Private production records and parallel invoices can prove clandestine removal where records are internally consistent and recovered from the assessee.

Private production records, when internally consistent and signed or stamped by the assessee, can be relied on to infer excess manufacture and clandestine clearance even without oral statements under section 9D. The CESTAT held that notebooks and production reports showing heats, batch size and output supported a reasonable extrapolation of production where furnace capacity remained unchanged, and the duty demand was upheld. It further held that recovered duplicate invoices with materially different particulars evidenced parallel invoicing and clandestine removal, so the related duty demand was sustained. On the same evidence, the director's penalty under Rule 26 was also upheld.

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Issues: (i) Whether the demand of central excise duty based on the assessee's private production records, the number of heats produced each day, and the average quantity of MS ingots per heat was sustainable; (ii) whether duty demand based on 12 parallel invoices recovered during search was sustainable; (iii) whether penalty on the director under Rule 26 of the Central Excise Rules was justified.

Issue (i): Whether the demand of central excise duty based on the assessee's private production records, the number of heats produced each day, and the average quantity of MS ingots per heat was sustainable.

Analysis: The recovery of the assessee's own notebook and production reports was not in dispute, and the records were signed and stamped by the assessee. The notebook showed the number of heats and batch-wise composition, while the production reports for three days showed the actual quantity produced per heat, with consistent batch size, timing, cross-section, weight, and density. The absence of any evidence of change in furnace capacity meant the average production per heat could reasonably be extrapolated for the period in question. Even after excluding oral statements, the private records themselves provided sufficient and reliable evidence of excess manufacture and clandestine clearance.

Conclusion: The duty demand on this count was upheld and is against the assessee.

Issue (ii): Whether duty demand based on 12 parallel invoices recovered during search was sustainable.

Analysis: The recovered documents showed two invoices bearing the same number but with different dates, quantities, vehicles, and consignees. Such duplication was not a mere matter of extra copies, because identical invoice numbers carried materially different particulars. Maintaining parallel invoices is a recognized method of clandestine removal, and the demand was confined only to the invoices actually recovered during investigation. The challenge that some additional invoices mentioned in the notice were not pursued did not prejudice the assessee.

Conclusion: The duty demand based on the parallel invoices was upheld and is against the assessee.

Issue (iii): Whether penalty on the director under Rule 26 of the Central Excise Rules was justified.

Analysis: The director was in charge of the assessee's operations and the evidence established his involvement in the impugned clearances and issuance of parallel invoices. Since the duty demand on the clandestine removals was sustained, the connected penalty proceedings under Rule 26 were also supported by the record.

Conclusion: The penalty on the director was upheld and is against the appellant.

Final Conclusion: The order confirming duty, interest, and penalties was sustained in full, and both appeals failed.

Ratio Decidendi: Private production records and parallel invoices, when internally consistent and recovered from the assessee, can constitute sufficient evidence of clandestine manufacture and removal even if oral statements are excluded under section 9D procedures.

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