Clandestine removal evidence and admissibility of statements sustained duty demand, confiscation, and firm penalty, but partner penalty failed.

Absence of gate passes and other contemporaneous trade documents, together with consistent statements from the manager and supervisor, justified an inference of clandestine removal; the duty demand and confiscation were upheld. Statements recorded without Criminal Procedure Code caution were treated as admissible in excise adjudication because the proceeding was not criminal in nature, the makers were not co-noticees, and there was no shown retraction or coercion. A separate penalty on a partner could not be sustained where the firm had already been penalised for the same default; the partner's penalty was set aside.

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Issues: (i) Whether the duty demand and consequential confiscation in respect of goods seized from the shop and handcarts were justified on the basis of absence of transport documents and contemporaneous statements. (ii) Whether statements recorded without administering the caution contemplated by the Criminal Procedure Code were inadmissible in adjudication proceedings under excise law. (iii) Whether separate penalty could be imposed on a partner of a partnership firm in addition to the firm.

Issue (i): Whether the duty demand and consequential confiscation in respect of goods seized from the shop and handcarts were justified on the basis of absence of transport documents and contemporaneous statements.

Analysis: Rule 52A required excisable goods to be cleared from a factory only under the prescribed gate pass procedure. The goods were found without gate pass, invoice, or other commercial documents ordinarily expected in lawful trade. The immediate statements of the office-cum-godown manager and supervisor supported the inference that the goods had been received from the factory and cleared without payment of duty. On the facts, the absence of contemporaneous documentary support and the consistency of the statements justified the inference of clandestine removal.

Conclusion: The duty demand and the related confiscation were upheld.

Issue (ii): Whether statements recorded without administering the caution contemplated by the Criminal Procedure Code were inadmissible in adjudication proceedings under excise law.

Analysis: The caution requirement relied upon by the assessee was linked to criminal procedure and the use of a confession against the maker in criminal proceedings. Adjudication under excise law is not governed by the Criminal Procedure Code in the same manner. Further, the persons who made the statements were not co-noticees in the adjudication proceedings, and the statements were not shown to have been retracted or obtained by coercion. The statements were therefore treated as admissible evidence in the adjudicatory context.

Conclusion: The statements were held admissible and could be relied upon in adjudication.

Issue (iii): Whether separate penalty could be imposed on a partner of a partnership firm in addition to the firm.

Analysis: The penalty had been imposed both on the firm and on the partner. The settled principle applied by the Tribunal was that a separate penalty cannot be sustained on the partner where the firm itself has been proceeded against for the same default in the manner adopted here.

Conclusion: The penalty on the partner was set aside.

Final Conclusion: The principal duty demand, confiscation, and firm-level penalty were sustained, but the separate penalty on the partner was deleted, resulting in a mixed outcome.

Ratio Decidendi: In adjudication proceedings, statements may be relied upon notwithstanding the absence of Criminal Procedure Code caution where the proceedings are not criminal in nature and the maker is not being proceeded against as a co-noticee, and a separate penalty on a partner cannot be sustained where the firm is already penalised for the same default.

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