ORDER
V.P. Gulati, Member
1. This is an appeal against the order of the Collector of Central Excise, Belgaum dated 31.12.1986. The appellants have been charged with clandestine removal of handmade labelled biris and a duty of Rs. 9,67,393.45 has been demanded from the appellants in terms of the impugned order and a penalty of Rs. 2,000 each on two counts has been levied. The proceedings started with the surprise visit of the Asstt. Collector (Preventive) and his party to the appellant’s premises and some shortages of biris with reference to the statutory records detected. Some shortage of tobacco was also detected. The officers also got hold of three chits dated 25.11.1984, 26.12.1984 and 27.12.1984 respectively which supported to show the production figures and these on check were not found to tally with the entries in the statutory records for those dates. Noticing the vast difference between the production figures in the chits and the statutory records, the officers searched under a valid search warrant dated 9.2.1985 the premises of the appellant and recovered some more further records under a panchanama. A scrutiny of these records showed that as far as the period from 30.11.1983 to 8.2.1985 as against 31,64,37,525 biris under different brands were not accounted for and only a quantity of 6,95,28,925 biris were accounted, in the R.G. 12A statutory record. The officers also got hold of 3 private account books containing the details of issue of tobacco during the period 30.11.1983 to 17.12.1984. They also got hold of account books containing particulars of loose biris received during the period 30th Nov. 1983 to 8th Feb. 1985. The scrutiny of the officers revealed that as against the quantity of 67,991.941 kgs. of tobacco the appellant had accounted for a quantity of 15, 131. 840 kgs. in their statutory E. B. 3 register. The officers also examined the records of the wages and found that during the period 9.5.1983 to 5.11.1983 the appellant had manufactured 58,56,160 biris while they accounted for only 6,45,125 biris. The officers also verified the Balance Sheet of the firm for the year 1982-83 and found that the ring pasting charges shown in the Balance Sheet amounted to Rs. 33,324.30 and taking into consideration the payments made by the appellant at the rate of 0 55 per 1000 biris for labelling, pasting the number of biris ringed during the said period worked out to 6,05,89,636 as against the R.G. 12-A figure of 5,69,01,095. Taking all these into account the authorities charged the appellant for having removed clandestinely the biris numbering 32,59,82,226 during the period 1.4.1982 to 8.2.1985. A statement was recorded from Shri Syed Mohamed, partner of the appellant farm in which he admitted to having produced the private records and statutory records on demand by the officers and in his further statement on the same day after the search he testified to the seizure of some more private records under panchanama. He further stated that he had nothing further to state about the two chits or about the seizure of certain documents as be was not fully conversant with the day-to-day accounting in the factory and that he would be able to explain about the same after ascertaining from the dealing clerk and other partners of the firm. However, in his statement on 23.7.1985 with regard to the figures of production in the private records and the figures of clandestine removal and shortage of tobacco as revealed by the scrutiny of the statutory and private records, he wanted to see the original records and accounts and had stated that the figures noted in the private records will not furnish the actual production but are only imaginary figures written for private purposes and has no relevance to Central Excise purposes. The appellant also stated that the letters addressed to the authorities may be treated as evidentiary documents and he wanted to see all he records and pointed out that he has not been provided with a copy of f he panchanama on the spot and copies of the statements were also not given to him immediately. He further pointed out that he has voluntarily produced all the private records on demand by the officers and hence there was no need for a search warrant for production of the records. He also stated that he never mentioned that ho would ask the clerk and then explain the position in regard to the shortages of biris noticed.
2. A show cause notice was issued to the appellant after taking into consideration the various pleas made and duty was demanded from the appellant and the penalty was levied as mentioned above.
3. The Learned Counsel for the appellant at the very outset pleaded that two statements were recorded from the appellant by the authorities and a perusal of the two would show that the appellant on his own violition had produced the statutory records. He pointed out that the appellant had signed the panchanama on the last page but the other pages are not signed and pleaded that the panchanama would not be treated as a proper document for the purpose of adjudication proceeded against the appellant. He pleaded that the cross-examination of the witnesses was done and they have during the cross-examination deposed that they were not available all the time during the period when the search was going on. He pleaded that the appellant had made a genuine plea during the investigation of the proceedings for being shown the private records so that he could make his submissions and clarify the position; he has pleaded that this was not done. He further pointed out that Shri Syed Mohamed, the partner, has not given any inculpatory statement and in the facts and circumstances of the case, reliance on some of the documents, said to have been seized from the appellant’s premises, should not be based for holding the charges against the appellant firm. He pleaded that the documents which have been relied against him would show the record of biris manufactured and the issue of the tobacco. He pleaded that the demand has been raised for a part of the period and no data with regard to production of the biris was available for that period. He pleaded that the whole exercise has been done based on private records without any proper verification. He pleaded that during the past 1 year and 3 months before the search of the appellant’s premises, biris were brought under physical control and since the Excise authorities exercised rigorous control and in spite of that no discrepancy has been noticed in regard to the manufacture and clearance of biris as also the sale and issue of tobacco. The appellant could not, therefore, be held to have removed biris clandestinely in the absence of any evidence of actual removal of the biris. He pleaded that the authorities have not done any proper investigation in regard to the purchase or issue of tobacco or the manufacture of biris with the workers or other employees or even with the buyers of the appellant’s biris to lay their hands for ascertaining the actual removal of the biris, He pleaded that at worst the appellants could be taken to have removed the tobacco which he might have purchased but that does not mean that he has manufactured biris when there was no definite evidence in regard to the same. The Ld. Advocate pleaded that the private records and the books were not recovered from the partner’s possession and in regard to the recovery of the same only the partner’s signatures were obtained. He pleaded that Shri Syed Mohamed, partner was busy elsewhere in connection with an election matter and could not have been present when the search was going on. He pleaded that after Syed Mohamed made enquiries, some of his employees came forward and have admitted that they had prepared the bogus records at the instance of such parties to put Syed Mohamed into trouble and stated that the said persons have filed affidavits and there was no rebuttal of the same by the Departmental authorities He pleaded that examination of such persons had been asked for before the adjudicating authority, but the adjudicating authority did not allow the same without assigning any reason. He pleaded that since the statement of employees had been made on oath, the same, unless it was rebutted, has to be taken to be true and in that background the charges against the appellant based on records should not be taken to be maintainable. He further pleaded that all that has been allegedly shown from the records is that some biris were produced; but there is no evidene that there was any removal of the biris without payment of duty. He pleaded right from the outset Syed Mohamed wanted to clarify the position from the records to the authorities; but the authorities all along refused to make available the documents seized inspite of repeated requests to the authorities. He pleaded that the panchanama copy was not given immediately and in any case it was not a proper panchanama, since all the pages have not been signed. He pleaded that the appellant has been denied the opportunity to peruse the documents and while the statements have been recorded from him, the documents under which he has been charged were held back from him. It this connection he drew our attention to the lower authority’s order and pointed out that one of the witnesses has stated that partner Syed Mohamed has signed only on the last page of panchanama and that he had some books on the table on that day and some on the floor and that the search warrant was signed in his presence and the signature of Syed Mohamed was obtained and that Syed Mohamed and one Jan signed on all the books kept on the table of appellant’s factory and the said records were taken by the officers. He also drew our attention to the cross-examination of the mahazar witnesses Jan and Eranna who admitted to being witnesses and that it was late in the night when they signed the panchanama at midnight. The Ld. Advocate contended that panchanama was not correctly drawn and the authorities had obtained the signatures on the same contrary to the actual position. He further stated that the findings of the Ld. lower authority is vague. He also pleaded that during the physical control when the officers visited the appellant’s factory some of the records seized earlier were seen by the authorities for audit purposes and no discrepancy was noticed and no demand of duty was raised. The Learned Advocate drew our attention to the findings in para 18 of the lower authority’s order in this particular aspect. In support of his various pleas the Learned Advocate relied on the following rulings:
1.
2. 1978 E.L.T. SC 172 : 1976 Cen-Cus 81D
3. 1988 (26) E.L.T. 997 (para 10; at p. 999) : (sic)/1987 (10) ECR 407 (Cegat SB-D)
4. AIR 1972 SC 176 (para 9 at page 178).
4. The Learned Departmental Representative for the Department pleaded that the panchanama prepared by the officers was a proper one and the same had been signed by the partner Syed Mohamed on the last page and that the absence of Syed Mohamed’s signature on other pages does not render the panchanama invalid in the eye of law. He pleaded that Syed Mohamed h as on his own violition signed the panchanama and after perusing the entries in the same records, chits, etc. he merely pleaded that he would have to consult other clerks and other partner. He pleaded that the private records have been recovered from the appellant’s premises. He further pleaded that the authorities had based this case on the appellant’s own records and no satisfactory explanation has been given in regard to the same. He pleaded that the appellant’s explanation that some of his staff members had tried to fudge the documents at the behest of somebody is false and the Ld. lower authority has given reasons in his order as to why he has not chosen to cross-examine the clerks who are stated to have put Syed Mohamed in difficulty in forging the records, and that he has taken note of the affidavits signed by the persons who are stated to have forged the records and put the appellant in difficulty and has given reasons for not accepting the version of the appellant in para 14.1 and the said para for purpose of convenience is reproduced below:
14.1 On a perusal of these affidavits, it is seen that they are working as clerks in the biri factory of Ms. Syed Mohamood and Sons. Shri Sha Saheb in his affidavit stated that he is maintaining accounts of loose bins and that some times in January 1985 he was pursuaded by some of the busy bodies who are inimically disposed towards his proprietor to sabotage the management and he was played into their hands; that accordingly Shri Khzier Ahmed and K. Abdul Huq were pursuaded to assist him in the job for fabricating account inflating figures of production of bins which would add to actual production; that he did that for a backward period from 1983; that for that purpose they removed old register and kept in a separate place so that the management may not get a hunch of what they did while they manipulated current registers outside the office hours and in a quiet place and replaced them in the factory; that when that was in progress they were pressing the gentleman who permitted them to do this job to pay them and he was postponing the issue; that before they could realise the damage that was done obviously at the instigation of that person, the Central Excise Preventive staff of Belgaum seized the accounts which they have manipulated; that the original records were destroyed by them; that there were signatures of the Central Excise Officers on the records destroyed by them; that the records destroyed included tobacco and beedi production accounts; that after the return of their proprietor from Belgaum, they told him all the story and begged for his pardon orally for which they were sorry.
The Ld. D.R. pointed out that all the entries in these records can be correlated with the entries in other records and would show that the entries are genuine. He pleaded that the appellants were maintaining some private records and held them back from the authorities inspite of the provision in this regard under Rule 94(2) of the Central Excise Rules, 1944 under which the licensees are required to submit the list of records maintained by them. He finally adopted the reasoning of the Learned lower authority’s findings in the Order-in Original.
5. We have carefully considered the submissions made before us and gone through the records. We observe that the evidence relied upon by the authorities against the appellant is primarily circumstantial based on the seized records and the point for consideration is whether the same can be taken to constitute the legal basis for the demand raised and the penalty levied in terms of the impugned order. The thrust of the defence plea is that appellant in the proceedings before the lower authority at the initial stage was not allowed to scrutinise the records to clarify the position and that in any case the demand which has been raised based on the entries in the seized private records cannot be legally upheld inasmuch as no evidence of actual removal of the biris has been found. We observe that the proceedings started with the discovery of the shortage of tobacco. Subsequently it led to the discovery of a set of documents in the nature of private records containing entries regarding the issue of the tobacco, the record of the biris manufactured as also the number of bins at the labelled stage. The plea of the appellant is that there is nothing in the mahazar to show as to from where these documents and private records were actually recovered and there is nothing to show that there was any shortage of biris. It has been further pleaded that the private records do not reflect at the actual position and these had been prepared falsely by some of the clerks with ulterior motive to put the partner of the appellant-company in trouble. In support of this, some affidavits have been filed. We observe that it is not denied that the various records relied upon by the authorities were recovered from the appellant’s premises. The only question that falls for our consideration is whether these records reflect the actual position in regard to the tobacco consumed and the number of biris manufactured. We after examining the evidence cited are of the view that the appellant’s plea that the records had been falsely prepared by some of the employees with ulterior motive to put the partner of the firm in trouble is an afterthought The affidavits filed in this regard do not show as to who had induced the said employees into preparing the said records and for what purposes or consideration it was done. There is nothing on record to show that the said employees had any enemity against the partner, Shri Syed Mohamed. The affidavits filed by the employees have been rightly rejected by the Learned lower authority for the reasons recorded by him In the circumstances we do not feel the appellant’s plea alleging that the records have been forged by the employees and that the examination of the persons has not been done by the Ld. Lower Authority, deserves any further consideration and the affidavits do not merit acceptance. The affidavits have been given by the employees who have given a general statement without any basis as to the preparation of the records. The appellant’s partner, Shri Syed Mohamed himself has admitted initially in the statement about the recovery of the private records. His plea that all the pages of the mahazar are not signed does not in any way affect the correctness or authenticity of the mahazar. The mahazar bears the signature of the panch witnesses. The appellant has been supplied with the copies thereof, as seen from the records produced before us and the signature of the appellant on the mahazar. The documents setting out the account of tobacco and the manufacture of biris clearly show that the appellant had been getting large quantities of tobacco which had not been brought on record. There is no explanation as to what the appellant did with the quantity of tobacco which was not reflected in the statutory records. On the other hand there is a record of the biris manufactured in excess of the quantity brought on record. The only inference that follows is that the excess tobacco has been used for the manufacture of the biris. This is further corroborated by the entry in the Balance Sheet of the appellant regarding the wages paid for the ‘ringing’ the biris and pasting of the same. There is no plea from the appollants that the entry in the Balance Sheet regarding wages paid is bogus. The appellants have also not challenged the findings of the Lower Authority that some of the entries in the said private records find a place in the statutory registers, There is also no pica that the biris clandestinely removed do not in any way correspond to the issue of the quantity of the tobacco as reflected in the private registers seized. The appellant’s plea that no evidence as to the actual removal of the bins has been cited or that no investigation was done regarding the removal and sale of biris, has to be considered in the background of the evidence on record Taking into consideration the nature of documentary evidence cited against the appellants, we are of the view that this in no way affects the merits of the case of the Department. We observe that the type of evidence on record by itself gives a reliable picture of the biris manufactured and removed without payment of duty and has to be held as reliable enough to come to a conclusion regarding the quantity of biris manufactured by the appellant and removed clandestinely. The case law cited by the appellant in our main it that appellant to the facts of the case. In this background, therefore, we uphold the conclusions of the Lower Authority, as to the duty payable by the appellants. The penalty levied in the facts and circumstances of the case cannot be said to be excessive and we accordingly uphold the same. In view of the above, we dismiss the appeal.