TMI Blog1994 (6) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... -1986 and verified the accounts and stock of Bidi physically. The stock of bidi agreed with the book balance. Thereafter the officers collected intelligence at the said factory that non-duty paid bidis were stored in the residential premises just adjacent to the factory of Shri A.N. Guha, Partner of M/s. A.N. Guha Co. Then the officers on the strength of a search warrant issued by the Assistant Collector, Central Excise and Customs, Sambalpur searched the aforesaid residential premises and recovered 61,000 Nos. of unbranded bidis packed in 500 bundles kept in two baskets, from the underneath of the cot lying in the second room of the second floor of the residential premises which is not an approved premises under Central Excise Law. These biris fully manufactured and packed were not accounted for in the prescribed register and therefore the officers seized the biris under a Panchanama in the presence of Shri A.N. Guha and in the presence of two independent witnesses with the reasonable belief that these biris are not duty paid and not accounted for in the statutory records and the same are liable to confiscation. On further scrutiny of records, seized from the premises the office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for sale and kept in his premises without his knowledge since he was out of station. Then the officers seized the biris and kept the same under his custody until further orders. Then on being asked by the officers to produce the transit notes etc. related to manufacture and sale of biris, he produced the required documents to the officers in his office. The officers resumed the same for further detailed verification. There is no provision of rolling biris inside their factory premises. They are only receiving unlabelled hand-made biris from their agents. All their agents possess valid L-2 licences. All unlabelled hand-made biris are received by them under transit notes. The amount of Octroi Tax which has been paid by the agents at the Octroi post while bringing the biris is reimbursed by them. Out of their total 19 agents, they are having two agents namely Shri Madhabram Idqh and Shri Balaram Oram, Digitpall inside the Municipality area, Sambalpur and the rest 17 other agents are from outside Municipality area of Sambalpur town. The entire quantity of biri tobacco received by them are being used for manufacture of biris. They are selling branded biris only. He further stated that h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fer for the reason best known to the person collecting Octroi tax. They on the basis of the transit notes make entry in R.G. 12B register, and the total quantity received against a particular day is more than that of the quantity mentioned in the Octroi receipts. The entire allegation in this respect is purely based on presumption and/or assumptions since they do not tender Octroi tax but the person passing through octroi post reports to the Octroi. They annexed a statement co-relating the transit notes and octroi receipts. They also further stated that they have 19 contractors/agents who are manufacturing raw biris on their behalf, and out of those 19 contractors/agents, 17 are situated outside the Municipality area and pay Octroi tax at the time of making delivery of biris to them and necessary amount paid as Octroi tax are reimbursed to them on production of Octroi tax receipt. The Department has alleged removal on the basis of octroi tax receipts without taking into account the account of biris as per transit notes, the department have not taken into account the entries based on transit notes with the corresponding Octroi tax paid by the said contractors/agents. The number of b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this regard. It is also pointed out that the Appellants are working under the physical control system. He also pointed out that the quantity mentioned in the octroi receipts cannot be given any importance in view of the fact that the declaration made at octroi check post by the contractors or the agents cannot be taken as reliable. Since the Appellants did not tender octroi tax, they cannot be held responsible for any fictitious entry and it is not permissible for the department to ignore the transit not which is the basic document for entry of manufacture in excise records. 9. He also contended that the contractors or agents maintained EB-3 Register wherein the quantity manufactured and delivered to the Appellants are mentioned. This was not verified by the Department and, therefore, clandestine removal is not proved in this case. As regards the confiscation of 61,000 biris found at the residential premises of one of the partners of the Appellants, he contended that they are actually damaged biris and were kept at the premises to retrieve the tobacco from the damaged biris. Shri A.N. Guha, Partner of the Appellant Company, in his statement dated 22-10-1986 had categorically st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctroi gate. The Appellants would have received the biris from these two contractor agents of Sambalpur in addition to the biris which they have received from 17 contractors outside Sambalpur area. These biris received from these two contractors are unaccounted. The seized octroi receipts have no supporting transit notes and Shri Mandal, therefore, pleaded that it is established that the biris received under cover of octroi tax receipts have not been accounted for. Shri Mandal also pointed out that in 79 cases, the reconciliation was possible since in those cases the biris mentioned in the octroi tax receipts tallies with the transit notes furnished by them and this benefit was extended to the Appellants by the learned Collector. The total number of such biris come to the extent of 40,69,000. The Collector also found that there was a mistake of 10,57,500 biris which were shown as excess in the show cause notice, as contended by the Appellants. This benefit was also extended to the Appellants. Accordingly, the Appellants were ordered to pay duty in respect of 3,33,89,500 biris instead of 3,85,16,000 as mentioned in the show cause notice. He, therefore, justified the orders. 11. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not possible for the Department to prove the same with mathematical precision. The Department is deemed to have discharged their burden if they place so much of evidence which, prima facie, shows that there was a clandestine removal if such evidence is produced by the Department. Then the onus shifts on to the Appellants to prove that there was no clandestine removal. In the case of Collector of Customs, Madras v. D. Bhoormull reported in 1983 (13) E.L.T. 1546 (S.C.) = 1985 ECR 2284 S.C. = ECR C Cus 908 S.C. wherein at para-32, the Honourable Supreme Court held as follows :- 32. Smuggling is clandestine conveying of goods to avoid legal duties. Secrecy and stealth being its covering guards, it is impossible for the Preventive Department to unravel every link of the process. Many facts relating to this illicit business remain in the special or peculiar knowledge of the person concerned in it. On the principle underlying Section 106, Evidence Act, 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 the presumptive evidence adduced by the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wise in view of the fact that when the Department found that these octroi receipts are not supported by the transit documents, they have discharged their initial onus. This special and peculiar knowledge of the Appellants with respect to those biris entered belonging to the other 17 contractors should be proved by them. The octroi receipts do not show the names of those contractors and it will be an impossibility for the Department to verify as to which octroi receipts pertain to which contractor and who supplied the same. This will be throwing an onus on the Department which it can never do. But, on the contrary, the special knowledge is with the Appellants and they should have enlightened this fact with reliable evidence. Therefore, the abovesaid clandestine removal is proved by the Department and the Appellants could not rebut the same. 13. The decisions relied on by the learned Advocate for the Appellants do not apply to the facts of this case. In the decision reported in 1990 (48) E.L.T. 460 in the case of Associated Cylinder Industries Limited v. Collector of Central Excise, the Tribunal held that the mere fact that there was difference between RG 1 balance and physical sto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this behalf. There must be some tangible evidence, either direct or circumstantial to come to this conclusion. In the facts of that case, there was no circumstantial evidence or direct evidence to prove the clandestine removal. But in this particular case, it is seen that the Appellants are in charge of the biris at the time of passing through the octroi gates. They also did not indicate as to which contractor had sent those biris and it was not possible for the Department to contact any particular contractor who had sent the consignment. There were two contractors who were within the Sambalpur Municipal area and their biris need not pass through octroi gates. The octroi receipts were recovered from the premises of the Appellants. Except 79 receipts, for which benefit was given, the other octroi receipts could not be correlated by the corresponding transit notes. These are the circumstances available in this case to prove the clandestine removal. Therefore, the above-cited decision also does not help the Appellants. 16. Reliance was also placed on a decision reported in 1990 (45) E.L.T. 285 in the case of Bimetal Bearings Limited v. Collector of Central Excise. In that particu ..... 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