TMI Blog1991 (8) TMI 201X X X X Extracts X X X X X X X X Extracts X X X X ..... iod from July, 1983 to January, 1984, as mentioned in para 10 above, under Rule 9(2) of the Central Excise Rules, 1944 read with the proviso to sub-section (1) of Section 11A of the Central Excises and Salt Act, 1944. The Collector has also imposed a penalty of Rs. 7 lakhs under sub-rule (1) of Rule 173Q of the Central Excise Rules, 1944. 2. The facts of the case leading to the adjudication are stated in the show cause notice dt. 28-1-1985 issued by the Supdt. of Central Excise, Baroda. It is alleged that the factory of the appellant was visited by the officers of Central Excise (Preventive) on 5-5-1984 for preventive checks and it was found that in the course of their checks, the officers found that the assessee was engaged in the manufacture of (i) Vegetable non-essential oil (VNE oil); (ii) Vegetable Products; (iii) Soap (with the aid of power); and (iv) All other goods not elsewhere specified falling under Tariff Items 12,13,15(1) and 68 of the First Schedule to the Central Excises and Salt Act, 1944. It was further alleged in the course of their said checks, the officers came across one private register showing day-to-day production of Vegetable Products and Soap manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was looking after the General Administration of the Company; (vi) Statement of Shri Jayantibhai F. Patel, Director of the Company,, who admitted that he is controlling the production of different items in the factory and the said production took place according to his direction and dispatches were normally made through road-ways through hired trucks and the excise work of the factory was dealt with by him and he signs all the registers. He has stated that the day-to-day production of Vegetable Products and Soap mentioned in the private register had been manufactured in their factory and the same had also been cleared without leaving any balance out of the said production. He. further clarified that the production shown in their private register of their factory did not tally with the production of R.G, 1. As per their private register, they had manufactured and packed 3,48,306 tins of Vegetable Products and 3138 tins cases of soap during the period from 1-7-1983 to 22-11-1983, while in R.G. 1 register the figures shown were 3,25,600 tins of Vegetable Product and that there was no accounting of single case of soap in R.G. 1 register for the said period. He stated that he was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise duty. They were asked to explain as to why penalty under clauses (a), (b) and (d) of sub-rule (1) of Rule 173Q of the Central Excise Rules, 1944 should not be imposed on them and duty be recovered under proviso to sub-section (1) of Section 11A of Central Excises and Salt Act, 1944 read with Rule 9(2) of the Central Excise Rules. 4. The assessee filed their reply to the show cause notice on 19-5-1986 and also by further reply on 10-6-1987. They have denied all the allegations made in the show cause notice and inter alia, submitted that; (i) The quantity shown in the said private register were of unfinished or incomplete goods and therefore at that stage the goods were non-excisable and no demand of duty can be made, much less on unwarranted conclusions/presumptions, for such non-excisable goods, as the goods were not yet manufactured; (ii) The department had not disputed the version that the quantities in the said private register were of vegetable oil in liquid form, and that the said register was maintained for labour control and statistical purpose. They contended that the department had drawn illogical conclusions and had made allegations without dischargi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied on the statement of Sh. Raj Kumar and that of J.F. Patel. She has held that the contention of the assessee that the total despatches for the entire relevant period as recorded in the private register (1,16,624 tins) are much less than the despatches entered in R.G. 1 register (3,53,597 tins), which establishes that there was no illicit removal was also rejected. The learned Collector has held that from the comparative figures of despatches furnished in a worksheet along with reply to the show cause notice dated 10-6-1987, it is seen that in most of the cases figures mentioned in the private register against the word despatch tally with the clearances as mentioned in R.G. 1 register. She has concluded that this would mean that the entries made in the private register were authentic and correct. She has further concluded that this also establishes that the assessee has intentionally not shown the figures of despatches in private register on certain days in each month, that is, July, 1983 to November, 1983 so that the entries in R.G. 1 register can be adjusted as per their convenience. She has held that the same reason is attributable to the difference between the production ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and investigation conducted by the department, inter alia, appellants have submitted that the impugned order has been passed on mere assumptions and presumptions in utter disregard to the factory and circumstantial evidence available on record. They contended that the learned Collector has glaringly erred in brushing aside the strong documentary evidence in the form of GP. 1 details furnished by them alongwith their reply to the show cause notice which covered each of the said,22 consignments against which charge had been made. They contended that the Collector has erred in basing her decision entirely on the confessional statement of Shri Jayantibhai F. Patel. They contended that there were several discrepancies in the chart annexed to the show cause notice prepared by the department had not been looked into by the Collector. They gave the following three illustrations which reflect the said discrepancies : (A) Against Column 12 of the chart, quantity shown is 600 .Ghee Soap , there is no specification as to how much quantity is given to Ghee and how much for soap cartons. They contend that the entire quantity is for soap. (B) Against Serial No. 16, the quantity shown is - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and finished Vegetable Oil (Vanaspati). On the other hand they contended that the difference in production figures in the said private and R.G. 1 registers directly support the fact that there were many factors for logical variation in the said two sets of figures in the said private register and in the R.G. 1 register. Therefore, they contended that the private register cannot be considered as an authentic and valid piece of evidence and the findings based entirely on the said private register is not legally sustainable. 12. Shri A. Hidayalullah, learned Sr. Advocate appearing along with S/Shri Willingdon Christian and Vikram Nankani argued extensively and painstakingly pointed out to several entries in the private register along with R.G. 1 register and submitted that the findings of the learned Collector based solely on the entries in the private register are wholly unsustainable and not supported by law. He contended that the private register only indicate the total quantity of dispute made but he did not reflect that the despatch was outside the factory. The register also did not reflect about the extent of production. He contended that the private register had been enter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gister is clearly indicates that at times the machines had failed and tins have not been removed. Some remarks indicated that empty tins had arrived from trucks for filling purpose. Some remarks indicated that due to non-availability of tins filling had stopped at certain time. He further pointed out that in certain remarks the tins had remained in production room as provided in the cold room and filling had to be stopped. He pointed out to individual remarks in each page of the private register and showed that the impugned private register could not be taken as a document affecting clandestine removal of the finished goods. He contended that the details of the private register clearly indicates that they were of reflection of production work and instructions left by the persons who filled the tins to the next batch of workers to cover the work in batches. He further submitted that private register had been voluntarily given by the assessees themselves which clearly showed that there was nothing to hide and suppress the facts. The Collector has not even going into the details of it and has come to erroneous conclusions without application of mind and due consideration of the entire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Kashmir Vanaspati (P) Ltd. v. Collector of Central Excise reported in 1989 (39) E.L.T. 655 and also that of Raza Textiles Ltd. v. Collector of Central Excise reported in 1989 (44) E.L.T. 233 (Tribunal). He also relied on the following rulings : (i) Carona Cosmetics and Chemicals Pvt. Ltd. v. Collector of Central Excise, Kanpur - reported in 1990 (28) ECR 223 (ii) Prabhavati Sahakati Soot Girni Ltd. v. Collector of Customs and Central Excise - reported in 1990 (48) E.L.T. 522 (Tribunal) (iii) Oudh Sugar Mills Ltd. v. Union of India - reported in 1978 (2) E.L.T. (J 172) (iv) M/s. Ebenezer Rubbers Ltd. v. Collector of Central Excise, Ahmedabad - reported in 1986 (26) E.L.T. 997 (Tribunal) = 1987 (10) ECR 407 (v) Ambica Metal Works v. Collector of Central Excise, Calcutta - reported in 1990 (29) ECR 549 (CEGAT ERB) (vi) Lili Foam Industries (P) Ltd. v. Collector of Central Excise - reported in 1990 (46) E.L.T. 462 (Tribunal) (vii) Ganga Rubber Industries v. Collector of Central Excise - reported in 1989 (39) 650 (Tribunal) (viii) Jagan Nath Dalip Singh v. Collector of Central Excise - reported in 1990 (47) E.L.T. 369 (Tribunal). 14. Shri Nankani, Advoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the order of the Bench in 426/91-C dated. 10-5-1991 pertaining to period from July 83 to November 83 would be applicable and the demand may have to be dropped. 16. We have carefully considered the statements made by both the sides and perused the records and the contents of the private register, statements of the various witnesses and also the Case Law cited by the learned Advocate. The main question arises for our consideration in appeal is as to whether the allegation of alleged clandestine removal based on the private register produced by the appellants themselves without any corroborative evidence, verification, tallying with production input register and without considering the various replies and grounds urged by the appellants is sustainable in law. 17. As has been pointed out elaborately from the charges made out in the show cause notice, it is very clear that the private register had been produced by the assesses themselves maintained from 1-7-1983 to 22-11-1983. The officers have scrutinised it and compared it with R.G. 1 register maintained by the assessees for the said period and have alleged that 22,706 tins of 16.5 kgs. of vegetable products valued at Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s given in the reply to the show cause notice by the assessee tally with the allegation and has upheld the charge. This approach of the learned Collector, unfortunately, is without application of mind and the findings based on such a cursory look is not sustainable at all. On a perusal of the statements made by the witnesses S/Shri M.K. Kale, Mohanbhai J, Dalwadi and Ramesh Chandra A. Vyas, Supervisors, it is clear that they had explained in categorical terms that this register produced by them was maintained for production purposes. They had also pointed out several remarks made by them in the register. They have clearly indicated that filled tins from filling machines were sent to cold storage. They also clearly stated that they had maintained this private register in their own handwriting in Gujarati or in Hindi. They had also stated that they were not supervising or making note of vegetable ghee which was going out of the factory. Shri Mohanbhai Jivabhai Dalwadi had stated that he was looking the work done by the labourers and putting the filled and sealed tins in cold room through them. He stated that the particulars in the private register were written by shift Supervisors wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Patel also does not in any way support the department. He has clearly stated that the difference in the entries in the private register and the R.G. 1 will be explained by the Supervisor. This does not indicate that there has been a clandestine removal and admission of removals without payment of duty. He has clearly stated that production shown in the private register have been accounted in the R.G. 1 and the same were subjected to duty. Therefore, the learned Collector has erred in merely stating that the goods have been removed without payment of duty and this finding is not sufficient to uphold the order. The admitted position is that the private register reflects the production figure and the various difficulties faced by the Supervisors are entered in the remark column. We have carefully gone through the every page of the private register and have also checked the entries in the R.G. 1 register which was produced by the JDR for our perusal. There is nothing to indicate that this private register reflect the clandestine removal of goods manufactured by the appellant. The department admits the contention of the appellant that the goods removed from the production room were in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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