THIRUCHENGODE VELAVAR SPINNING Vs. C.C.E.

JUDGEMENT

(1.) THIS appeal arises from Order -in -Appeal No. 255/2001, dated 10 -10 -2001 by which the Commissioner (Appeals) has confirmed the demands on the allegation of clandestine manufacture and removal of cotton yarns of 26's, 34's and 40's counts. On the visit to the factory premises and on checking of the account books, stock, etc. the officers found that on certain dates the figures of cotton yarn production found in the production slips did not match the figures of the gate pass of those days. Solely on this basis proceedings have been built up on the allegation of clandestine manufacture and removal of goods. The stocks were checked and found tallied. Likewise the consignee were examined by the officers and statement obtained pertaining to M/s. TVS Mills Pvt. Ltd. Both on checking it was found that all those invoices were genuine ones. The officers also noticed no incriminating facts from the statements obtained from the consignee. This has been recorded in para 5 of the Order -in -Original. The sole case made out is on the basis of the admissions made by the Managing Director that the figures shown in the production slip was higher than the one recorded in RG I. The gate out register was also seen. The appellant's contention was that these production slips maintained by the watchman and shift supervisor did not contain their signature. They were illiterate persons and they did not know yarn was dispatched under 96E on sale basis and his entries cannot be taken as authentic ones insofar as the entries made in gate out register is concerned. With regard to particulars noted in the production slip it was submitted that the employees had inflated/unreal particulars without blowing the consequence. They also pointed out that the department had taken the figures of the sale invoices/96E invoices which were not genuine to the case. They pointed out that there was no shortage in the input stock, there was no excess production, there was no removal and there was no production by anybody of the final product nor there is evidence of purchase of excess raw materials or excess utilisation of electricity. The original authority did not accept their plea but proceeded on the basis of the earlier statement recorded from the Managing Director and the Security Guard. The said order of the Joint Commissioner was confirmed by the Commissioner (Appeals).

(2.) I have heard both sides and have gone through the records. I notice that the officers seized the production slip and the register maintained at the gate. However it is the department's own case as recorded in Order -in -original that on physical verification of stock they found that all the stocks were in order. The consignees were also examined and nothing incriminating was found from their statement. The appellant clearly explained as to how the production slip was maintained by the illiterate staff and supervisors. They also explained that there was no signature on the said slips. They also explained that the gate out register was maintained by the guard without proper entries made therein. The question that arises for consideration is as to whether these two pieces of evidence can be considered to be sufficient to support the allegation of clandestine manufacture and clearance of goods without any other evidence of excess stock, excess production, purchase of raw material, sale of final product, figures of electricity production, payment of wages to workers and other corroborative evidence. Both authorities have clearly noted that there is no evidence except these two evidences. It is now a settled position of law that mere production slips of private register are not sufficient for the purpose of confirming the allegation of clandestine manufacture and removal of goods. This was held in the case of Krishna Bottlers v. C.C.E. as reported in 1999 (32) RLT 845 which followed the earlier judgment of the Tribunal on the aspect of private registry and chit not being a piece of evidence in the case of Kashmir Vanaspati (P) Ltd. v. CCE as reported in 1989 (39) E.L.T. 655. In an identical matter the Tribunal in the case of K. Rajagopal v. CCE, Madurai as reported in 2002 (142) E.L.T. 128 also held that the entries made in the private note books or chits is not a conclusive piece of evidence to prove clandestine removal unless the scribe of note book are examined and other corroborative evidence processed in the matter. The Managing Director has filed detailed reply to the show cause notice explaining the discrepancy. The discrepancy explained is acceptable and they have not been taken into consideration by the authorities below. Since there was no other evidence available on record even in the terms of the facts noted by the original authority on physical verification there was no excess raw material, there was no excess of production of electricity or payment of wages or excess of production of goods to any private party. The invoices of the consignee tallied with the register. The revenue has not been able to collect evidence of excess manufacture and sale without payment of duty. The two pieces of evidence are not sufficient for supporting the allegation of clandestine manufacture and removal of the goods without payment of duty. In that view of the matter the impugned order is set aside by allowing the appeal with consequential relief, if any.