Appeal partially allowed due to missing units; penalty reduced; matter remanded for quantification.

The appeal was allowed in part. The tribunal found that the four units claimed to have manufactured goods did not exist and that the goods were actually manufactured by the appellant. The penalty imposed on the appellant was reduced due to the unsustainable charge related to one of the units. The matter was remanded for quantification of goods and a reduction in the duty payable, with instructions for the department to issue a notice to the appellant for further proceedings.

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Issues Involved:
1. Demand for duty and confiscation of goods.
2. Alleged manufacture and clearance without payment of duty.
3. Existence of four units claimed to have manufactured goods.
4. Evidence supporting the clearance of goods from the appellant's factory.
5. Statements and cross-examinations of key witnesses.
6. Existence and operations of the four units.
7. Transportation of goods.
8. Quantification of goods and penalty reduction.

Detailed Analysis:

1. Demand for Duty and Confiscation of Goods:
The appellant's advocate did not press the ground for the demand of duty of Rs. 6.27 lacs and the confiscation of goods seized from the appellant's premises. Consequently, the tribunal focused on other aspects of the case.

2. Alleged Manufacture and Clearance Without Payment of Duty:
The appellant was accused of manufacturing and clearing high-density polyethylene sacks without paying duty. The sacks were allegedly shown to be manufactured by four firms to exploit exemptions under Notifications 175/86 and 65/87.

3. Existence of Four Units Claimed to Have Manufactured Goods:
The Commissioner concluded that the four units did not exist and that the goods were actually manufactured by the appellant. The tribunal noted that the notice and the Commissioner's order were clear that these units were created on paper to facilitate duty evasion.

4. Evidence Supporting the Clearance of Goods from the Appellant's Factory:
The primary evidence was the statement of Satishkumar Bhagwandas Biswani and the records maintained by him. Biswani's records showed higher figures of printed bags than those recorded in the RG1 register. The appellant contended that Biswani's figures included clearances from the four units, making his statement insufficient evidence.

5. Statements and Cross-Examinations of Key Witnesses:
Biswani's cross-examination did not significantly contradict his earlier statement. His ambiguous reference to a unit "perhaps called Balaji" and the lack of clarity in his cross-examination did not undermine his initial clear and specific statements.

6. Existence and Operations of the Four Units:
- Shree Ram Enterprises: The proprietor, Ram Lal Dhoot, maintained that he was the proprietor and had machinery for manufacturing. Despite some connections to the appellant, the tribunal found insufficient evidence to conclude that no manufacture took place.
- Ganapati Enterprises and Shubh Enterprises: The statements of the proprietors suggested occasional manufacture but overall indicated that these units were not genuine factories. The tribunal concluded that these units did not exist.
- Raj Industries: The proprietor's inconsistent and vague statements, along with the absence of machinery, led the tribunal to conclude that no manufacture took place.

7. Transportation of Goods:
There was no evidence of vehicles used for transporting goods from the alleged units to the Bombay office or customers. Statements from transporters indicated that consignments were loaded from HVPL only. The tribunal noted the lack of evidence showing transport of goods from the appellant's premises.

8. Quantification of Goods and Penalty Reduction:
The Commissioner's order did not specify the quantity of goods manufactured by Shree Ram Enterprises at HVPL. The tribunal remanded the matter for quantification by the Commissioner. The penalty imposed on the appellant was reduced from Rs. 10.00 lacs to Rs. 6.00 lacs due to the unsustainable charge related to Shree Ram Enterprises.

Conclusion:
The appeal was allowed in part. The department was instructed to issue a notice to the appellant indicating the quantity of goods manufactured by Shree Ram Enterprises and the duty payable. The Commissioner was to determine the duty payable and reduce the demand accordingly, providing consequential relief as per law.

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