ORDER
Shiben K. Dhar, Member (T)
1. This appeal is directed against Order-in-Original No. 14/34/91/Collr., dated 10-12-1991. The issue relates to alleged clandestine removal of goods involving duty of Rs. 7,56,517.02. On checking certain records it was found that some goods entered in the production log had not been accounted for in R.G. 1. Consequent to initiation of proceedings the Collector held that goods to that extent had not been accounted in R.G. 1 and has been removed without payment of duty. He therefore confirmed the demand of duty and also imposed penalty of rupees one lakh.
2. Arguing for the appellants Legal Manager of the appellant company submits that quantities alleged to have been removed were worked out on the basis of entries in the production log maintained by unskilled workers. Comparison with R.G. 1 not only revealed shortages but compared to production log also indicated the excesses. If excesses and shortages are adjusted the duty liability if at all would be only Rs. 3 lakhs. Actually however the difference between the quantity indicated in the production log and that in the R.G. 1 is due to the fact that goods are to be reprocessed when these do not conform to quality control standards. It is only when goods fully satisfy the requirement of quality control that these are entered in the R.G. 1. The difference of 72 tonnes between the production log and R.G. 1 pertains to the period extending to nearly 4 years during which time the total production in the factory was 93,000 tonnes. The difference is therefore negligible i.e. 0.08%. Production as indicated in the production register completely tallies with the production entered in the R.G. 1. In view of this what was more reliable was the daily production record and not the record maintained by unskilled workers to indicate the daily production for the purpose of incentive bonus. All these pleas were taken before the collector and in this connection he takes us through the reply to the show cause notice addressed to the Collector. He submits that except the negligible difference between the production entered in the records maintained by unskilled workers and that in the R.G. 1, there is no corroborative evidence to support the clandestine removal and this cannot be merely inferred. On the other hand, one of the reliable basis to arrive at a finding as to whether or not there has been clandestine removal would have been to examine the raw material (sulphonic acid). In this connection a certificate from Naveen Patodi & Co.; Chartered Accountants (Annexure-III of Supplementary Paper Book) was submitted in the Court. This certificate indicates Sulphonic Acid Reconciliation for the years 1987-88,1988-89 and 1989-90. He submits that there is no evidence to prove the charge of clandestine removal. In respect of this unit the appellants are paying excise duty of Rs. 30 crores annually. If the intention was to evade duty the excess quantities would not have been recorded in the production record on a consistent basis. In fact there has been a constant excess and shortage in the production logs which are maintained by unskilled workers. In support of his contention that in such circumstances the charge of clandestine removal cannot be sustained he cites the case of Prabhavati Sahakari Soot Girni Ltd. – 1990 (48) E.L.T. 522..
3. Ld. DR reiterated the Departments arguments and submits that to the extent production shown in the production log was not entered in the R.G. 1 it has to be presumed that such goods were removed without payment of duty.
4. We have heard both sides. A perusal of the reply to show cause notice (page 19 to 33 of the Paper Book) indicates that all these pleas had been taken up before the Collector. The Collector, however, has disregarded the evidence in the form of daily production slips and recorded that production log is a basic record maintained by the shiftmen engaged in the production. Such shiftwise production, according to the Collector, ought to have been correctly recorded in the statutory records. There is no other evidence except the difference in the production log and R.G. 1 to sustain the charge of clandestine removal. The fact of clandestine removal has to be proved and cannot be merely inferred. The more accurate record in these circumstances certainly was the daily production slips which they have cited in their defence before the Collector. The Collector, however, has not given any finding in regard to this. In these circumstances the records maintained at the primary stage by the workers indicating the production cannot be relied upon as the sole evidence to support the charge of clandestine removal. The fact that there was no difference between production slips and the production in the R.G. 1, which plea was taken before the Collector, has not been rebutted- In these circumstances, in the absence of any affirmative or corroborative evidence it would be difficult to sustain the charge of clandestine removal. In Prabhavati Sahakari Soot Girni Ltd. v. Collector of Customs & Central Excise reported in 1990 (48) E.L.T. 522 it was held by this Tribunal that allegation based only on one document i.e. daily spinning and winding register, is not enough to establish the charge of clandestine removal. In the case of Kashmir Vanaspati (P) Ltd. v. Collector of Central Excise reported in 1989 (39) E.L.T. 655 it was held by this Tribunal that note book maintained by labourers containing unauthenticated entries and over-writings are not dependable record to establish clandestine removal unless same are supported by other evidence such as raw material consumed, goods actually manufactured and packed etc. In this case we find that only one document i.e., production log maintained by workers, has been relied on and other documents i.e., daily production slips have been ignored. There is no other evidence except the variation between the production log and R.G. 1 to sustain the charge of clandestine removal. In these circumstances we hold that the evidence relied upon is not sufficient to sustain the charge of clandestine removal. In view of this we set aside the impugned order and allow the appeal.