules, 2002 and the supplementary instructions issued there under, in as much as, they failed to account for the impugned quantities of raw materials and excisable goods manufactured out of it in their books of accounts, and have dealt with the said goods in the manner not prescribed under the Central Excise Act and the Rules made there under. 49.1 In view of aforesaid violations of Central Excise Act, 1944 and Rules made there under ,I hold that M/s. Rajeshree are liable for penal action under rule 25 of the Central Excise Rules, 1944. I also hold that they with a malafide intent have evaded the central excise duty by way of fraud, wilful mis-statement, suppression of facts and contravention of the provisions of Central Excise Act, 1944 and Rules made there under. Therefore, I hold that M/s. Rajeshree are liable to penal action under Section 11AC of the Act, ibid. Due to the aforesaid reasons, the C. Ex. duty not paid

by way of clandestine clearance is recoverable from them by invoking extended period of 5 years as per proviso to Sub-section (1) of Section 11A of the Act, ibid. I also hold that the reasons for invoking extended period of 5 years have been fully justified They are also liable to pay interest under Section 11AB of the Act, ibid on duty not paid or short paid by them.

49.2 I hold that all these acts of contravention on the part of M/s Rajeshree which have been committed with a sole intention to evade payment of C. Ex. Duty. They have suppressed the fact of manufacture and clearance of excisable goods from the department and cleared their goods without payment of duty by reason of fraud, willful misstatement and by suppressing the material facts and therefore duty totally amounting to Rs.1,68,67,591/- (as detailed in Annexure D-1 to D-4 to the notice no.DGCEI/AZU/36-93/2009-10) is required to be recovered from them under the proviso to section 11A(1) of the Central Excise Act, 1944 by invoking extended period of limitation of five years along with interest under section 11AB of the said Act. Further, the assessee has rendered themselves liable to penalty under section 11AC of the said Act for the acts and omissions as described above.

50. I refrain from imposing personal penalty on Shri Gunvat S. Humbal, Proprietor of M/s. Rajeshree Automeche under rule 26 of CER 2002 as proposed in both the Show Cause Notices as the noticee’s firm is a proprietory concern and the same is not a different legal entity from the proprietor. My view is further supported by the following decisions

In the case of Hisaria Electronics V/s. Commissioner of Central Excise, Delhi reported at 2009 (235) E.L.T. 732 (Tri. - Del.) (Final Order Nos. 765-767/2008-EX(PB), dated 7-10-2008 in Appeal Nos. E/2116-2118/2005) wherein the Hon’ble Tribunal has held that the proprietary concern is not a different legal entity from the proprietor. We accordingly set aside the separate penalty of Rs. 15 lacs imposed on Shri Devki Nandan Aggarwal.

In another case, the Tribunal in the case of Jai Timber Company V/s. Commissioner of Central Excise & Customs, Bhopal reported at 2009 (234) ELT 457 (Tri-Mumbai) wherein it is held that Penalty upheld on proprietary concern – Proprietor concern and proprietor are one and the same in the eye of law – separate penalty on proprietor set aside – Rule 209A of erstwhile Central Excise Rules, 1944 – Rule 26 of Central Excise Rules, 2002.

51. In view of above discussion and findings for both the SCNs, I pass the following order:

:: ORDER ::

(i) I confirm the demand of Central Excise duty including M.V.cess amounting to 1,68,67,591 /- (Rupees One crore Sixty Eight Lakh Sixty Seven Thousand Five Hundred Ninety One only) (CENVAT 16247858/-, Edu. Cess ` 324957/- and H.Ed. Cess `120778/- + M.V.Cess Rs. 173998/-), not paid on Chhakado Rickshaws, manufactured and clandestinely cleared by them during the period from December 2005 to June 2010, as detailed in Annexure D-1 to D-4 to the SCN, under the provisions of erstwhile Section 11A of the Central Excise Act, 1944 by invoking extended period of 5 years as per erstwhile proviso to sub-Section (1) of said Section 11A;

(ii) I impose a penalty of 1,68,67,591/-[ Rupees One crore Sixty Eight Lakh Sixty Seven Thousand Five Hundred Ninety One only] on M/s. Rajeshree Automeche under the provisions of erstwhile Section 11AC of the Central Excise Act, 1944 read with Rule 25 of Central Excise Rules, 2002;

(iii) I do not impose any personal penalty under Rule 26 of Central Excise Rules, 2002 on Shri Gunavat Sureshbhai Humbal, Proprietor of M/s. Rajeshree Automeche as per the discussion made at para No. 50.

(iv) I order recovery of interest at the appropriate rate on the amount confirmed under sub-para (i) above, under erstwhile Section 11AB of Central Excise Act, 1944.

(v) I order for confiscation of the seized goods viz. 2 Nos chhakado rickshwas totally valued at Rs. 1,05,000/-, as detailed in the Show cause notice under Rule 25 of the Central Excise Rules, 2002. In terms of provisions of Section 34 of CEA' 1944, I give an option to the noticee to pay a redemption fine of Rs. 27,000/-( Rupees Twenty Seven Thousand only) in lieu of confiscation in respect of SCN No. DGCEI/AZU/36-02/2010-11 dated 01.04.2010.

.

(vi) I impose a penalty of Rs. 15,000/- ( Rupees Fifteen Thousand only)] on M/s. Rajeshree Automeche under the provisions of Section 11AC of the Central Excise Act, 1944 read with Rule 25 of Central Excise Rules, 2002 in respect of SCN No. DGCEI/AZU/36-02/2010-11 dated 01.04.2010.

(vii) I do not impose any personal penalty under Rule 26 of Central Excise Rules, 2002 on Shri Gunavat Sureshbhai Humbal, Proprietor of M/s. Rajeshree Automeche as per the discussion made at para No. 50 in respect of SCN No. DGCEI/AZU/36-02/2010-11 dated 01.04.2010.

In terms of the provisions of erstwhile Section 11 AC of Central Excise Act 1944, where such duty, as determined under sub-section (2) of erstwhile Section 11A and the interest payable thereon under erstwhile Section 11AB of the Central Excise Act, 1944, is paid within thirty days from the date of the communication of the order of the Central Excise Officer determining such duty, the amount of penalty liable to be paid by such person under this section, shall be twenty-five per cent of the duty so determined.

52 Accordingly, M/s. Rajeshree Auto Meche, 285, Yadunandan Estate, Opp: Simla House, NH 8, Rakhial, Ahmedabad is given an option to avail the offer of payment of reduced penalty amounting to 42,16,898 /- (i.e. 25% of ` 1,68,67,591/-) under erstwhile Section 11AC of the Central Excise Act, 1944, subject to the condition that the entire amount of Central Excise Duty determined and confirmed in above para alongwith interest at the appropriate rate is paid within the period of thirty days, of the communication /receipt of this order. If the same is not paid within 30 days of receipt of the order, then the said option will not be available to them and they will be liable to pay the entire amount of penalty of 1, 68, 67, 591/-and Rs. 15,000/- as imposed on them, under erstwhile Section 11AC of the Central Excise Act, 1944.