Excise duty evasion case against Dhariwal Ind admitted by Guj HC

Gujarat High Court has admitted a duty evasion appeal filed by the Commissioner of Central Excise, Customs and Service Tax against Dhariwal Industries Limited (DIL), a leading pan masala and gutkha (PMG) maker selling products under the brand name ‘RMD’ previously known as ‘Manikchand’.

The appeal by the central excise department was against an order of Central Excise and Service Tax Appellate Tribunal (CESTAT) which had granted relief to DIL in Rs 1.39 crore duty evasion case filed by the central excise department.

Excise department’s counsel, Yogesh Ravani, said that the division bench of Justices V M Sahai and N V Anjaria on Tuesday had admitted the appeal requesting the court to frame substantial question of law for its consideration. The department has also sought the court to quash and set aside the CESTAT’s order.

The appeal was filed in 2010 but was admitted on Tuesday after the court found that the excise department has made out a prima facie case against DIL.

The excise department’s petition said that PMGs worth Rs 2.77 crore were cleared without payment of excise duty of Rs 1.39 crore, which was the demand raised by the department towards Modified Value Added Tax (Modvat).

This was besides seizure of goods amounting to Rs 78 lakh during raids at various premises of the company and penalty on company’s director Rasiklal Manikchand Dhariwal.

The department had then issued showcause notices to the company towards recovery, which was challenged by the company in CESTAT. The tribunal rejected department’s application in 2009. This led the department to move the HC.

According to the petition filed the Central excise department, in 1994, the department came to know that DIL was evading central excise duty by not accounting total receipt of printed laminated rolls (PLRs) and other packaging materials. It further claimed that the company was showing greater consumption of PLR in packing the product than the actual consumption.

The department had further claimed in the petition that the company was not accounting total quantity of (PMG) manufactured and was secretly ‘clearing’ the same.

It claimed that the clearance of PMG was without marks and numbers. The department further claimed that the company had been giving forged names of consignors and consignees while clearing PMGs.