TMI Blog1997 (4) TMI 253X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, residential premises of Shri V.K. Lila, Managing Director of the firm were raided on 4-11-1988 and a huge number of incriminating documents were recovered and seized. Simultaneously, the factory premises were also searched and re-cords/documents recovered were seized. Spot enquiries also revealed that the appellants had leased out the said factory to M/s. United Technocrat Pvt. Ltd. 3. Shri V.K. Lila, in his statement dated 4-11-1988 admitted the recovery of records and documents. He also admitted that on some of the account books, name of M/s. Superior Steel Products (P) Ltd. appeared. 4. The statement of Shri O.P. Gupta was also recorded who deposed that he was managing production, labour and other liasion work with M.S.T.C., M.M.T.C. and Department of Import and Export and Industry. He stated that he had occasions to examine the confidential accounts/trial balance sheet and provisional profit and loss accounts of the appellants and found that the management was concealing production and sales/purchase of raw materials and evading Central Excise duty. He stated that his salary and perks were not being shown in their statutory books and that he left the job on 12-10-1985. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , only 489.01 MT were shown. The amount of rolling charges for the period Jan. 1985 to June 1985 were shown as 12,07,382.58 whereas in the statutory ledger, it has been shown as Rs. 3,16,483/-. Similarly in the document A-32 at page 10, the amount of sale proceeds were shown as 4,16,96,378/- whereas in the statutory ledger for the year 1984-85, the total value of sales were shown as Rs. 1,17,49,098.03. 7. It appeared that the actual purchase of raw material, sale of ingots and flats production were not reflected in the statutory records and that only a part of such transactions/productions were recorded therein. Accordingly a show cause notice was issued to the appellants asking them to explain as to why duty amounting to Rs. 23,92,805.50 should not be demanded from them and why penalty should not be imposed on them along with the persons concerned with the clandestine removal of the goods. In reply to the show-cause notice, the appellants submitted that the records on which the case has been made out were not recovered from the possession of Shri V.K. Lila; that they were brought to the drawing room of Shri Lila by S/Shri O.P. Gupta and Deepak Gupta on 4-11-1988; that O.P. Gupta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by DESU and its enforcement staff; pilferage of electricity was noted by DESU in Jan. 1989 when the factory was being run by another party to whom the factory had been leased out in August, 1987, while the demand was up to Aug., 1987; that electricity was not consumed only for production but for other non-production activities as well; that the deptt. has not brought on record any evidence to show that for production of one ton of ingots 650 units of electricity were required. 10. Ld. Counsel submitted that though the statements of B.N. Paul, S.K. Sharma and R.K. Sharma were relied upon yet they were not produced for cross-examination. In support of his contention that if the witnesses whose statements have been relied upon are not produced for cross-examination then the statements cannot be relied upon. Ld.Counsel cited a number of case-law. A few of them were reported in 1987 (167) ITR 498 (SC), AIR 1986 (SC) 995, 1977 (3) SCR 233, AIR 1972 (SC) 330 and AIR 1996 (81) E.L.T. 276. 9. Ld. Counsel submitted that the extended period is not invokable in their case as the appellants were entitled to proforma credit up to 28-2-1986 and thereafter they were entitled to deemed Modvat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty or was sold at the price that calculations have been made presuming the records to be what they were not and that the persons whose statements were relied upon were not produced for cross-examination and therefore, prayed that the appeal may be allowed. 13. Shri Y.R. Kilaniya, ld. DR submitted that the documents relied upon really show that the raw material was purchased which was not accounted for, that heat register was maintained showing the number of times the material was produced, that consumption of electrical energy was thereto show that a larger quantity of the final product was manufactured; that these documents have been explained by the persons who kept them; that all these factors and others have been adequately dealt with by the adjudicating authority. Reiterating the findings in the impugned order, the ld. DR submitted that duty has rightly been demanded and penalties are fully justifiable in law. 13A. Heard the submissions of both sides. A number of issues were raised and were argued by the ld. Counsel for the appellants. The first argument was on the jurisdiction of the Principal Collector and that Shri S. Kak, Collector had no jurisdiction. It was argued by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and on seeing the registers recovered from the factory premises, stated that entries were made in the laboratory for maintaining the analysis report of every heat of casting ingot and scrap of iron. Against this statement of Shri S.P. Gupta, the appellant submitted that since S.P. Gupta was not produced for cross-examination and since Shri O.P. Gupta was the informer of the deptt. the statements should not be relied. On analysis of the evidence on record, we find that Shri S.P. Gupta only explained the entries made in the registers and had confined his statement to the explanation of the entries. Thus non-production of Shri S.P. Gupta for cross-examination does not vitiate the proceedings inasmuch as he had only explained the entries made in the register and the register was in the form of a self contained document. 16. Shri V.K. Lila, Managing Director of M/s. Superior Steel Products Pvt. Ltd. in his statement stated that he was sending ingots to different rolling mills for conversion into flats; that he used to sell the flats in the market; that Shri Lila after seeing the panchnama confirmed that the two heat registers were recovered from the premises of Superior Steel Produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find that Shri O.P. Gupta was produced for cross-examination who in the cross-examination also confirmed what he had stated earlier. From the statement of all the persons named above, we find that these were in Explanation to the entries made in the record. We find that looking to the number of heats electricity consumed, raw material purchased, the deptt. has been able to establish the case beyond reasonable doubt. No doubt in this type of transactions, it is impossible to make out a fool proof case but looking to the facts and circumstances of the case that there was a register which contained information about heats and the admission of the appellants as to the production per heat, the quantity has been calculated. We also note that this production is supported by more consumption of electricity. We find that here is technical literature which shows that for production of ingots and castings of one ton in induction furnace, 650 units of electricity are consumed. Thus there is reasonable proof on this score also. We also note that the deptt. has able to show that sufficient raw material was procured by the appellants which was not shown in the records and which was used for cland ..... X X X X Extracts X X X X X X X X Extracts X X X X
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