ORDER
Shiben K. Dhar, Member (T)
1. This appeal is directed against Order in Appeal No. 15/91 dated 5-6-1991 of Additional Collector, Central Excise, Jaipur.
2. Facts in brief are that the Appellants were manufacturers of marble slabs, falling under Central Excise Tariff Item 25.04 and had a factory located in Rajsamand, Rajasthan. The appellants were financed by Rajasthan Financial Corporation at the time when the factory was set up. Since appellants had failed to pay some instalments of loan, the Rajasthan Financial Corporation (RFC) took possession of the factory on 6-6-1987. Consequent on verification of stocks by Central Excise Officers on 15/16-11-1988, a Show Cause Notice dated 3-11-1989 was issued to the Appellants alleging that there was shortage of goods and, therefore, appellants, it was alleged, had removed 2239.154 Sq. Mts. of marble slabs without issuing Central Excise gate pass and without payment of Central Excise Duty amounting to Rs. 22,391.54. The Additional Collector in his impugned order dated 5-6-1991 confirmed the duty demand of Rs. 22,391.54 and also imposed penalty of Rs. 20,000/- on the appellants.
3. Arguing for the appellants, the Ld. Advocate submitted that the RFC took over their factory on 6-6-1987 and they duly intimated this fact to the Central Excise Department vide their letter dated 15-6-1987. The Department conducted verification of stock only on 15/16-11-1988 and thereafter issued a Show Cause Notice on 3-11-1989. Even though specific intimation was given to the Department, they did not carry out any stock verification. The factory was completely taken over by the RFC and they had no control either on the fixed assets or on the movable assets and the Corporation, in the meantime, also sold the unit to M/s. Bhagaria Marbles, who took possession of the factory before the stocks were verified. The Ld. Advocate drew attention to the various communications addressed by them to the RFC and to the Department. The Ld. Advocate also cited the case of Rajen (Textile) Mills, Sholapur v. Collector of Central Excise, Pune, 1986 (25) E.L.T. 1026, where Tribunal held that the liability to pay dues on change of ownership of business rests with the successor under Rule 230 of Central Excise Rules, 1944.
4. Ld. D.R. submitted that they were the licencee and, therefore, it was for them to account for the shortages and since there were shortages, it had to be presumed that goods have been sold without paying duty.
5. I have given careful consideration to the submissions made by both sides. From the perusal of the records, it will appear that the factory was taken over by RFC on 6-6-1987. The letter annexed as ‘£’ Page-6 of the enclosures indicates that the unit was locked at 1.30 P.M. in the presence of Notary Public and witnesses. On 15th June, 1987, the appellants wrote to the Collector, Central Excise that possession of their factory had been taken by RFC on 6-6-1987 and, therefore, there was no production in their unit from 6-6-1987. The Ld. Advocate referred to letter of appellants dated 22-8-1989 in which they had referred to the letter of RFC dated 9-12-1988 and submitted that the letter contained contradictions in that, on the one hand, it says that they had not taken possession of the materials and yet the letter says the factory was given to M/s. Bhagaria Marbles Ltd. and materials were under their custody. From the very first letter dated 6-6-1987, it is clear that the RFC had taken possession of the assets of the unit. The fact was also intimated by the appellant to the Department on 15th June, 1987. In spite of this, it is not clear while the Department failed to take an immediate stock when it was evident that actual control of the unit had passed over to another body. The Department has not produced any evidence that in fact the appellants did have effective control upto November, 1988, when they conducted the actual verification. The Ld. Advocate is correct in his submission that goods could have been removed at any time after it was taken over by the Financial Corporation and the Successor Company and, therefore, Successor Company alone was liable to pay such duty. Department has not produced any evidence that it is the appellant as a manufacturer who within the meaning of Rule 173Q removed excisable goods in contravention of any of the provisions of the Rules or did not account for any of the goods manufactured or produced by them. There is only a presumption that since there is a shortage, it is the appellant who must be held responsible. In case of Rajen (Textile) Mills, Sholapur v. Collector, Central Excise (supra), it was held that successor was liable for duty. Apart from this, I find that Department has not placed any evidence at all proving the act of removal or evasion on the part of the manufacturer particularly when intimation of take over of the Appellant’s unit was given in time and no action for nearly I1/’2 year was taken thereafter. No case, therefore, can be made out against the appellants in regard to removal of goods.
6. In the result, therefore, I set aside the impugned order and allow the appeal.
