Judgment:
1. a) Appellants, an assessee under the Central Excise Act 1944 were having a factory in Rajkot which was visited by the officers in September 1994 and conducted enquiries. 495 Nos of connecting were found excess which was claimed as that days production. The officers also found two registers from the desk of the clerk concerned which contained the details of date, item, quantity and name of buyers of the products, the assessee was engaged in manufacture at these premises.
The period of these registers was April 94to August 94. Corresponding entries for/of production for the production and sales as shown in these registers were not shown in the statutory records ie RG1 completed up to 31.8.94.
b. A Show Cause notices dated 1.3.95, proposing to recover duty of Rs. 7,22,854/-Plus duty of Rs. 6,352/- on seized (excess good) was issued under Rule9 (2) read with Section 11 A(1) proviso penalty under Rule173 Q was proposed along with penalty under Rule209 A on J.D. Patel, director of the assessee. This demand of Rs. 7,2,854/- was reduced to Rs. 6,96,245/-after allowing the benefit of not. 1/93 vide corrigendum dated 10.1.96.
c. The Commissioner after examining & noting that the registers contain "Bill no & date", on comparison with invoices, tally in some cases only while in some cases entries of the Bill no & date were not shown in these registers, were concluded them to be showing actual clearances figures & to depict actual production & entries where no invoices could be connected were considered clandestine clearance evidence & he relied upon the statement dated 22.9.94 of Shri. D. Patel, the Director of assessee, & that non cross examination of J D Patel was of no consequence.
d. Commissioner also observed that duty has not been demanded on all the entries, & if that was done, the demand would work out to Rs. 9,16,060/- while demand of Rs. 7,29,210- was only made. This was considered by him to be judiciousness of the Show Cause Notice issuing authority.
e. He found that non corroboration of raw material receipt by form IV records is riot relevant, since the assessee not maintaining correct production records, will also not make from IV raw material receipt records correctly.
f. He rejected the arguments of discrepancy pointed out in the registers.
g. The claim on MODVAT credit made, is not as per the actual figures, which indicate clandestine manufacture & clearance h. He confirmed the duty demand of Rs. 6,96,245/-confiscated excess goods & gave redemption fine of Rs. 5000/- imposed penalty of Rs. 2 lakhs under 173Q on the assessee, Rs. 2 lakhs on the Director under Rule209A 2) There is no material in the notice or and relied upon by the Commissioner as to who is the author of the said Register. The reliance on such registers, without obtaining the authors say on the same, would not be an interpretation by the officers and or the Director of the assessee company as is the case here. In absence of the authors say on What was recorded and why? the Registers and the evidence therein would be in the realm of an assumption or presumption it is no bodies case that the author is/was not available for offering the required explanation.
b) The figures, admittedly is the alleged clandestine clearances work out to Rs. 3,16,060/- and had to be sealed down again on a presumption.
The investigators have missed an important link in proving or disproving the case. That Pacunar is being attempted to be filled by the Adjudicator, it can not be upheld.c) This tribunal in the case of Durga Trading Co (2002(148) ELT 967 had held that charge of clandestine removal has to be based on concrete and tangible evidence & not on inference involving unwarranted assumption.
When reconciliation of sales & purchase bills is not achieved, infernce could be drawn legally for clandestine removal and without payment of duty. Supreme Court after condoning the delay has dismissed the appeal filed by Revenue in Durga Trading Company case (2003 (157) ELT A 315 SC. This appeal should also meet the same fate as in Durga Trading Company case, when it is found that the demands based on Registers is on inferences, presumption & assumption, in absence of authors clarification, on the same. Demands of duty are to be therefor set aside.
d) As regards the confiscation & redemption of the seized goods the same cannot be proved to be production of the day. The confiscation upheld along with redemption fine.
e) There is no appeal before us by the director. No orders are passed on the penalty on Director.