ORDER
D.C. Mandal, Member (T)
1. In this case, the Preventive Staff of Central Excise Collectorate, Chandigarh visited tie factory premises of the appellants on 2.8.1986 and seized one private note book stated to be maintained by Shri Desh Raj, a contractor working with the appellants. After comparing the entries recorded in the note book with the RG-1 register, the Department issued a show cause notice to the appellants alleging that on 21.1.1986, 22.1.1986, 5.2.1986 and 11.7.1986, the appellants removed 956 tins of vegetable product in excess of what was recorded in the RG-1 register. It was, therefore, alleged that the appellants contravened the provisions of Rules 9(1), 52A, 53,173G, 173F and 226 of the Central Excise Rules, 1944 by clandestinely removing those 956 tins of vegetable product without payment of duty of Rs. 22,444.56. After adjudicating the case, the Collector of Customs and Central Excise, Chandigarh demanded duty of Rs. 22,444.56 in respect of those 956 tins of vegetable product under Rule 9(2) of the Central Excise Rules, 1944 and also imposed a penalty of Rs. 10,000/- on the appellants Under Rules 9(2), 173Q and 226 of the Central Excise Rules, 1944. The present appeal is against the said order of the Collector.
2. During the hearing before me, learned Consultant for the appellants has stated that on 12.8.1986 the Superintendent of Central Excise (Preventive) issued a letter to the appellants pointing out a discrepancy of 1376 tins of vegetable product between the entries in the seized note book and those recorded in the RG-1 register on 21.1.1986, 22.1.1986, 5.2.1986, 24.4.1986, 16.5.1986 and 11.7.1986 and he asked the appellants to explain and reconsile the discrepancy. The appellants sent reply explaining the discrepancy and after that the Department reduced the difference from 1376 to 956 tins. The break up of these 956 tins has been given in the Annexure to the show cause notice, vide page 18 of the paper book. In the said break up, it is shown that on 21.1.1986 and 22.1.1986 (both days taken together) there was a difference of 50 tins and on 5.2.1986 and 11.7.1986, the differences were 900 tins and 6 tins respectively, thus, making the total to 956 tins. The learned consultant has argued that the note book was maintained by the labourers. Some of the entries of the note book were authenticated by Shri B.R. Shar-ma, an employee of the appellants. All the entries were not authenticated over his signatures. Many of the entries are unattested. There are lots of overwritings of entries in the note book, Shri Desh Raj, Contractor, was not an employee of the appellants. The relation between Shri Desh Raj and the appellants is Principal to Principal. Note book seized from a third party (Shri Desh Raj) cannot be used against the appellants. No presumption can be drawn against the appellants on the basis of the note book. Note book has no evidenciary value as against the appellants. In support of his argument, the learned Consultant has relied on the decision reported in 1983 ELT 2208 (Allahabad) in the case of Lalit Kumar v. Assistant Collector of Central Excise, Meerut and Anr. In support of his argument that many of the entries in the note book are not authenticated by any signature and there are overwritings, the learned Consultant has shown to me entries recorded in the note book on 21.1.1986, 22.1.1986, 5.2.1986 and 11.7.1986. He has also argued that the charge against the appellants is based on the so-called excess-loading and not excess-packing as per entries in the private note book. There is also no co-relation between raw materials consumed, vegetable product manufactured, packed and cleared. There is no allegation and also no evidence to show that so-called excess quantity of vegetable product was supported by the raw materials consumed and the vegetable product actually manufactured and packed by the appellants. There is no allegation of shortage of raw materials, nor any excess stock was found in the premises of the appellants, nor intercepted having been removed without any gate pass. There is no evidence that the appellants manufactured and cleared 956 tins of vegetable product. The allegation is based on misconception and so-called entries of the private record of the contractor, which has no evidential value. The learned consultant has further argued that the difference in figures was due to the fact that the goods were taken out for loading in trucks, but the same were taken back as the trucks did not reach the factory premises. This was also deposed by Shri Desh Raj, contractor before the Collector during the adjudication proceedings. Although the Collector has relied on the note book of Desh Raj, he has held that the above deposition is not sustainable. Shri Jain has further argued that Contractor Shri Desh Raj was paid for his services on the basis of the entries in the RG-1 register. This is confirmed by the statement of Shri Desh Raj. A statement of payments made to Shri Desh Raj for his services was submitted to the Collector, but the same was not considered by him. He has also argued that Collector, in paragraph 14 of the impugned order, has relied on the table of clearances prepared by the Superintendent (Preventive), but the said statement was not made available to the appellants. This has resulted in the denial of the principles of natural justice. The learned consultant for the appellants has argued that the period under allegation is from January, 1986 to July, 1986, during which 956 tins of vegetable product valued at Rs. 2,24,445.60 Paise are alleged to have been clandestinely removed. He has stated that total turn-over of the appellants is Rs. 13.5 crores and central excise duty paid is about Rs. 77,00,000/-per year. The vegetable products are supplied by the appellants to the Defence Department. There is no reason why the appellants should try to evade duty of Rs. 22,444/- only during a period of 7 months in a year. He has stated that there is no clandestine removal and no evidence of evading payment of central excise duty.
3. Arguing for the respondents, Smt. Saxena has reiterated the reasons given by the Collector in the impugned order. She has, however, confirmed that there is no co-relation between the raw-materials consumed and vegetable product manufactured, packed, loaded and cleared.
4. I have gone through the records of the case and the arguments advanced before me. The only evidence on the basis of which duty has been demanded and penal* ty has been imposed in this case is a private note book seized from Shri Desh Raj, Contractor. This note book was maintained by the labourers engaged by Shri Desh Raj. I have seen the entries made in the note book on 21.1.1986, 22.1.1986, 5.2.1986 and 11.7.1986. I find that on 21.1.1986 there is an entry of loading 1275 tins and packing 1600 tins. Whereas figure of loading is authenticated by initial, there is no authentication of the figure of packing. On 22.1.1986 entries indicate that 1600 tins were packed and 3930 tins were loaded. The figure 1600 tins against packing is initialled, but 3930 tins in respect of loading is not authenticated by any signature. This is one of the entries in dispute. On 5.2.1986 there is an entry of packing 2000 tins which is not authenticated by any initial. There is an entry of loading 6234 tins which is authenticated by initial. The digit “6” in the above figure of 6234 is overwritten. On the same date, there is figure 3331 tins against unloading. There is correction in this figure. On 11.7.1986, the entry is in Gurumukhi. However, Shri Jain has explained that on that date there is an entry of Ghee loading 2276 tins. This figure bears overwriting and is also not authenticated by any initial. Looking to the various entries in the other pages of the note book, I find that there are innumerable entries which are not authenticated by any signature and there are overwritings in many cases. Shri B.R. Sharma, an employee of the appellants, has also stated in his written statement that he made some of the entries in the note book on account of the work done by the labourers in the factory premises and that labourers used to come to him for getting the entries made in respect of the work done. In view of the fact that many of the entries are not authenticated by the signature of anybody, there is overwriting in the entries without proper attestation and note book was maintained by the labourers and not by Shri Desh Raj, contractor, personally, I am of the view that this is not a dependable record to establish clandestine removal of vegetable products manufactured by the appellants unless the same is supported by other evidence, such as, raw material consumed, goods actually manufactured and packed etc. There is no such evidence on record. There is also no co-relation between the consumption of raw materials, vegetable product manufactured, packed and cleared. In the circumstances, it cannot be held that 956 tins of vegetable products were actually manufactured by the appellants and clandestinely removed from the factory without payment of duty.
5. n view of the above discussions, the impugned order has to be set aside and the appeal allowed. I order accordingly.