AshwIn Vanaspati Industries Pvt. Vs. Collector of Central Excise - Court Judgment

Excerpt:
1. this appeal is fifed against the order-in-original passed by the collector of central excise and customs, vadodara confirming the demand raised in the show cause notice dt. 28-1-1985 to the extent of rs. 3,39,463.35 ps. on 32636 tins of "vegetable products" falling under erstwhile tariff item 13 of the first schedule to the central excises and salt act, 1944 valued at rs. 67,89,267 and rs. 16,588.70 ps. on 3338 cases of 'soap' falling under erstwhile tariff item 15(1) of the first schedule to the central excises and salt act, 1944 valued at rs. 3,15,975.00 alleged to have been illicitly manufactured and removed by them without payment of duty during the period from july, 1983 to january, 1984, as mentioned in para 10 above, under rule 9(2) of the central excise rules, 1944 read with the proviso to sub-section (1) of section 11a of the central excises and salt act, 1944. the collector has also imposed a penalty of rs. 7 lakhs under sub-rule (1) of rule 173q of the central excise rules, 1944.2. the facts of the case leading to the adjudication are stated in the show cause notice dt. 28-1-1985 issued by the supdt. of central excise, baroda. it is alleged that the factory of the appellant was visited by the officers of central excise (preventive) on 5-5-1984 for preventive checks and it was found that in the course of their checks, the officers found that the assessee was engaged in the manufacture of (i) vegetable non-essential oil (vne oil); (ii) vegetable products; (iii) soap (with the aid of power); and (iv) all other goods not elsewhere specified falling under tariff items 12, 13, 15(1) and 68 of the first schedule to the central excises and salt act, 1944. it was further alleged in the course of their said checks, the officers came across one private register showing day-to-day production of "vegetable products" and "soap" manufactured and cleared from the factory of the assessee. the register was found to have been maintained for the period from 1-7-1983 to 22-11-1983. it was further found on scrutiny and comparison with the entries made in the statutory r.g. 1 register maintained by the assessee for the aforesaid period revealed to the officers that the assessee had manufactured and removed 22706 tins each of 16.5 kgs. of vegetable products valued at rs. 47,23,529.00 ps.without accounting the same in r.g. 1 register, without payment of central excise duty and also without following other central excise procedure. the visiting officers recorded the statements of following persons: (i) shri kanubhai l. panchal, clerk who is said to have been looking after the day-to-day excise work and have admitted that the private register belongs to the factory; (ii) statement of sh. thakorbhai c. patel, head supervisor who is said to have clarified the entries dt. 19-1-1984 made in r.g. 1 register for the removal of 8300 tins of vegetable products taken for reprocessing. he had clarified that they had not cleared the said tins on payment of duty and it was not in balance with them that day; (iii) statement of sh. shaileshkumar n. naik, chief accountant who had admitted having gone through the private register but was not in a position to explain the production and despatch as shown in the said register for vegetable products and soap as he was dealing with the accounts matters; (iv) statement of shri thakorbhai c. patel, godown supervisor, who admitted that he was preparing production report and maintaining r.g. 1 register and stated that the said register was signed by the director shri j.f. patel. he had further stated that 8300 tins had been taken for reprocessing on 19-1-1984 and made entries in r.g. 1. he stated that he did not note the lot number of 8300 tins and as on that day there was no balance of 16.5 kgs. tins or in any tanker or in any vessels in the factory with regard to the said 8300 tins. he further stated that he did not know how it was shown in the production and dispatch figures of the vegetable products tins and soap in the private register. he admitted that no production and clearance had been shown in r.g. 1 register for july, 1983 to december, 1983 for soap; (v) statement of shri jashwantrai c. rao, director of the factory was also recorded. he stated that he was looking after the general administration of the company; (vi) statement of shri jayantibhai f. patel, director of the company,, who admitted that he is controlling the production of different items in the factory and the said production took place according to his direction and dispatches were normally made through road-ways through hired trucks and the excise work of the factory was dealt with by him and he signs all the register. he has stated that the day-to-day production of vegetable products and soap mentioned in the private register had been manufactured in their factory and the same had also been cleared without leaving any balance out of the said production. he. further clarified that the production shown in their private register of their factory did not tally with the production of r.g. 1. as per their private register, they had manufactured and packed 3,48,306 tins of vegetable products and 3138 tins cases of soap during the period from 1-7-1983 to 22-11-1983, while in r.g. 1 register the figures shown were 3,25,600 tins of vegetable product and that there was no accounting of single case of soap in r.g. 1 register for the said period. he stated that he was not in a position to say that as to how there was difference of packed tins of vegetable products and cases of soap shown in r.g. 1 when compared with the production in their private register; (vii) statements of s/shri manekrao, k. kale, mohanbhai j. dalwadi and ramoshchandra, a. vyas, supervisors was also recorded by the officers who admitted that the private register belongs to the assessee factory and they admitted having made entries of production in the said register in their own handwriting and that the details shown in column for "tins" in the register relate to "tins" filled in with vegetable processed oil in liquid form, manufactured in the assessee factory, from filling machine and that the filled tins are deposited in cold storage; (viii) statement of shri raj kumar verma, production manager, was also recorded who stated that hydrogenated liquid oil after adding vitamins was sent to filling section. this oil was filled in tins and these tins were sent into cold rooms for chilling that is solidification and no further process is carried out in cold room and from the cold room these tins go into b.s.r. for marketing; (ix) according to the statement of shri jayantibhai f. patel, recorded on 7-8-1984 when he was shown the chart (as per statement 'c attached to show cause notice) showing the despatches of the vegetable products and soap through road transport agencies of baroda along with transport receipts shown therein prepared by them and also was shown central excise gate passes for the alleged period issued by the factory, he stated that central gate passes had not been issued for 22 consignments of vegetable products (ghee) and soap shown in the said chart and cleared under the transport receipts mentioned in the chart; (x) statements of transporters of bhupendera transport corporation and jineshwar trading co., and also western transport service of baroda was also recorded who admitted transporting the goods.3. on the basis of these facts, a show cause notice was issued demanding duty and the assessee was alleged to have contravening the provision of rule 173f read with rule 9(1), rule 173g(2) read with rule 52a and rule 173g(4) read with rule 53 and rule 226 of central excise rules, 1944. the assessees were called upon to show cause for the alleged commital of fraud, wilful mis-statement and suppression of facts with an intent to evade central excise duty. they were asked to explain as to why penalty under clauses (a), (b) and (d) of sub-rule (1) of rule 173q of the central excise rules, 1944 should not be imposed on them and duty be recovered under proviso to sub-section (1) of section 11a of central excises and salt act, 1944 read with rule 9(2) of the central excise rules.4. the assessee filed their reply to the show cause notice on 19-5-1986 and also by further reply on 10-6-1987. they have denied all the allegations made in the show cause notice and inter alia, submitted that; (i) the quantity shown in the said private register were of unfinished or incomplete goods and therefore at that stage the goods were non-excisable and no demand of duty can be made, much less on unwarranted conclusions/presumptions, for such non-excisable goods, as the goods were not yet manufactured; (ii) the department had not disputed the version that the quantities in the said private register were of vegetable oil in liquid form, and that the said register was maintained for labour control and statistical purpose. they contended that the department had drawn illogical conclusions and had made allegations without discharging their requisite burden of proof; (iii) they contended that the statement of shri jayantibhai patel is involuntary and his signature was obtained by false promises and he had given the same without understanding the contents thereof. they stated that it was quite evident from a glaring and typical example, namely that as regards allegation of 9930 tins of vegetable oil (vanaspati) he confessed this offence in toto. but as a matter of fact, not a single consignment of the said quantity were despatched without payment of duty under gp. 1. he contended that the statement of the said sh. jayantibhai patel cannot be relied as a piece of evidence; (iv) the said private register contained records of manufacture of vegetable oil till the stage of putting the oil in the tins in liquid form and before they are put in the cold storage. this private register was maintained primarily for the purpose of making payment/wages to contractors/workers, i.e. for labour control. they contended that the entry in r.g. 1 register were made only after the above mentioned tins containing the liquid oil are kept in cold storage for not less than 2 to 4 days and only after sufficient quality test to achieve vop standards. they contended that the entries in private register and r.g. 1 are altogether different and the said allegation made in the show cause notice merely on the private register figures does not merit any consideration. they further contended that if the entries in the private register alone were to have been taken to charge evation of duty then the entire quantities shown in the private register should have been more in all the months but instead the figures in the r.g. 1 register were on comparison more than the private register.5. the learned collector after considering the entire material rejected the contentions of the appellants and has confirmed the impugned order.the learned collector has held that whatever has been entered in the private register has necessarily to be taken as being manufactured and in no way the same can be recorded as unfinished or incomplete goods as contended by the assessee. the learned collector has arrived on this conclusion by rejecting the assessee's claim that the entries made in the register reflected the goods in unfinished or incomplete condition; on the basis of the statements of shri kale, dalwadi and vyas. she has also relied on the statement of sh. raj kumar and that of j.f. patel.she has held that the contention of the assessee that the total despatches for the entire relevant period as recorded in the private register (1,16,624 tins) are much less than the despatches entered in r.g. 1 register (3,53,597 tins), which establishes that there was no illicit removal was also rejected. the learned collector has held that from the comparative figures of despatches furnished in a worksheet along with reply to the show cause notice dt. 10-6-1987, it is seen that in most of the cases figures mentioned in the private register against the word "despatch" tally with the clearances as mentioned in r.g. 1 register. she has concluded that this would mean that the entries made in the private register were authentic and correct. she has further concluded that this also establishes that the assessee has intentionally not shown the figures of "despatches" in private register on certain days in each month, that is, july, 1983 to november, 1983 so that the entries in r.g. 1 register can be adjusted as per their convenience. she has held that the same reason is attributable to the difference between the production figures as shown in private register and r.g. 1 register. she has also held that authenticity and the correctness of the figures- as shown in the private register is fully supported by the statement dt. 10-5-1984 of shri j.f. patel one of the directors of assessee by which he had stated that 'in the said register day-to-day shiftwise production and despatches of vegetable products and soap have been shown'. the learned collector has held that in view of these findings, the arguments advanced by the assessee that the private register cannot be accepted as the piece of evidence as the same was maintained for different purposes such as the labour control and statistical purposes etc. is not sustainable. the different citations relied upon by them in support of this plea are also rejected with a single sense that the same is of no help to them.6. as regards the allegation relating to illicit manufacture and removal of 3138 cases of soap based on the private register, the learned collector rejected the assessee's contention as the assessee has not produced any documentary or other cogent evidence to show that "soap" was manufactured by them without the aid of power and therefore confirmed the duty raised on this allegation.7. as regards the allegation of illicit manufacture and removal of 9930 tins of vegetable products and 200 boxes of soap based on 22 transport receipts. the collector again rejected the assessee's contention and has held that on examination of relevant annexures to the show cause notice, it is found that the number of tins of vegetable products and boxes of soap worked out by the officers were based on clearances and identifiable entries relating to vegetable products and soap and as such the assessee's arguments was not acceptable. the learned collector also rejected the assessee's contention that the statement of shri jayantibhai fulabhai patel was recorded by force and has held that statement has been given out of his own volition. the contention of the time bar by the assessee was rejected by the learned collector and has held that the assessee had cleared the goods by suppressing facts, fraud etc. and on these findings the learned collector has confirmed the demand raised in the show cause notice.8. the appellants in this appeal have taken several grounds against the impugned order and also against the adjudication proceedings and investigation conducted by the department, inter alia, appellants have submitted that the impugned order has been passed on mere assumptions and presumptions in utter disregard to the factory and circumstantial evidence available on record. they contended that the learned collector has glaringly erred in brushing aside the strong documentary evidence in the form of gp. 1 details furnished by them alongwith their reply to the show cause notice which covered each of the said, 22 consignments against which charge had been made. they contended that the collector has erred in basing her decision entirely on the confessional statement of shri jayantibhai f. patel. they contended that there were several discrepancies in the chart annexed to the show cause notice prepared by the department had not been looked into by the collector. they gave the following three illustrations which reflect the said discrepancies: (a) against column 12 of the chart, quantity shown is "600 ghee & soap", there is no specification as to how much quantity is given to ghee and how much for soap cartons. they contend that the entire quantity is for soap. (b) against serial no. 16, the quantity shown is - "650 vegetable oil and soap cartons" - there is no specification about separate quantities of vegetable oil and soap respectively. (c) against serial no. 16, quantity shown is "500-vegetable oil" - actually quantity should be 150 vegetable oil (vanaspati) and 350 tins of ground nut oil.9. the appellant pointed out to these discrepancies contained that they are of serious nature which reflect the haphazard manner or investigation carried over by officers. they contended that the learned collector has not dealt with these discrepancies even through specific attention was drawn to the same. in view of the fact that all the 22 consignments have been removed under proper and valid documents on payment of duty of excise, therefore, the impugned order is invalid, illegal and deserves to be set aside.10. as regards the alleged illicit removal of 3338 cases of soap they contended that the learned collector has erred in her conclusion and not considering the documentary evidence produced in the form of copies of declarations and letters written by them from claiming exemptions from payment of duty and from licensing in respect of soap manufactured without aid of power.11. they further contended that the allegation about illicit removal of 3138 cases of soap was without any supporting evidence. they contended that the private register is not an authentic or regular record of production and hence the findings given confirming this allegation is unwarranted and unsustainable. they contended that the appellant's demand is time-barred under section 11a inasmuch as the clearances of soap manufactured without aid of power were made at nil rate of duty after filing declarations and with full knowledge and consent of the range officer. they contended that in the case of allegation of 22706 tins of vegetable oil (vanaspati) the learned collector has solely relied on the statements recorded under section 14 of the act, which according to them is not sufficient to hold the charge levelled against them. they contended that the learned collector has not applied her mind nor examined their written objections and also has not perused the entire statements of the witnesses and has confirmed the charge by merely quoting the allegations in the show cause notice. they contended that the figures in the said private register did not reflect actual production of fully manufactured and finished vegetable oil (vanaspati). on the other hand they contended that the difference in production figures in the said private and r.g. 1 registers directly support the fact that there were many factors for logical variation in the said two sets of figures in the said private register and in the r.g. 1 register. therefore, they contended that the private register cannot be considered as an authentic and valid piece of evidence and the findings based entirely on the said private register is not legally sustainable.12. shri a. hidayatullah, learned sr. advocate appearing along with s/shri willingdon christian and vikram nankani argued extensively and painstakingly pointed out to several entries in the private register along with r.g. 1 register and submitted that the findings of the learned collector based solely on the entries in the private register are wholly unsustainable and not supported by law. he contended that the private register only indicate the total quantity of dispute made but he did not reflect that the despatch was outside the factory. the register also did not reflect about the extent of production. he contended that the private register had been entered in the local vernacular language and so were the statements of the main witnesses.he contended that the learned collector did not give any indication in the impugned order that these entries in the private register and the statements had been duly seen and checked by her thereby clearly indicating that there was total non-application of mind and the order has been passed in a cursory manner and by quoting the allegation in the show cause notice. the learned collector had merely stated that the charges have been proved. he contended that the impugned order can be set aside solely on these grounds. elaborating in great detail, going meticulously into the details of the private register; the learned advocate pointed out that there was absolutely no indication in any of these entries that despatches had been made outside the factory. he contended that there was no dispute of the department that the vegetable oil filled in these tins' had been despatched in the cold room for solidification and when that is the situation there was absolutely no reason to come to the conclusions that the word "des" mentioned in the private register meant that the tins were removed from the factory. he contended that the individual shift supervisor was noting the figures of the tins in the each shift and the term despatch reflect the sending of those to cold room for further processing. he further contended that the admitted position was that the alleged removal shown in the private register was in a unfinished stage and, therefore, to come to conclusion that they were goods in finished stage was totally erroneous and unsustainable. he further pointed out that there were bound to be discrepancies in the private register and the r.g. 1 register, as r.g. 1 register reflect the tins which were in bsr while the figures in the private register reflect the tins still in the production stage which still had to go to the cold room for solidifications and the other processes. he contended that it was an admitted fact by the revenue in despatch that the tins from the production room to bsr took more than five to six days or even more to reach. he contended that it was highly presumptuous to come to conclusion that the figures in the private register and r.g. 1 register not tallying amounted to clandestine removal from the factory. he further pointed out to several remarks in the private register is clearly indicates that at times the machines had failed and tins have not been removed. some remarks indicated that empty tins had arrived from trucks for filling purpose. some remarks indicated that due to non-availability of tins filling had stopped at certain time. he further pointed out that in certain remarks the tins had remained in production room as provided in the cold room and filling had to be stopped. he pointed out to individual remarks in each page of the private register and showed that the impugned private register could not be taken as a document affecting clandestine removal of the finished goods. he contended that the details of the private register clearly indicates that they were of reflection of production work and instructions left by the persons who filled the tins to the next batch of workers to cover the work in batches. he further submitted that private register had been voluntarily given by the assessees themselves which clearly showed that there was nothing to hide and suppress the facts. the collector has not even going into the details of it and has come to erroneous conclusions without application of mind and due consideration of the entire materials on record. he further pointed out that private register showed the individual name of workers and against their name the number of tins filled by them and in the remarks column the snags during the production period. therefore, the private register was indicative of individual workers performance and production problems and nowhere thus figures reflect the clandestine removal as alleged by the department.13. he took us through the statements of all the supervisors and directors and pointed out that there was nothing incriminating in the statement nor any statement admitting removal from the factory. he further submitted that the statements were recorded from the witnesses pertaining to private register, which pertained to a period much earlier from the date of recording the statements. therefore, the witnesses were entitled to give clarifications and such clarifications given cannot be rejected as has been done by the learned collector. he contended that the private register had been maintained by three supervisors who has left the service. the director was not maintaining the register and there was nothing in his statement which could corroborate the allegation that the goods had been removed clandestinely. he submitted that most of these entries in the private register had tallied except one or two entries which had not been tallying and therefore, without proper corroboration it would be fatal to conclude that there was a clandestine removal. he submitted that the entire inputs were of controlled items under a legislature under quota and there were several registers maintained for them. there was no allegation that there had been excess inputs and excess use of electricity during that period to conclude that there was higher production and removal of the goods clandestinely. he submitted that the learned collector had not scrutinised the worksheet given by the appellants along with the show cause notice and the conclusions drawn by the learned collector that the worksheet given along with the reply to the show cause notice tallied with the figures of clandestine removal was totally baseless. it showed total lack of application of mind and conclusions were vitiated. he pointed out that the gps tallied with the register and pointing out to the evidence placed before us regarding the same. he heavily relied on the rulings rendered by this bench in the case of kashmir vanaspati (p) ltd. v. collector of central exciseraza textiles ltd. v. collector of central excise reported in 1989 (44) e.l.t. 233 (tribunal). he also relied on the following rulings:carona cosmetics and chemicals pvt. ltd. v. collector of central excise, kanpur (ii) prabhavati sahakati soot girni ltd. v. collector of customs and central excise - reported in 1990 (48) e.l.t. 522 (tribunal)oudh sugar mills ltd. v. union of india - reported in 1978 (2) e.l.t. (j 172)m/s. ebenezer rubbers ltd. v. collector of central excise, ahmedabadambica metal works v. collector of central excise, calcutta - reported in 1990 (29) ecr 549 (cegat erb)lilt foam industries (p) ltd. v. collector of central excise - reported in 1990 (46) e.l.t. 462 (tribunal)ganga rubber industries v. collector of central excise - reported in 1989 (39) 650 (tribunal)jagan nath dalip singh v. collector of central excise - reported in 1990 (47) e.l.t. 369 (tribunal).14. shri nankani, advocate arguing on a latter date submitted that in the appellant's own case pertaining to the demand covering period from july '83 to november '83 on the removal of soap manufactured without the aid of power was set aside by the tribunal vide order no, 426/91-c dt. 10-5-1991 and it was held therein that the appellants had not suppressed the facts of production of soap without the aid of power and therefore the duty demand pertaining to the removal of soap is to be set aside in this case also.15. shri l.n. murthy, learned jdr argued for the revenue and submitted that the learned collector was justified in relying on the sole document of private register and to come to conclusion that there was clandestine removal of the goods. he contended that the production in the private register had been compared with r.g. 1 and only thereafter the show cause notice had been issued by giving details of the figures in the annexures attached to the show cause notice. he pointed out that the difference of figures appearing from these two registers clearly indicate that there was clandestine removal as the goods were not reprocessed and therefore, it could be safely presumed that the goods had been removed clandestinely. he contended that there was no satisfactory despatches made by the appellants and noted in the private register and therefore the conclusions drawn by the learned collector was correct and could not be said to be on assumptions and presumptions. he further contended that the entries and clearances from production room to cold room and entries in r.g. 1 was not properly explained by the appellant. therefore, there was no error committed by the learned collector while drawing conclusion in the impugned order.he contended that there was no need to tally the figures with raw material register as the figures from the production register itself was sufficient to draw the conclusions. he contended that the citation relied by the learned counsel was not applicable to the facts in question. however, on query from the bench he submitted that there was no indication in the order that the collector had got the private register translated from the vernacular language and also the statements of witnesses were translated to come to a proper conclusions. as regards the removal of soap of 3138 cases said to have been manufactured without the aid of power, he fairly submitted that the order of the bench in 426/91-c dt. 10-5-1991 pertaining to period from july '83 to november '83 would be applicable and the demand may have to be dropped.16. we have carefully considered the statements made by both the sides anperused the records and the contents of the private register, statements of the various witnesses and also the case law cited by the learned advocate. the main question arises for our consideration in appeal is as to whether the allegation of alleged clandestine removal based on the private register produced by the appellants themselves without any corroborative evidence, verification, tallying with production input register and without considering the various replies and grounds urged by the appellants is sustainable in law.17. as has been pointed out elaborately from the charges made out in the show cause notice, it is very clear that the private register had been produced by the assessee themselves maintained from 1-7-1983 to 22-11-1983. the officers have scrutinised it and compared it with r.g.1 register maintained by the assessees for the said period and have alleged that 22,706 tins of 16.5 kgs. of vegetable products valued at rs. 47,23,527.00 p. have been removed without accounting in r.g. 1 register and without payment of central excise duty. it was also alleged that the assessee had removed 3138 cases of soaps valued at rs. 2,97,043 without accounting the same in r.g. 1 and without paying excise duty thereof. in order to prove this allegation the department has heavily relied on the statements recorded from various persons and the conclusions of the said statements noted supra. the main incriminating statement is alleged to be attributed to jayantibhai f.patel, director of the assessee co. who is supposed to have supervised the production and entries made in the register. however, it is not disputed by the revenue that this private register was entered by three supervisors who had left the services of the assessee factory. the statement which is incorporated in the show cause notice of jayantibhai f. patel which is said to be admission of removal is that when you are shown the chart (as per statement-c attached) attached to show cause notice showing the despatches of vegetable products and soap through road transport agencies of baroda along with transport receipt showed therein prepared by them along with central excise gate passes for the period from july '83 to january '84 issued by the factory; he had admitted that gate passes had not been issued for 22 consignments of vegetable products (ghee) and soap. it was also attributed to him that he had admitted the alleged removal without payment of excise duty. the learned collector has also concluded on the basis of these statements that there has been a clandestine removal of the goods produced in the factory. as had been pointed out by the learned advocate it is not at all clear from the impugned order as to whether the learned collector had gone through the entire statement of the witnesses which had been recorded in vernacular language and it is also not clear as to whether the entire private register which had been predominantly maintained in the vernacular language was translated and seen. it is very clear from the impugned order that the entire private register has not been gone into and scrutinised. the various statements made by the appellants pertaining to the entries in the private register has not been examined. the learned collector has merely cited the allegations in the show cause notice and has held that the figures given in the reply to the show cause notice by the assessee tally with the allegation and has upheld the charge. this approach of the learned collector, unfortunately, is without application of mind and the findings based on such a cursory look is not sustainable at all. on a perusal of the statements made by the witnesses s/shri m.k. kale, mohanbhai j. dalwadi and ramesh chandra a. vyas, supervisors, it is clear that they had explained in categorical terms that this register produced by them was maintained for production purposes. they had also pointed out several remarks made by them in the register. they have clearly indicated that filled tins from filling machines were sent to cold storage. they also clearly stated that they had maintained this private register in their own handwriting in gujarati or in hindi. they had also stated that they were not supervising or making note of vegetable ghee which was going out of the factory. shri mohanbhai jivabhai dalwadi had stated that he was looking the work done by the labourers and putting the filled and sealed tins in cold room through them. he stated that the particulars in the private register were written by shift supervisors who were on duty. he had also written certain particulars in his own handwriting in the register. he had written on 12-7-1983 and 14-7-1983; like "tins" which refer to filled tins of vegetable processed oil in liquid form from the filling machine of their factory. he has stated that in the said register they were writing the particulars of soap as per the reports received from the supervisor of soap section as he was not supervising the production nor packing of the soap and he was also not making note of ghee tins which was going out of the factory. the statement of shri jayantibhai f. patel, director reveals that he has seen the register carefully and he declared that the said register indicated day-to-day shiftwise production and the despatches of vegetable products and soap. he further stated that the register indicated day-to-day abstracts of production and despatches of vegetable products. he also stated that abstracts accounts of tins has also been written in the register. he also stated that whatever production of vegetable products and soap have been shown in the register had been manufactured in the factory and the same were cleared from the factory. he stated that whatever production was shown in the said register had been completely despatched and there was no balance of the said production. he has further stated as follows: "as per our private production register we have manufactured and packed in 3,48,306 tins vegetable products and 3138 cases of soap during the period from 1-7-1983 to 22-11-1983 while in r.g.i 3,25,600tins of vegetable products have been accounted for and not a single case of soap is accounted for in r.g. 1 during the period from 1-7-1983 to 22-11-1983. as regards difference i.e. short accounting of vegetable products and soap in r.g.i i have to explain that the private production register showing the production of vp and soap is actually maintained by the shift supervisor for controlling the labour and for giving labour charges to contractor on packed tins or cases." therefore, it is very clear that there is nothing incriminating from these statements that there had been deliberate removal of goods in finished form. the supervisors have clearly stated that the filled vegetable oil in liquid form were removed from production room to cold room and they were not aware of the removal from the bsr. the statements of jayantibhai patel also does not in any way support the department. he has clearly stated that the difference in the entries in the private register and the r.g. 1 will be explained by the supervisor. this does not indicate that there has been a clandestine removal and admission of removals without payment of duty. he has clearly stated that production shown in the private register have been accounted in the r.g. 1 and the same were subjected to duty. therefore, the learned collector has erred in merely stating that the goods have been removed without payment of duty and this finding is not sufficient to uphold the order. the admitted position is that the private register reflects the production figure and the various difficulties faced by the supervisors are entered in the remark column. we have carefully gone through the every page of the private register and have also checked the entries in the r.g. 1 register which was produced by the jdr for our perusal. there is nothing to indicate that this private register reflect the clandestine removal of goods manufactured by the appellant. the department admits the contention of the appellant that the goods removed from the production room were in the unfinished stage and liquid stage. the department also does not deny that it is not in a finished stage goods and they were not required to be solidified by further processing in the cold room. when that is the case how could it be presumed that the private register reflect the details of entries of despatches made outside the factory. the person who has entered the word 'des' has explained that this word 'des' refer to despatches made to the cold room. therefore, the learned collector has clearly come to a wrong conclusion that the word 'des' means despatches outside the factory. the word 'tins' have also been explained by the supervisors, which does not in any way indicate that the goods have been clandestinely removed from the factory. the revenue has to place strong and clinging evidence to prove the charge of clandestine removal. this private register relied upon in this particular case does not in any way indicate that there are entries pertaining to the final product which has been removed outside the factory. the transport receipts and gate passes were produced before us and we have carefully seen that there are no discrepancies in the same and it clearly tallies. on our careful perusal of the entire evidence and records we are convinced that the learned collector has not applied her mind nor she has considered the statements made by the assessee and perused any of the material which is very clear from the record. the impugned order is not sustainable and is liable to be set aside.18. we strengthen our findings on the basis of the various rulings rendered by this tribunal. time and again, it has been held that notebook maintained by labourers containing unauthenticated entries and over-writing are not a dependable record to establish clandestine removal unless the same is supported by other evidence, such as, raw materials consumed, goods actually manufactured and packed [kashmir vanaspati (p) ltd. v. collector of central excise and raza textiles ltd. v. collector of central excise] supra. the other citations produced by the learned advocate have also been considered and carefully perused by us and it is now a settled law that the evidences for clandestine removal has to be cleared and unrebuttable and relying upon the entire rulings the impugned order has to be set aside.19. the tribunal has already given the findings that the soap manufactured without the aid of power by the appellants was within the department's knowledge as in the order no. 426/91-c dt. 10-5-1991 and therefore, the demand raised on the removal of the soap is not sustainable.20. hence, in view of our findings we set aside the impugned order and allow the appeal.

Judgment:
1. This appeal is fifed against the Order-in-Original passed by the Collector of Central Excise and Customs, Vadodara confirming the demand raised in the show cause notice dt. 28-1-1985 to the extent of Rs. 3,39,463.35 Ps. on 32636 tins of "Vegetable Products" falling under erstwhile Tariff Item 13 of the First Schedule to the Central Excises and Salt Act, 1944 valued at Rs. 67,89,267 and Rs. 16,588.70 Ps. on 3338 cases of 'Soap' falling under erstwhile Tariff Item 15(1) of the First Schedule to the Central Excises and Salt Act, 1944 valued at Rs. 3,15,975.00 alleged to have been illicitly manufactured and removed by them without payment of duty during the period from July, 1983 to January, 1984, as mentioned in para 10 above, under Rule 9(2) of the Central Excise Rules, 1944 read with the proviso to sub-section (1) of Section 11A of the Central Excises and Salt Act, 1944. The Collector has also imposed a penalty of Rs. 7 lakhs under sub-rule (1) of Rule 173Q of the Central Excise Rules, 1944.

2. The facts of the case leading to the adjudication are stated in the show cause notice dt. 28-1-1985 issued by the Supdt. of Central Excise, Baroda. It is alleged that the factory of the appellant was visited by the officers of Central Excise (Preventive) on 5-5-1984 for preventive checks and it was found that in the course of their checks, the officers found that the assessee was engaged in the manufacture of (i) Vegetable non-essential oil (VNE oil); (ii) Vegetable Products; (iii) Soap (with the aid of power); and (iv) All other goods not elsewhere specified falling under Tariff Items 12, 13, 15(1) and 68 of the First Schedule to the Central Excises and Salt Act, 1944. It was further alleged in the course of their said checks, the officers came across one private register showing day-to-day production of "Vegetable Products" and "Soap" manufactured and cleared from the factory of the assessee. The register was found to have been maintained for the period from 1-7-1983 to 22-11-1983. It was further found on scrutiny and comparison with the entries made in the statutory R.G. 1 register maintained by the assessee for the aforesaid period revealed to the officers that the assessee had manufactured and removed 22706 Tins each of 16.5 kgs. of Vegetable Products valued at Rs. 47,23,529.00 Ps.

without accounting the same in R.G. 1 register, without payment of Central Excise duty and also without following other Central Excise Procedure. The visiting officers recorded the statements of following persons: (i) Shri Kanubhai L. Panchal, clerk who is said to have been looking after the day-to-day excise work and have admitted that the private register belongs to the factory; (ii) Statement of Sh. Thakorbhai C. Patel, Head Supervisor who is said to have clarified the entries dt. 19-1-1984 made in R.G. 1 register for the removal of 8300 tins of vegetable products taken for reprocessing. He had clarified that they had not cleared the said tins on payment of duty and it was not in balance with them that day; (iii) Statement of Sh. Shaileshkumar N. Naik, Chief Accountant who had admitted having gone through the private register but was not in a position to explain the production and despatch as shown in the said register for vegetable products and soap as he was dealing with the accounts matters; (iv) Statement of Shri Thakorbhai C. Patel, Godown Supervisor, who admitted that he was preparing production report and maintaining R.G. 1 register and stated that the said register was signed by the Director Shri J.F. Patel. He had further stated that 8300 tins had been taken for reprocessing on 19-1-1984 and made entries in R.G. 1.

He stated that he did not note the lot number of 8300 tins and as on that day there was no balance of 16.5 kgs. tins or in any tanker or in any vessels in the factory with regard to the said 8300 tins. He further stated that he did not know how it was shown in the production and dispatch figures of the Vegetable Products tins and soap in the private register. He admitted that no production and clearance had been shown in R.G. 1 register for July, 1983 to December, 1983 for soap; (v) Statement of Shri Jashwantrai C. Rao, Director of the Factory was also recorded. He stated that he was looking after the General Administration of the Company; (vi) Statement of Shri Jayantibhai F. Patel, Director of the Company,, who admitted that he is controlling the production of different items in the factory and the said production took place according to his direction and dispatches were normally made through road-ways through hired trucks and the excise work of the factory was dealt with by him and he signs all the register. He has stated that the day-to-day production of Vegetable Products and Soap mentioned in the private register had been manufactured in their factory and the same had also been cleared without leaving any balance out of the said production. He. further clarified that the production shown in their private register of their factory did not tally with the production of R.G. 1. As per their private register, they had manufactured and packed 3,48,306 tins of Vegetable Products and 3138 tins cases of soap during the period from 1-7-1983 to 22-11-1983, while in R.G. 1 register the figures shown were 3,25,600 tins of Vegetable Product and that there was no accounting of single case of soap in R.G. 1 register for the said period. He stated that he was not in a position to say that as to how there was difference of packed Tins of Vegetable Products and cases of soap shown in R.G. 1 when compared with the production in their private register; (vii) Statements of S/Shri Manekrao, K. Kale, Mohanbhai J. Dalwadi and Ramoshchandra, A. Vyas, Supervisors was also recorded by the officers who admitted that the private register belongs to the assessee factory and they admitted having made entries of production in the said register in their own handwriting and that the details shown in column for "Tins" in the register relate to "Tins" filled in with vegetable processed oil in liquid form, manufactured in the assessee factory, from filling machine and that the filled tins are deposited in cold storage; (viii) Statement of Shri Raj Kumar Verma, Production Manager, was also recorded who stated that hydrogenated liquid oil after adding vitamins was sent to filling section. This oil was filled in tins and these tins were sent into cold rooms for chilling that is solidification and no further process is carried out in cold room and from the cold room these tins go into B.S.R. for marketing; (ix) According to the statement of Shri Jayantibhai F. Patel, recorded on 7-8-1984 when he was shown the chart (as per Statement 'C attached to show cause notice) showing the despatches of the Vegetable Products and Soap through road transport agencies of Baroda along with transport receipts shown therein prepared by them and also was shown Central Excise gate passes for the alleged period issued by the factory, he stated that Central Gate passes had not been issued for 22 consignments of Vegetable Products (Ghee) and Soap shown in the said chart and cleared under the transport receipts mentioned in the chart; (x) Statements of transporters of Bhupendera Transport Corporation and Jineshwar Trading Co., and also Western Transport Service of Baroda was also recorded who admitted transporting the goods.

3. On the basis of these facts, a show cause notice was issued demanding duty and the assessee was alleged to have contravening the provision of Rule 173F read with Rule 9(1), Rule 173G(2) read with Rule 52A and Rule 173G(4) read with Rule 53 and Rule 226 of Central Excise Rules, 1944. The assessees were called upon to show cause for the alleged commital of fraud, wilful mis-statement and suppression of facts with an intent to evade Central Excise duty. They were asked to explain as to why penalty under clauses (a), (b) and (d) of sub-rule (1) of Rule 173Q of the Central Excise Rules, 1944 should not be imposed on them and duty be recovered under proviso to sub-section (1) of Section 11A of Central Excises and Salt Act, 1944 read with Rule 9(2) of the Central Excise Rules.

4. The assessee filed their reply to the show cause notice on 19-5-1986 and also by further reply on 10-6-1987. They have denied all the allegations made in the show cause notice and inter alia, submitted that; (i) The quantity shown in the said private register were of unfinished or incomplete goods and therefore at that stage the goods were non-excisable and no demand of duty can be made, much less on unwarranted conclusions/presumptions, for such non-excisable goods, as the goods were not yet manufactured; (ii) The department had not disputed the version that the quantities in the said private register were of vegetable oil in liquid form, and that the said register was maintained for labour control and statistical purpose. They contended that the department had drawn illogical conclusions and had made allegations without discharging their requisite burden of proof; (iii) They contended that the statement of Shri Jayantibhai Patel is involuntary and his signature was obtained by false promises and he had given the same without understanding the contents thereof. They stated that it was quite evident from a glaring and typical example, namely that as regards allegation of 9930 tins of Vegetable Oil (Vanaspati) he confessed this offence in toto. But as a matter of fact, not a single consignment of the said quantity were despatched without payment of duty under GP. 1. He contended that the statement of the said Sh. Jayantibhai Patel cannot be relied as a piece of evidence; (iv) The said private register contained records of manufacture of vegetable oil till the stage of putting the oil in the tins in liquid form and before they are put in the cold storage. This private register was maintained primarily for the purpose of making payment/wages to contractors/workers, i.e. for labour control. They contended that the entry in R.G. 1 register were made only after the above mentioned tins containing the liquid oil are kept in cold storage for not less than 2 to 4 days and only after sufficient quality test to achieve VOP standards. They contended that the entries in Private Register and R.G. 1 are altogether different and the said allegation made in the show cause notice merely on the private register figures does not merit any consideration. They further contended that if the entries in the private register alone were to have been taken to charge evation of duty then the entire quantities shown in the private register should have been more in all the months but instead the figures in the R.G. 1 register were on comparison more than the private register.

5. The learned Collector after considering the entire material rejected the contentions of the appellants and has confirmed the impugned order.

The learned Collector has held that whatever has been entered in the private register has necessarily to be taken as being manufactured and in no way the same can be recorded as unfinished or incomplete goods as contended by the assessee. The learned Collector has arrived on this conclusion by rejecting the assessee's claim that the entries made in the register reflected the goods in unfinished or incomplete condition; on the basis of the statements of Shri Kale, Dalwadi and Vyas. She has also relied on the statement of Sh. Raj Kumar and that of J.F. Patel.

She has held that the contention of the assessee that the total despatches for the entire relevant period as recorded in the private register (1,16,624 tins) are much less than the despatches entered in R.G. 1 register (3,53,597 tins), which establishes that there was no illicit removal was also rejected. The learned Collector has held that from the comparative figures of despatches furnished in a worksheet along with reply to the show cause notice dt. 10-6-1987, it is seen that in most of the cases figures mentioned in the private register against the word "despatch" tally with the clearances as mentioned in R.G. 1 register. She has concluded that this would mean that the entries made in the private register were authentic and correct. She has further concluded that this also establishes that the assessee has intentionally not shown the figures of "despatches" in private register on certain days in each month, that is, July, 1983 to November, 1983 so that the entries in R.G. 1 register can be adjusted as per their convenience. She has held that the same reason is attributable to the difference between the production figures as shown in private register and R.G. 1 register. She has also held that authenticity and the correctness of the figures- as shown in the private register is fully supported by the statement dt. 10-5-1984 of Shri J.F. Patel one of the Directors of assessee by which he had stated that 'in the said register day-to-day shiftwise production and despatches of vegetable products and soap have been shown'. The learned Collector has held that in view of these findings, the arguments advanced by the assessee that the private register cannot be accepted as the piece of evidence as the same was maintained for different purposes such as the labour control and statistical purposes etc. is not sustainable. The different citations relied upon by them in support of this plea are also rejected with a single sense that the same is of no help to them.

6. As regards the allegation relating to illicit manufacture and removal of 3138 cases of soap based on the private register, the learned Collector rejected the assessee's contention as the assessee has not produced any documentary or other cogent evidence to show that "soap" was manufactured by them without the aid of power and therefore confirmed the duty raised on this allegation.

7. As regards the allegation of illicit manufacture and removal of 9930 tins of Vegetable Products and 200 boxes of Soap based on 22 Transport receipts. The Collector again rejected the assessee's contention and has held that on examination of relevant annexures to the show cause notice, it is found that the number of tins of Vegetable Products and boxes of soap worked out by the officers were based on clearances and identifiable entries relating to vegetable products and soap and as such the assessee's arguments was not acceptable. The learned Collector also rejected the assessee's contention that the statement of Shri Jayantibhai Fulabhai Patel was recorded by force and has held that statement has been given out of his own volition. The contention of the time bar by the assessee was rejected by the learned Collector and has held that the assessee had cleared the goods by suppressing facts, fraud etc. and on these findings the learned Collector has confirmed the demand raised in the show cause notice.

8. The appellants in this appeal have taken several grounds against the impugned order and also against the adjudication proceedings and investigation conducted by the department, inter alia, appellants have submitted that the impugned order has been passed on mere assumptions and presumptions in utter disregard to the factory and circumstantial evidence available on record. They contended that the learned Collector has glaringly erred in brushing aside the strong documentary evidence in the form of GP. 1 details furnished by them alongwith their reply to the show cause notice which covered each of the said, 22 consignments against which charge had been made. They contended that the Collector has erred in basing her decision entirely on the confessional statement of Shri Jayantibhai F. Patel. They contended that there were several discrepancies in the chart annexed to the show cause notice prepared by the department had not been looked into by the Collector. They gave the following three illustrations which reflect the said discrepancies: (A) Against Column 12 of the chart, quantity shown is "600 Ghee & Soap", there is no specification as to how much quantity is given to Ghee and how much for soap cartons. They contend that the entire quantity is for soap.

(B) Against Serial No. 16, the quantity shown is - "650 Vegetable Oil and Soap Cartons" - There is no specification about separate quantities of Vegetable Oil and Soap respectively.

(C) Against Serial No. 16, quantity shown is "500-Vegetable Oil" - actually quantity should be 150 Vegetable Oil (Vanaspati) and 350 tins of Ground Nut Oil.

9. The appellant pointed out to these discrepancies contained that they are of serious nature which reflect the haphazard manner or investigation carried over by officers. They contended that the learned Collector has not dealt with these discrepancies even through specific attention was drawn to the same. In view of the fact that all the 22 consignments have been removed under proper and valid documents on payment of duty of excise, therefore, the impugned order is invalid, illegal and deserves to be set aside.

10. As regards the alleged illicit removal of 3338 cases of soap they contended that the learned Collector has erred in her conclusion and not considering the documentary evidence produced in the form of copies of declarations and letters written by them from claiming exemptions from payment of duty and from licensing in respect of soap manufactured without aid of power.

11. They further contended that the allegation about illicit removal of 3138 cases of soap was without any supporting evidence. They contended that the private register is not an authentic or regular record of production and hence the findings given confirming this allegation is unwarranted and unsustainable. They contended that the appellant's demand is time-barred under Section 11A inasmuch as the clearances of soap manufactured without aid of power were made at NIL rate of duty after filing declarations and with full knowledge and consent of the Range Officer. They contended that in the case of allegation of 22706 tins of Vegetable Oil (Vanaspati) the learned Collector has solely relied on the statements recorded under Section 14 of the Act, which according to them is not sufficient to hold the charge levelled against them. They contended that the learned Collector has not applied her mind nor examined their written objections and also has not perused the entire statements of the witnesses and has confirmed the charge by merely quoting the allegations in the show cause notice. They contended that the figures in the said private register did not reflect actual production of fully manufactured and finished Vegetable Oil (Vanaspati). On the other hand they contended that the difference in production figures in the said private and R.G. 1 registers directly support the fact that there were many factors for logical variation in the said two sets of figures in the said private register and in the R.G. 1 register. Therefore, they contended that the private register cannot be considered as an authentic and valid piece of evidence and the findings based entirely on the said private register is not legally sustainable.

12. Shri A. Hidayatullah, learned Sr. Advocate appearing along with S/Shri Willingdon Christian and Vikram Nankani argued extensively and painstakingly pointed out to several entries in the private register along with R.G. 1 register and submitted that the findings of the learned Collector based solely on the entries in the private register are wholly unsustainable and not supported by law. He contended that the private register only indicate the total quantity of dispute made but he did not reflect that the despatch was outside the factory. The register also did not reflect about the extent of production. He contended that the private register had been entered in the local vernacular language and so were the statements of the main witnesses.

He contended that the learned Collector did not give any indication in the impugned order that these entries in the private register and the statements had been duly seen and checked by her thereby clearly indicating that there was total non-application of mind and the order has been passed in a cursory manner and by quoting the allegation in the show cause notice. The learned Collector had merely stated that the charges have been proved. He contended that the impugned order can be set aside solely on these grounds. Elaborating in great detail, going meticulously into the details of the private register; the learned Advocate pointed out that there was absolutely no indication in any of these entries that despatches had been made outside the factory. He contended that there was no dispute of the department that the Vegetable Oil filled in these tins' had been despatched in the cold room for solidification and when that is the situation there was absolutely no reason to come to the conclusions that the word "des" mentioned in the private register meant that the tins were removed from the factory. He contended that the individual shift supervisor was noting the figures of the tins in the each shift and the term despatch reflect the sending of those to cold room for further processing. He further contended that the admitted position was that the alleged removal shown in the private register was in a unfinished stage and, therefore, to come to conclusion that they were goods in finished stage was totally erroneous and unsustainable. He further pointed out that there were bound to be discrepancies in the private register and the R.G. 1 register, as R.G. 1 register reflect the tins which were in BSR while the figures in the private register reflect the tins still in the production stage which still had to go to the cold room for solidifications and the other processes. He contended that it was an admitted fact by the revenue in despatch that the tins from the production room to BSR took more than five to six days or even more to reach. He contended that it was highly presumptuous to come to conclusion that the figures in the private register and R.G. 1 register not tallying amounted to clandestine removal from the factory. He further pointed out to several remarks in the private register is clearly indicates that at times the machines had failed and tins have not been removed. Some remarks indicated that empty tins had arrived from trucks for filling purpose. Some remarks indicated that due to non-availability of tins filling had stopped at certain time. He further pointed out that in certain remarks the tins had remained in production room as provided in the cold room and filling had to be stopped. He pointed out to individual remarks in each page of the private register and showed that the impugned private register could not be taken as a document affecting clandestine removal of the finished goods. He contended that the details of the private register clearly indicates that they were of reflection of production work and instructions left by the persons who filled the tins to the next batch of workers to cover the work in batches. He further submitted that private register had been voluntarily given by the assessees themselves which clearly showed that there was nothing to hide and suppress the facts. The Collector has not even going into the details of it and has come to erroneous conclusions without application of mind and due consideration of the entire materials on record. He further pointed out that private register showed the individual name of workers and against their name the number of tins filled by them and in the remarks column the snags during the production period. Therefore, the private register was indicative of individual workers performance and production problems and nowhere thus figures reflect the clandestine removal as alleged by the department.

13. He took us through the statements of all the supervisors and Directors and pointed out that there was nothing incriminating in the statement nor any statement admitting removal from the factory. He further submitted that the statements were recorded from the witnesses pertaining to private register, which pertained to a period much earlier from the date of recording the statements. Therefore, the witnesses were entitled to give clarifications and such clarifications given cannot be rejected as has been done by the learned Collector. He contended that the private register had been maintained by three Supervisors who has left the service. The Director was not maintaining the register and there was nothing in his statement which could corroborate the allegation that the goods had been removed clandestinely. He submitted that most of these entries in the private register had tallied except one or two entries which had not been tallying and therefore, without proper corroboration it would be fatal to conclude that there was a clandestine removal. He submitted that the entire inputs were of controlled items under a legislature under quota and there were several registers maintained for them. There was no allegation that there had been excess inputs and excess use of electricity during that period to conclude that there was higher production and removal of the goods clandestinely. He submitted that the learned Collector had not scrutinised the worksheet given by the appellants along with the show cause notice and the conclusions drawn by the learned Collector that the worksheet given along with the reply to the show cause notice tallied with the figures of clandestine removal was totally baseless. It showed total lack of application of mind and conclusions were vitiated. He pointed out that the GPs tallied with the register and pointing out to the evidence placed before us regarding the same. He heavily relied on the rulings rendered by this Bench in the case of Kashmir Vanaspati (P) Ltd. v. Collector of Central ExciseRaza Textiles Ltd. v. Collector of Central Excise reported in 1989 (44) E.L.T. 233 (Tribunal). He also relied on the following rulings:Carona Cosmetics and Chemicals Pvt. Ltd. v. Collector of Central Excise, Kanpur (ii) Prabhavati Sahakati Soot Girni Ltd. v. Collector of Customs and Central Excise - reported in 1990 (48) E.L.T. 522 (Tribunal)Oudh Sugar Mills Ltd. v. Union of India - reported in 1978 (2) E.L.T. (J 172)M/s. Ebenezer Rubbers Ltd. v. Collector of Central Excise, AhmedabadAmbica Metal Works v. Collector of Central Excise, Calcutta - reported in 1990 (29) ECR 549 (CEGAT ERB)Lilt Foam Industries (P) Ltd. v. Collector of Central Excise - reported in 1990 (46) E.L.T. 462 (Tribunal)Ganga Rubber Industries v. Collector of Central Excise - reported in 1989 (39) 650 (Tribunal)Jagan Nath Dalip Singh v. Collector of Central Excise - reported in 1990 (47) E.L.T. 369 (Tribunal).

14. Shri Nankani, Advocate arguing on a latter date submitted that in the appellant's own case pertaining to the demand covering period from July '83 to November '83 on the removal of soap manufactured without the aid of power was set aside by the Tribunal vide Order No, 426/91-C dt. 10-5-1991 and it was held therein that the appellants had not suppressed the facts of production of soap without the aid of power and therefore the duty demand pertaining to the removal of soap is to be set aside in this case also.

15. Shri L.N. Murthy, learned JDR argued for the revenue and submitted that the learned Collector was justified in relying on the sole document of private register and to come to conclusion that there was clandestine removal of the goods. He contended that the production in the private register had been compared with R.G. 1 and only thereafter the show cause notice had been issued by giving details of the figures in the annexures attached to the show cause notice. He pointed out that the difference of figures appearing from these two registers clearly indicate that there was clandestine removal as the goods were not reprocessed and therefore, it could be safely presumed that the goods had been removed clandestinely. He contended that there was no satisfactory despatches made by the appellants and noted in the private register and therefore the conclusions drawn by the learned Collector was correct and could not be said to be on assumptions and presumptions. He further contended that the entries and clearances from production room to cold room and entries in R.G. 1 was not properly explained by the appellant. Therefore, there was no error committed by the learned Collector while drawing conclusion in the impugned order.

He contended that there was no need to tally the figures with raw material register as the figures from the production register itself was sufficient to draw the conclusions. He contended that the citation relied by the learned Counsel was not applicable to the facts in question. However, on query from the Bench he submitted that there was no indication in the order that the Collector had got the private register translated from the vernacular language and also the statements of witnesses were translated to come to a proper conclusions. As regards the removal of soap of 3138 cases said to have been manufactured without the aid of power, he fairly submitted that the order of the Bench in 426/91-C dt. 10-5-1991 pertaining to period from July '83 to November '83 would be applicable and the demand may have to be dropped.

16. We have carefully considered the statements made by both the sides anperused the records and the contents of the private register, statements of the various witnesses and also the Case Law cited by the learned Advocate. The main question arises for our consideration in appeal is as to whether the allegation of alleged clandestine removal based on the private register produced by the appellants themselves without any corroborative evidence, verification, tallying with production input register and without considering the various replies and grounds urged by the appellants is sustainable in law.

17. As has been pointed out elaborately from the charges made out in the show cause notice, it is very clear that the private register had been produced by the assessee themselves maintained from 1-7-1983 to 22-11-1983. The officers have scrutinised it and compared it with R.G.1 register maintained by the assessees for the said period and have alleged that 22,706 tins of 16.5 kgs. of vegetable products valued at Rs. 47,23,527.00 P. have been removed without accounting in R.G. 1 register and without payment of Central Excise duty. It was also alleged that the assessee had removed 3138 cases of soaps valued at Rs. 2,97,043 without accounting the same in R.G. 1 and without paying excise duty thereof. In order to prove this allegation the department has heavily relied on the statements recorded from various persons and the conclusions of the said statements noted supra. The main incriminating statement is alleged to be attributed to Jayantibhai F.Patel, Director of the assessee Co. who is supposed to have supervised the production and entries made in the register. However, it is not disputed by the revenue that this private register was entered by three Supervisors who had left the services of the assessee factory. The statement which is incorporated in the show cause notice of Jayantibhai F. Patel which is said to be admission of removal is that when you are shown the chart (as per Statement-C attached) attached to show cause notice showing the despatches of Vegetable Products and Soap through road transport agencies of Baroda along with transport receipt showed therein prepared by them along with Central Excise gate passes for the period from July '83 to January '84 issued by the factory; he had admitted that gate passes had not been issued for 22 consignments of Vegetable Products (Ghee) and Soap. It was also attributed to him that he had admitted the alleged removal without payment of excise duty. The learned Collector has also concluded on the basis of these statements that there has been a clandestine removal of the goods produced in the factory. As had been pointed out by the learned Advocate it is not at all clear from the impugned order as to whether the learned Collector had gone through the entire statement of the witnesses which had been recorded in vernacular language and it is also not clear as to whether the entire private register which had been predominantly maintained in the vernacular language was translated and seen. It is very clear from the impugned order that the entire private register has not been gone into and scrutinised. The various statements made by the appellants pertaining to the entries in the private register has not been examined. The learned Collector has merely cited the allegations in the show cause notice and has held that the figures given in the reply to the show cause notice by the assessee tally with the allegation and has upheld the charge. This approach of the learned Collector, unfortunately, is without application of mind and the findings based on such a cursory look is not sustainable at all. On a perusal of the statements made by the witnesses S/Shri M.K. Kale, Mohanbhai J. Dalwadi and Ramesh Chandra A. Vyas, Supervisors, it is clear that they had explained in categorical terms that this register produced by them was maintained for production purposes. They had also pointed out several remarks made by them in the register. They have clearly indicated that filled tins from filling machines were sent to cold storage. They also clearly stated that they had maintained this private register in their own handwriting in Gujarati or in Hindi. They had also stated that they were not supervising or making note of vegetable ghee which was going out of the factory. Shri Mohanbhai Jivabhai Dalwadi had stated that he was looking the work done by the labourers and putting the filled and sealed tins in cold room through them. He stated that the particulars in the private register were written by shift Supervisors who were on duty. He had also written certain particulars in his own handwriting in the register. He had written on 12-7-1983 and 14-7-1983; like "tins" which refer to filled tins of vegetable processed oil in liquid form from the filling machine of their factory. He has stated that in the said register they were writing the particulars of soap as per the reports received from the Supervisor of soap section as he was not supervising the production nor packing of the soap and he was also not making note of ghee tins which was going out of the factory. The statement of Shri Jayantibhai F. Patel, Director reveals that he has seen the register carefully and he declared that the said register indicated day-to-day shiftwise production and the despatches of vegetable products and soap. He further stated that the register indicated day-to-day abstracts of production and despatches of vegetable products. He also stated that abstracts accounts of tins has also been written in the register. He also stated that whatever production of vegetable products and soap have been shown in the register had been manufactured in the factory and the same were cleared from the factory. He stated that whatever production was shown in the said register had been completely despatched and there was no balance of the said production. He has further stated as follows: "As per our private production Register we have manufactured and packed in 3,48,306 tins vegetable products and 3138 cases of Soap during the period from 1-7-1983 to 22-11-1983 while in R.G.I 3,25,600tins of vegetable products have been accounted for and not a single case of soap is accounted for in R.G. 1 during the period from 1-7-1983 to 22-11-1983. As regards difference i.e. Short accounting of vegetable products and soap in R.G.I I have to explain that the private production Register showing the production of VP and Soap is actually maintained by the shift Supervisor for controlling the labour and for giving labour charges to Contractor on packed tins or cases." Therefore, it is very clear that there is nothing incriminating from these statements that there had been deliberate removal of goods in finished form. The Supervisors have clearly stated that the filled Vegetable Oil in liquid form were removed from production room to cold room and they were not aware of the removal from the BSR. The statements of Jayantibhai Patel also does not in any way support the department. He has clearly stated that the difference in the entries in the private register and the R.G. 1 will be explained by the Supervisor. This does not indicate that there has been a clandestine removal and admission of removals without payment of duty. He has clearly stated that production shown in the private register have been accounted in the R.G. 1 and the same were subjected to duty. Therefore, the learned Collector has erred in merely stating that the goods have been removed without payment of duty and this finding is not sufficient to uphold the order. The admitted position is that the private register reflects the production figure and the various difficulties faced by the Supervisors are entered in the remark column. We have carefully gone through the every page of the private register and have also checked the entries in the R.G. 1 register which was produced by the JDR for our perusal. There is nothing to indicate that this private register reflect the clandestine removal of goods manufactured by the appellant. The department admits the contention of the appellant that the goods removed from the production room were in the unfinished stage and liquid stage. The department also does not deny that it is not in a finished stage goods and they were not required to be solidified by further processing in the cold room. When that is the case how could it be presumed that the private register reflect the details of entries of despatches made outside the factory. The person who has entered the word 'Des' has explained that this word 'Des' refer to despatches made to the cold room. Therefore, the learned Collector has clearly come to a wrong conclusion that the word 'Des' means despatches outside the factory. The word 'tins' have also been explained by the Supervisors, which does not in any way indicate that the goods have been clandestinely removed from the factory. The Revenue has to place strong and clinging evidence to prove the charge of clandestine removal. This private register relied upon in this particular case does not in any way indicate that there are entries pertaining to the final product which has been removed outside the factory. The transport receipts and gate passes were produced before us and we have carefully seen that there are no discrepancies in the same and it clearly tallies. On our careful perusal of the entire evidence and records we are convinced that the learned Collector has not applied her mind nor she has considered the statements made by the assessee and perused any of the material which is very clear from the record. The impugned order is not sustainable and is liable to be set aside.

18. We strengthen our findings on the basis of the various rulings rendered by this Tribunal. Time and again, it has been held that notebook maintained by labourers containing unauthenticated entries and over-writing are not a dependable record to establish clandestine removal unless the same is supported by other evidence, such as, raw materials consumed, goods actually manufactured and packed [Kashmir Vanaspati (P) Ltd. v. Collector of Central Excise and Raza Textiles Ltd. v. Collector of Central Excise] supra. The other citations produced by the learned Advocate have also been considered and carefully perused by us and it is now a settled law that the evidences for clandestine removal has to be cleared and unrebuttable and relying upon the entire rulings the impugned order has to be set aside.

19. The Tribunal has already given the findings that the soap manufactured without the aid of power by the appellants was within the department's knowledge as in the Order No. 426/91-C dt. 10-5-1991 and therefore, the demand raised on the removal of the soap is not sustainable.

20. Hence, in view of our findings we set aside the impugned order and allow the appeal.