TMI Blog2002 (9) TMI 603X X X X Extracts X X X X X X X X Extracts X X X X ..... premises of the firm bearing numbers E-3555-57 and 3637, located at Rajaji Puram, Lucknow. They also conducted search of the trading premises of the appellant No. 3 bearing No. E-3727, Rajaji Puram, Lucknow. During the search of the premises of the firm registered with the central excise, 55 bags of pan masala gutkha in loose condition weighing 1282 Kgs. were found but out of that 507 Kgs. was not shown in RG-1 register, wherein the balance pan masala gutkha in loose condition record was 775 Kgs. The excess pan masala gutkha was seized as proprietor of the firm K.N. Singh (appellant No. 2) could not offer any plausiable explanation for non-accountal of the same in the statutory record. As per form IV register, there were various quantities of different raw material, but no stock of raw material of pan masala was physically available in the registered premises. Regarding shortage of raw material, Shri K.N. Singh disclosed that due to paucity of space, the premises No. E-3637 and E-3727 were being used by him for storage of raw materials. The raw material kept in these premises were found to be of the value of Rs. 7,18,300/-. Similarly, from the trading premises of appellant No. 3, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated the correctness of the impugned order. 7. We have heard both the sides and gone through the record. 8. We find that the firm did not dispute the detection of shortage of raw material (essence) in the factory premises. The proprietor of the firm, appellant No. 2 namely K.N. Singh at the spot, when this detection was made on 17-2-97 while conducting search, could not offer any explanation thereto. It had also not been contested that essence is one of the raw materials used in the manufacture of pan masala. What is pan masala has been defined in Chapter 21 of the CETA. As per note 3 of the said Chapter, pan masala means any preparation containing betel nuts and any one or more of the ingredients, namely lime, katha and tobacco whether or not containing any ingredients such as cardamom, copra and menthol. Note 4 of this Chapter further defines betel nut powder which is also known as supari as any preparation containing betel nuts but not lime, katha, tobacco. The argument of the learned counsel that since betel nuts or other ingredients such as lime, katha had not been found short short or excess in the stock of the firm, no inference regarding the clandestine production ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred evidence. Even otherwise, such an evidence could not be legally available because clandestine removal is always made by the assessee in a clandestine and secret manner. The Tribunal in Siemens Ltd. v. CC CE, Calcutta-I - 1994 (70) E.L.T. 305, has even observed that in case of clandestine removal, the department will not be able to produce direct evidence. Such removal can be gathered from the circumstances. The Apex Court has also in CC, Madras Others v. D. Bhoormull - 1983 (13) E.L.T. 1546 (S.C.), made observations that on the principle underlying section 106 of the Evidence Act, the burden to establish those facts which are within the knowledge of the party, is always on the party concerned and if that party fails to establish or explain those facts, an adverse inference can be raised against him. In the instant case, the firm as well as its proprietor appellant No. 2, had failed to offer any explanation for the shortage of the raw material and the raw material found stored in the unregistered premises. From the recovery of the raw materials from the unregistered premises, detailed above and shortage of raw material, referred to above, it can be safely inferred that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The counsel has no doubt relied upon the ratio of law laid down in certain cases to contend that shortage of one of the raw materials could not lead to an inference of manufacture and removal of goods in a clandestine manner. Those are J.N.J. Industries Ors. v. CCE - 1999 (83) E.C.R. 251 (T), V.K. Thampy v. Collector - 1994 (69) E.L.T. 300 (T), Premier Packing (P) Ltd. v. Collector - 1986 (26) E.L.T. 333 (T) and Rishi Packers Ltd. v. CCE - 1999 (33) RLT 445 (CEGAT). But the ratio of law laid down in all those cases is not attracted to the facts of the present case, in the light of the discussions made above. In the first case, the clandestine removal was based on the total procurement of raw material by all the units, but the finished goods lying with the assessee were not taken into consideration. No proper deduction was worked out and for that reason, demand was set aside by the Tribunal. In other cases, the charge of clandestine removal of the goods from the material brought on record, was not proved and the demands were set aside. No corroborative evidence was also collected in those cases by the department. But in the instant case, as discussed above, there is over-whelmi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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