1995 (12) TMI 107 - AT - Central Excise

Duty affirmed for 81 short moped tyres; rest of demand quashed for reliance on uncorroborated private diary

CEGAT, New Delhi affirmed the duty demand only for the 81 moped tyres found short on physical verification, holding that shortage was not disputed and ... Demand - Clandestine removal of tyres and tubes - 81 tyres of Moped found short at the time of physical verification - allegation is based mainly and solely on the private note book (diary) - HELD THAT:- From the impugned order we find that the shortage of 81 tyres of Moped which was found on the physical verification of the finished goods at the time of visit was not disputed by the appellants before the Collector. This was also not seriously disputed before us. Therefore, we confirm the demand of duty. Admittedly, in the instant case except the said diary no other evidence, such as, installed capacity of the factory, raw-material utilisation, labour employed, power consumed, goods actually manufactured and packed etc. has been produced by the department to prove the alleged clandestine production and removal of the same. On the other hand, admittedly at the time of the visit of the factory no discrepancy in the raw material account was found. It was the case of the appellants before the adjudicating authority (see reply in written submission) and also before us that the factory of the appellant did not have the capacity to produce the number of tyres and tubes as shown in the alleged diary during the period in question. The learned Collector has commented upon the said report on the ground that the said report is based on the assumption that the appellants’ factory work for one shift forgetting that the department has not produced any evidence to show that the factory worked for more than one shift of 8 hours and the burden to prove the charge of clandestine removal is on the Department and the assessee has to probablise his defence. No evidence worth the salt is forthcoming on the record to discredit the fact stated in the report given by the said expert. Thus, it cannot be concluded that the note book is an authenticative private record of production so as to raise demand based on the figures indicated therein. At the most, it may raise a doubt but that cannot take a place of proof. Even, there may be certain elements of truth in the prosecution story but between ‘may be true’ and ‘must be true’ there is a long distance to travel and the whole of the distance must be covered by the, legal reliable and unmatchable evidence before a person can be convicted. In the result, we uphold that part of the impugned order which confirms the demand payable on 81 tyres of Moped found short and set aside the remaining part of the impugned order. Thus, the appeal is partly allowed. Issues Involved:1. Demand of duty on 81 tyres found short.2. Alleged clandestine removal of tyres and tubes.Summary:1. Demand of duty on 81 tyres found short:The appellants did not seriously dispute the demand of duty of Rs. 1,275.75 on 81 tyres of Moped found short during physical verification. The Tribunal confirmed this demand, stating, 'We confirm the demand of duty of Rs. 1,275.75.'2. Alleged clandestine removal of tyres and tubes:The Department's case was based mainly on a private diary allegedly detailing unaccounted production. The appellants contested this, arguing that the diary was not connected to their production records and that the confessional statement of Shri Surinder Singh was retracted. They also cited discrepancies in production figures and lack of evidence regarding raw material discrepancies or factory capacity to support the alleged clandestine removal.The Tribunal noted that the learned Collector relied solely on the diary and the confessional statement without considering the retraction or discrepancies. It emphasized that 'no importance can be attached to that part of the confessional statement which incriminates him as it was immediately retracted.' The Tribunal also highlighted the lack of corroborative evidence such as raw material utilization, labor employed, and power consumed.The Tribunal referred to several precedents, including *Sarwan Singh v. State of Punjab* and *Kashmir Vanaspati (P) Ltd. v. Collector of Central Excise*, which underscored the necessity of solid evidence to prove clandestine removal. It concluded that the diary alone could not substantiate the Department's claims, stating, 'At the most, it may raise a doubt but that cannot take a place of proof.'Conclusion:The Tribunal upheld the demand of Rs. 1,275.75 on 81 tyres found short but set aside the remaining part of the impugned order related to the alleged clandestine removal. The appeal was thus partly allowed.