Judgment:
1. Order-in-Original No. 2/Collector/MP/95, dated 9-1-1995 passed by the Collector of Central Excise, Kanpur is under challenge in this appeal.
2. Appellant was working as job worker for M/s. R. S. Essential Oil (for short, RSEO) for extraction of sandalwood oil from sandalwood supplied by M/s. RSEO. The dispute in this appeal relates to the period from 17-5-1989 to 18-7-1990. Appellant was declaring the goods manufactured and paying appropriate duty. Search of the premises of the appellant and RSEO on 31-7-1990 showed 209 letters sent by Shri Ram Baran, an employee of RSEO, addressed to RSEO referring to the sandalwood supplied and sandalwood oil received without specifically indicating the name of the appellant. Excise officers verified the quantity shown in the letters with the quantity shown in the excise records of the appellant and found the quantities referred to in 201 letters tallied. It was found that in 8 letters quantity of sandalwood oil shown were much in excess of the respective quantity shown by the appellant in the excise records.
3. Shri Ram Baran and Shri Mohan Lal Maheshwari, Proprietor of M/s.
RSEO were questioned. The proprietor stated that sandalwood oil is manufactured by the appellant on job work basis; that they did not have a distillation unit; that he had deputed three persons, Ram Baran and others to the appellant's factory to ensure quality of the oil; that Ram Baran was mainly responsible for storage and clearing of sandalwood oil and weighment thereof and was required to submit information to the proprietor either by telephone or otherwise with regard to production and that Ram Baran supervised the weighment, and packing and delivery of finished sandalwood oil.
4. Shri Ram Baran stated that he was RSEO's supervisor in appellant's factory and that the production of sandalwood oil was recorded in his presence and he was keeping his employer informed daily with regard to the daily production on the basis of weighment slips either by telephone or through letters or personally; that the letters shown to him were in his handwriting written by him to the father of the proprietor. The letters reflected the quantities of sandalwood supplied to the appellant and the quantities of sandalwood oil cleared by the appellant to M/s. RSEO.5. In reply to the show cause notice the appellant stated that excise records were full and complete and there was no clandestine removal and that the statements of Ram Baran and Mohan Lal Maheshwari were contradictory and he sought to cross-examine those two persons and the investigator.
6. The investigator and the other two persons were cross-examined on behalf of the appellant. During cross-examination of Shri Ram Baran no attempt was made to challenge the genuineness of the data contained in the 8 letters relied on by the Department. Similar was the position with regard to cross-examination of Shri Mohan Lal Maheshwari except that he stated that he was sending sandalwood to three job workers in Kannauj.
7. The adjudicating authority on the basis of the above materials held that the quantity of sandalwood oil referred to in the 8 letters of Ram Baran was, in fact, manufactured by the appellant and cleared by him without payment of duty.
8. It is contended for the appellant that the finding of production and clandestine removal cannot be based merely on private letters written by the supervisor of the supplier to his employer, particularly when it is seen that the supplier got oil extracted from two other job workers at Karmauj. Reliance was also placed on two decisions of the Tribunal, namely, Gurpreet Rubber Industries v. C.C.E., Chandigarh 1996 (12) R.L.T. 569 (T) and Metal Fitting (P) Ltd. v. C.C.E., Delhi 1997 (93) E.L.T. 747 (T). These contentions are rebutted on behalf of the Department.
9. In Gurpreet Rubber Industries case the finding was based on retracted confessional statement and private diary written by an employee of the manufacturer showing production figures and the statement of another employee. It was found that the statement of the other employee was not true. It was found that higher production entries shown in private diary could not be relied on in the presence of expert opinion showing lack of capacity of the appellant to produce higher quantity of goods. This decision does not lay down a general principle that records of an employee either of the manufacturer or supplier cannot be relied on.
10. In the case of Metal Fitting (P) Ltd. the confession had been retracted and it was found that the private records related not only to the transaction of the manufacturer but also to certain other private transactions. It was therefore held that the private records could not be relied on. This decision also does not lay down any general principle which can be of any assistance to the appellant. The weight to be attached to any particular evidence in a given case would depend entirely on the facts and circumstances of the case.
11. I have adverted to the evidence collected by the Department. The basic evidence is found in 8 letters written by Shri Ram Baran to his employer regarding supply of sandalwood and receipt of sandalwood oil without specifically indicating the name of the job worker. The contention that the data given in the chits may relate also to other job workers in Kannauj since Mohan Lal Maheswari admitted in his cross-examination that he was sending sandalwood to three job workers cannot be accepted in the light of material showing that Ram Baran was the Supervisor of M/s. RSEO supervising the job work being done by the appellant and he was responsible to convey the exact data to the proprietor. It was not suggested to Ram Baran in the course of cross -examination that he was also supervising the production in the factory of other job workers to whom RSEO was supplying sandalwood or that the 8 letters included also the production by other job workers. A supportive factor in the circumstances is that the data written by Ram Baran of production of sandalwood oil in 201 letters tallied exactly with the production figures recorded by the appellant in excise records. These circumstances clearly show that the letters written by Ram Baran relate to the production in the factory of the appellant.
There is no motive suggested for Ram Baran to incorporate higher production figures, which would have been to his own detriment since he would be responsible for the stock so far as his employer was concerned.
12. On a consideration of these circumstances, I am inclined to agree with the finding of the adjudicating authority that the quantity in question, that is, 719.500 Kg. sandalwood oil was manufactured by the appellant over and above the quantities declared in the excise records and clandestinely removed without payment of duty. Therefore, confirmation of demand has to be sustained. However, in the circumstances the amount of penalty is reduced to Rs. 25,000/- and the appeal disposed of.