1990 (2) TMI 188 - AT - Central Excise

Tribunal reduces penalty in duty evasion case involving match production units, stresses need for concrete proof

S. AVUDAYAMMAL (VASUKI MATCH WORKS) Versus COLLECTOR OF C. EX.

S. AVUDAYAMMAL (VASUKI MATCH WORKS) Versus COLLECTOR OF C. EX. - 1990 (49) E.L.T. 415 (Tribunal) Issues:1. Allegation of exceeding ceiling limit of production and duty evasion.2. Mix-up of raw materials and manufacturing activities between two units.3. Lack of investigation by Central Excise authorities.4. Burden of proof on the appellant regarding manufacturing location.5. Confiscation of matches and imposition of penalty.Analysis:1. The case involved an appeal against the order of the Collector of Central Excise, Madurai, alleging that the production of matches in two units, M/s. Vasuki Match Works and M/s. Surendran Match Works, was interconnected. The authorities found discrepancies during a visit, leading to a show cause notice for duty evasion and exceeding the prescribed production limit. The appellant contested the allegations, claiming a mix-up of packing materials due to illiterate workers. The Collector relied on physical observations and lack of separate records to conclude that the units were collectively operated.2. The appellant's advocate argued that the presence of the other unit's packing materials in their factory did not prove joint manufacturing. He highlighted the familial relationship between the owners and the shared brand approval, suggesting a plausible mix-up. However, the lack of worker statements or detailed investigation raised doubts about the authorities' conclusions.3. The Departmental Representative acknowledged the absence of a thorough investigation but defended the inference drawn from the observed discrepancies. The central issue revolved around whether mere suspicion, without substantial evidence or worker statements, could establish duty liability transfer between the units.4. The Tribunal emphasized that suspicion alone could not substitute concrete evidence of duty evasion. It criticized the authorities for relying on assumptions and not conducting a detailed probe post the initial detection. The burden of proof was placed on the appellant, yet the lack of worker statements and operational details weakened the case against them.5. Ultimately, the Tribunal found insufficient evidence to support the duty evasion allegations based on the observed discrepancies. While upholding the confiscation of matches, it reduced the penalty imposed on the appellant. The judgment highlighted the importance of thorough investigations and the necessity of concrete proof in establishing duty liability transfer between interconnected units.