ORDER
Gowri Shankar, Member (T)
1. This appeal is against the order of the Collector of Central Excise, Jaipur confiscating 13.860 MTs of M.S. Ingots but giving the appellant an option to redeem them on payment of fine of Rs. 40,000/-; confirming the demand for duty of Rs. 2,44 lakhs approximately and imposing the penalty of Rs. 25,000/- on the appellant. I have heard Ms. Archna Wadhwa, Advocate for the appellant and Shri K.K. Dutta, JDR for the deptt.
2. The action of the Collector was based on two counts. One was that 13.680 MTs. of M.S. Ingots was not recorded in the RG 1 Register. Against this the appellant has not filed an appeal. The finding of the Collector on the second count, was that the appellant manufactured and cleared without payment of duty 387.910 M.T. Ingots during the period from November 1990 to March, 1991. The basis for this allegation is the “heat record” recovered from the assessee’s unit. This record relates to the heating of the furnace for manufacturing ingots. The Collector has gone by the statement of Shri Dharam Pal that in one heat on an average 25 ingots are produced, each of them on an average about 85 Kg. On this basis he had concluded that during the period in question, 1351 ingots weighing 1117.75 MTs. were produced. Duty has been demanded on the quantity which was not entered in the RG 1 register.
3. Ms. Wadhwa argued that clandestine removal has not been established on the basis of independent finding as it was required to be done in terms of subsisting decision of the Tribunal. It is not correct to arrive at the quantity on the basis of averages. The fact that Shri Dharam Pal voluntarily tendered duty, cannot lead to estimate that he has agreed to the facts. Shri Dutta, DR points out that this duty has been paid voluntarily and Dharam Pal has not retracted his statement.
4. The entire basis for the Collector’s finding is number of heats according to the heat record recovered from the unit and arithmetical calculation based on this production. He takes into account the average production in each heat, and the average weight of each ingot had come to the figure in question. He seeks to buttress his conclusion by reference to the capacity of the furnace. It is settled law that production and removal without payment of duty have to be established beyond reasonable doubt and cannot be based on surmise and conjecture. Shri Dharam Pal has in his statement has not specifically stated that the quantity attributed to the unit was actually manufactured. In his statement dated 21st March, 1991, he says that in a heat approximately 20 to 30 ingots can be produced and that approximately 80 to 90 Kgs. would be the weight of each of the ingots. He further says that if any duty is payable on the basis of statement of Shri Ram Murat, he will pay. In his further statement, he says that details of production based on “agreed quantity of quality on average basis”, this is the basis of comparative chart that officer drew up in the production and duty. There is no statement of Shri Ram Murat, Supervisor of the firm agreeing to any quantity of ingots having been produced and cleared without payment of duty. Analysis of Shri Dharam Pal’s statement does not show that he has agreed that any quantity of goods in excess of entered in the RG 1 register has actually been manufactured and cleared on payment of duty. The fact that he agreed to pay the duty is not the samething that he has agreed that such clearance has taken place. There is certainly, a case for saying that he would not have agreed to pay the duty if there has been absolutely no removal without payment of duty. The presence of heat records leads to an inferable theory that some quantity beyond RG 1 register has been manufactured and was cleared. However, it was up to the officer investigating the case to determine this quantity and to establish that such manufacture has taken place. This quantity of goods could not have vanished into thin air, if Shri Dharam Pal was cooperative enough to pay the duty, he would certainly have shown the details of the mode of removal and method of receipt of payment. It is possible that some quantity of ingots was manufactured and was cleared without payment of duty, but that is not enough to establish the case of clandestine removal and demand of duty. Even the quantification of duty is based purely on averages and there is no specific evidence that goods were manufactured and cleared without payment of duty.
5. The position could have been different if the officer have undertaken appropriate investigation of the heat record as a starting point and not in concluding that the case was made because of presence of heat record. It is however, not for this Tribunal to make up the deficiency – as in this case the total absence of evidence of investigation. On the facts before us it is not possible for us to conclude with reasonable certainty that the quantity of goods found by the Collector to have been removed without payment of duty, was actually removed. The benefit of doubt has to go to the appellant. The result would be that the demand for duty has to be set aside. Since the confiscation of 13.680 MTs of M.S. Ingots is not being in question, the Collector’s order in this regard is confirmed. Penalty is reduced to Rs. 5,000/- (Rupees Five thousand only).