TMI Blog1999 (5) TMI 127X X X X Extracts X X X X X X X X Extracts X X X X ..... f intelligence that the appellant was misusing the facility of Chapter X of Central Excise Rules, 1944 by showing excess issue of inputs in the relevant records than their actual use and disposing the same in the manner other than as specified in the application for grant of registration for procuring non-duty paid inputs under Rule 192 ibid, a team of Central Excise Officers visited the factory premises of the appellant on 16-6-1993 and conducted physical varification of stocks of finished goods and non-duty paid inputs (brought for special industrial purpose, under the aforesaid chapter X) in presence of the representatives of the appellants, Shri Devendra Srivastava, Store Incharge, Shri Raj Kumar Sharma, Store Keeper and two independent witnesses. Two verification reports which were part of the Panchnama dated 16-6-1993 marked as Annexure `A (for non-duty paid inputs brought under Chapter X ibid) and Annexure `C (for finished goods) were prepared. 4. The Officers found RG 1 Register in which the appellant was maintaining stock of excisable goods on which it was paying duty. However, the finished stock in the factory as well as in the books was nil on that date. 5. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prepared by him on the basis of RG 16 register and signed by the Shri Ajay Kumar Agarwal. 12. In view of the non-production of records by the appellant, despite repeated reminders and summons as aforesaid, the officers again visited the factory premises on 16-8-1996 alongwith Shri Pradeep Poddar, Chartered Engineer to find out the actual quantity of inputs it s type contained in their respective final product manufactured by the party. 13. On examination of the goods and dismantling thereof, report was prepared by the said Chartered Engineer. Gist of the said report is as follows :- (A) 5 types of centrifugal water pumps. One piece of each variety of water pumps was got dismantled by Shri Pradeep Poddar and Officers in the presence of Shri Ajay Kumar Agarwal, Shri S.B. Tewari, the Testing Engineer of the party and two independent witnesses. The bearings fixed with each Model were verified and a chart marked as Annexure (A-I) was prepared to this effect on the spot by Shri Pradeep Poddar, Chartered Engineer. (B) Similarly, Diesel Engines of various Models available in the factory were ascertained and a separate chart marked as Annexure (A-II) was prepared by Shri Pradeep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... double piston) engine except fuel tank which was used in single number, all the other major components/inputs were used in two numbers. But on perusal of resumed challan book for the period 24-6-1992 to 21-7-1992 (only made available by the said party) in respect of the clearances of diesel engines, and the sale invoices for the period 1-4-1993 to 16-6-1993 (only made available by the party) it can be seen that the party had not cleared any 10 H.P. diesel engine (double piston) from their factory premises. Thus, it can be concluded that the said party was not engaged in the manufacture of double piston diesel engine of 10 H.P. during the relevant period of this case. Hence, on application of above referred ratio of consumption of major inputs/components, the figures of actual use of inputs in the manufacture of diesel engine (quantity of final product as shown in RG-16 register against the major inputs) was worked out for the period 1-12-1991 to 16-6-1993, the details of which are shown in Annexure D". In the case of diesel engines also, excess issue of inputs had been shown against actual consumption. (m) the difference in the actual stock of inputs (brought by the party under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then they should have been got dismantled as on 16-6-1993, (i.e. on the date of search). But it was not done. (d) the officers took for granted that during the period from 1-12-1991 to 16-6-1993 same types of centrifugal water pumps diesel engines were manufactured as were available on 16-8-1996. The officers have not given any reason for presuming the type of centrifugal water pumps diesel engines manufactured during 1-2-1991 to 16-6-1993 to be identical to those available on 16-8-1996. (e) the officers also did not collect and correlate the various internal records to ascertain the number and type of various centrifugal water pumps and diesel engines manufactured during the period 1-12-1991 to 16-6-1993. (4) the figures worked out by the officers are purely imaginary, hypothetical and based on presumption. (5) the demand accordingly is based on pure surmises and presumptions without any evidentiary value and lawful standing. The Hon ble Supreme Court in Oudh Sugar Mills Ltd. v. Union of India, 1978 (2) E.L.T. (J 172) (S.C.) have held that the show cause notice to be based on some facts and specific data specific allegations should not be based on inferences drawn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting authority but those have been totally ignored. The adjudicating authority, he submits, has come to his own predetermined conclusion without examining the pleas of the appellant and the evidence adduced by it. He therefore prays for setting aside the impugned order and allowing the appeal. 23. We have heard both sides and we have carefully considered the pleas advanced from both sides. We agree with the ld. Advocate Shri A.K. Jain that the appellants have taken a number of pleas based on documents. They also undertook to produce all the various sale invoices/and bills but the authority never directed the appellant to do so and get them examined. They produced the following evidence before the adjudicating authority :- (a) details of Ball bearings used in the production of centrifugal water pumps/pumps with trolly from 1-12-1991 to 16-6-1993 which were purchased under Chapter X procedure. (b) details of inputs purchased by them under Chapter X procedure and used in the manufacture of I.C. diesel engines during 1-12-1991 to 16-6-1993. (c) charts showing details of items manufactured by them for the month of December, 1991 to June, 1993. (d) internal audit report for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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