Double accounting and director penalty standards defeated excise demand and personal penalties for lack of supporting evidence.

Duty demand based on alleged excess production was found unsustainable where the records and evidence supported double accounting between machine cards and RG-1, and the Revenue did not displace those factual findings. Personal penalties on directors were also held unsustainable because designation alone is insufficient; the record must show each director's specific role or active involvement in the contravention. In the absence of such evidence, the penalties could not be maintained and were set aside.

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Issues: (i) whether the demand of duty based on alleged excess production shown in machine cards over RG-1, on the theory of double counting, was sustainable; (ii) whether personal penalties on the directors were justified in the absence of evidence showing their specific role or active involvement.

Issue (i): whether the demand of duty based on alleged excess production shown in machine cards over RG-1, on the theory of double counting, was sustainable.

Analysis: The adjudicating authority had examined the manufacturing process, the records maintained by the assessee, the evidence gathered by the officers, the statements and cross-examinations, and the material relating to the alleged difference between machine cards and RG-1. On that appraisal, it found that the entries reflected double accounting at different stages of production and that the alleged excess was not established. The Revenue, in appeal, did not materially dislodge those factual findings or the evidentiary appreciation made in the impugned order.

Conclusion: The demand was not justified and the Revenue's challenge failed.

Issue (ii): whether personal penalties on the directors were justified in the absence of evidence showing their specific role or active involvement.

Analysis: Personal penalty on a director cannot be sustained merely because of his designation. The material must show how and to what extent the particular director was concerned with the contravention. In the present matter, no evidence was produced to establish the active involvement or specific role of the directors in the alleged violations. In such circumstances, the penalties imposed on them could not stand.

Conclusion: The personal penalties were not justified and the directors succeeded on this issue.

Final Conclusion: The duty demand was upheld in favour of the assessee on the Revenue's challenge, and the personal penalties imposed on the directors were set aside for want of evidence of their individual involvement; the matter was thus disposed of with the Revenue's appeals rejected and the other appeals allowed.

Ratio Decidendi: A personal penalty on a director under the excise law requires evidence establishing the director's specific role or active involvement in the contravention, and a duty demand based on alleged excess production must fail where the factual finding of double accounting is not displaced.

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