Judgment:
1. The appellant filed these appeals against the order dated 24-4-1992 passed by the Collector of Central Excise, Meerut.
2. The Collector of Central Excise, Meerut vide impugned order, ordered the confiscation of 57 Bags of biris containing 1163520 bins under Rule 209 of Central Excise Rules, 1944 and gave option to the appellant to redeem the goods on payment of fine of Rs. 10,000/-.
3. The Collector also ordered confiscation of 1299120 loose unlabelled biris under Rule 209 of Central Excise Rules, 1944 and gave option to redeem the goods on payment of fine of Rs. 10,000/-.
4. The Collector also demanded duty of Rs. 18,78,783.71 under Rule 9(2) of the Central Excise Rules, 1944 read with Section 11A of Central Excises and Salt Act, 1944 from M/s. Kamal Biri Factory being Central Excise duty payable on 448129690 biris surreptitiously remanded during the period 17-2-86 to 16-11-86 in contravention of Rules 9(1), 52A, 44; 93 and 226 of the Central Excise Rules, 1944. The Collectgr also imposed personal penalty of Rs. 5,00,000/-(Rupees five lakhs) as the Kamal Biri Factory under Rule 9(2) and 209 of Central Excise Rules, 1944. He also imposed personal penalty of Rs. One lakh on Shri Khushnuder Rehman Propritor of M/s. Kamal Biri factory under Rule 209 of the Central Excise Rules, 1944.
5. Brief facts of the case are that on 17-11-88 the officers of Central Excise visited the factory and residential premises of Shri Khushnuder Rehman. Shri Khushnuder Rehman appellant is properitor of M/s. Kamal Biri Factory. During investigation 54/57 bags containing packed biris were found concealed in a room situated on the first floor of the building. The stock position was verified with the RG 12A register and it was found that 1163520 number of biris packed in 57 bags and 1299120 unlabelled biris were found in excess of the recorded balance.
6. During search certain private record was also found in the factory and also from the residential premises. The private record was maintained by the appellant on rough register Chithha Takseem, Branchwise khata, Tobacco Patta Register, Private note book. The documents were taken into possession to prove that the appellants used to manufacture biris through different persons. But this production was not shown in the record. From this private record it was alleged that appellants got manufactured 18,13,39,550 biris from different persons.
But this production was not entered in the statutory record hence no Excise duty was paid on this production. After adjudication the impugned order was passed.
7. Ld. Counsel appearing on behalf of appellant submits that the factory of the appellant was under physical control of the Revenue. In respect of 57 bags found in excess to the R.G.-I record, he submits that 54 bags were duty paid. He submits that 11 bags cleared under G.P.-I No. 34, dated 28-10-88, 25 Bags cleared under G.P.-I No. 34, dated 15-11-88 and 2 bags cleared under G.P.-I No. 32, dated 14-10-88.
These 38 bags were brought from the duty paid premises as the goods were getting affected by moisture in duty paid premises.
8. Sixteen bags were returned by the customers on account of inferior quality. On these 16 bags duty was paid at the time of clearance.
9. Remaining three bags were the production of previous day which was yet to be entered in the record.
10. In respect of excess stock of 1299120 unlabelled biris, he submits that these were not entered in record as the excise clerk was on leave.
11. In respect of 448129690 biris the counsel submits duty is being demanded on the basis of private record maintained by Shri Yusuf or Shri Kanthana. This record was not in the knowledge of the properitor of the firm. Shri Yusuf who alleged to have prepared this private record, is not examined by the respondents. He further submits that Yusuf prepared the record on being told by his competetor, against whom the appellant filed a civil suit.
12. He further submits that no opportunity to cross-examine the witness was granted to the appellant. He relied upon the decision of the Tribunal in the case of Ganga Rubber Industries v. Collector of Central Excise(Tribunal) and Kashmir Vanaspati (P) Ltd. v. Collector of Central Excise reported in 1989 (39) E.L.T. 655 (Tribunal). He therefore prays that appeal be allowed.
13. Ld. JDR submits that goods in duly packed condition were found concealed in the residential premises of the appellant Kusburchis and on verification of stock of finished goods, it was found that goods duly finished were not entered in the record. He further submits that duty is confirmed on the basis of private record maintained by the appellant.
14. Heard both sides. In this case, 57 bags of biris were found fully packed in excess to the recorded balance. The appellant submitted that 38 bags were duty paid, 16 bags were returned by the customers and 3 bags were previous days production. In respect of loose biris the appellant submitted that these were not entered in the record as their Excise clerk was on leave.
15. The Commissioner in the impugned order gave specific finding that the serial number of bags as mentioned in the Gate Passes does not tally with serial number entered in the register. In respect of 16 bags alleged to be returned by the customers. There was nothing on record to show that these were returned by the customers. No intimation to respondents was ever sent regarding return of the goods. Nor the appellants produced any customers in support of his claim. Tn respect of three bags of biris the appellant submits that this was previous days production. But this was nowhere entered in the record. The biris were received from the branchdars. No record was produced in respect of despatch of raw material and regarding return of biris from branchdars.
16. In respect of excess stock of 1299120 unlabelled biris the appellant submits that the production was not entered in the record as dealing clerk was on leave. Shri Khushnuder Rehman the properitor of the factory made a statement that there were 31 branchdars from whom they got manufactured biris. Therefore the appellant are getting biris manufactured from 31 branchdars whereas to the Revenue, they described only 4 branchdars and they have not made entry in respect of these biris in the statutory record.
17. In view of above discussion, we do not find any infirmity in the impugned order in respect of confiscation of 57 bags of biris and in respect of 1299120 biris under Rule 209 of Central Excise Rules, 1944.
18. In respect of demand of duty of Rs. 18,78,783.71 on 448129690 biris surreptitiously removed, we find that the demand is made on the basis of private record maintained by Shri Yusuf and Shri Kanthana. The appellant denied the knowledge of this private record. Shri Yusuf was not examined by the Revenue. No investigation was made from the branchdars in this respect. The Tribunal in the case of Ganga Rubber Industries v. Collector of Customs reported in 1989 (39) E.L.T. 650 held that in the case of allegation of clandestine removal the onus is on the Revenue to prove reliability of private record. When the same is disowned by the manufacturer. The entries can be verifiable by checking with transport companies. Octroi past, consignees and comparison of hand writing etc. The assessee is entitled to benefit of doubt in absence of verification. In the case of Kashmir Vanaspati v. Collector of Customs reported in 1989 (39) E.L.T. 655, the Tribunal held in the case of clandestine removal, the note book maintained by labourers containing entries is not dependable record in absence of supporting independent evidence.
19. In present case the Revenue is relying on the entries made by the employees of the appellant. One of the employee was not examined by the Revenue. No investigation was made from other sources to corroborate the entries. Applying the ratio of the decision of the Tribunal in the case of Gagan Rubber Industries and in the case of Kashmir Vanaspati (supra), we set aside the impugned order in respect of demand of duty of Rs. 18,78,783.71 on 44812960 biris.
20. In respect of penalty, we find that keeping in view the facts and circumstances of the case, the penalty on the firm M/s. Kamal Biri Factory is reduced to Rs. 50,000/-. M/s. Kamal Biri Factory is a properitory firm hence the penalty on the properitor Shri Khusnuder is set aside. The appeal is disposed of as indicated above.