TaxTMI 
TaxTMI 
1983 (11) TMI 293
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....msp;The facts of the case, briefly stated, are : (a) The appellants are manufacturers of Water-pigment finishes for leather (for brevity's sake to be called hereafter as W.P. finishes). Based on scrutiny of the private records of the appellants such as challans, delivery notes, Cash memos, private gate-passes, bills and outward challan registers, the Department charged the appellant with having removed, without accountal in the statutory record, without payment of duty and in a manner otherwise than as provided in the Central Excise Rules and in contravention of Rules 9(1), 52A, 53 and 226 of the Central Excise Rules (hereinafter to be referred to as the Rules), 2,81,656.884 Kg. of W.P. finishes during the period 1-10-1960 - 19-1-19....
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....ltant, for the appellants, submitted that : (i) The appellants' factory commenced production in 1948 and came under excise control in 1955 when excise duty was first imposed on, among other things, W.P. finishes for leather. (ii) During the entire period, relevant to the present matter, the factory worked under the system of physical excise control. Under this system, goods could be cleared only on assessment of the goods by the Central Excise Officer and after payment of duty, on gate passes countersigned by the officer. There was, therefore, no question of any clandestine removals since the factory was under continuous supervision by Central Excise Officers. The Department had not come across a single instance of clandesti....
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....ant notification, it was due to inadvertance or error in the part of the officer. (vi) In any event, Rule 10A was deleted on 6-8-1977 (i.e. before the issue of the present demand notice) when a period of 6 months was prescribed in Rule 10 for issue of demand notice. (vii) The demand notice contains assumptions and presumptions, e.g. doubling the production of October 1960-March 1961 for arriving at the production of the financial year 1960-61 in the absence of the records for April to September, 1960. Reliance was placed on E.L.T. 1978 (J 152) - Oudh Sugar Mills Ltd. v. Union of India. (viii) In the above circumstances, the demands and the penalty should be set aside. 4. Shri A.K. Jain, the learned Department....
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....pril 1960 to March 1961 in the absence of any other data. 5. In reply, Shri Seth submitted that : (i) The appellants were not disowning or disputing the entries in the private records but only disputing the correctness of the interpretation of the entries; (ii) There could be no question of mis-statement or suppression when, under the physical control system, all goods had to be cleared on ARI forms and gate passes duly checked and countersigned by the Central Excise Inspector; (iii) Rule 10A was not in existence at the time of issue of the show cause notice; (iv) The Central Excise Inspector had misled the appellants by his erroneous interpretation of Notification No. 137/60 and, therefore, it could not b....
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....occasional physical checks by the Central Excise staff and scrutiny of assessment on the basis of monthly returns. (iii) In the above view of the matter, it could not be said that the department has discharged the onus on it to a reasonable degree. It is difficult to believe that over a period of 7 years and more, the assessee could have systematically suppressed the production and cleared the unaccounted production without such violations ever having been noticed by the Central Excise staff. There is no instance on record of any of the goods allegedly produced and removed in violation of the Central Excise law having been seized by the Central Excise staff. Nor has any evidence in the shape of statements of the buyers of the goods ....