1991 (1) TMI 247 - AT - Central Excise

Summary

Issues Involved:
1. Justification of relying on stock reports for proving clandestine manufacture and clearance of goods.
2. Consideration of averments made in the plaint before the Delhi High Court as conclusive proof.

Summary:

Issue 1: Justification of relying on stock reports for proving clandestine manufacture and clearance of goods.

The appellants, M/s. Roxy Enterprises (P) Limited, were charged with suppressing the production of electric wires and cables valued at Rs. 86,97,946.80 and evading Central Excise duty of Rs. 10,31,772/-. The Department's case was based on discrepancies between stock reports submitted to the State Bank of India and the entries in the RG-1 Register. The appellants argued that the inflated stock figures were for obtaining more credit from the bank and that the records were destroyed in a fire. The Collector of Central Excise confirmed the demand and imposed a penalty of Rs. 3,00,000/- under Rule 173Q of the Central Excise Rules.

The Tribunal found that the Department had not discharged the burden of proving clandestine manufacture and removal of goods. The reliance solely on stock reports from the bank was deemed insufficient without corroborative evidence of actual production and clearance. Previous cases cited by the appellants supported the view that mere discrepancies in stock reports do not constitute proof of clandestine manufacture. Therefore, the Department was not justified in levying duty and penalty based solely on these reports.

Issue 2: Consideration of averments made in the plaint before the Delhi High Court as conclusive proof.

The Department argued that the averments made by the appellants in a plaint before the Delhi High Court, which indicated higher production and sales figures, constituted an admission of clandestine manufacture. The appellants contended that these statements were made in a different context and should not be considered as conclusive evidence. The Tribunal held that admissions made in different contexts could not be taken as conclusive proof without corroborative evidence. The burden of proof remained with the Department to substantiate the charges with concrete evidence, which was not done in this case.

Separate Judgment:

The Technical Member, however, disagreed, emphasizing that the appellants failed to provide any evidence of purchasing the goods from the market. The Technical Member found the stock reports and the statements of bank officials credible and sufficient to support the charges. The Technical Member upheld the impugned order and dismissed the appeal.

The President of CEGAT referred the point of difference to another Member, who agreed with the Technical Member, concluding that the stock verification report, authenticated by the appellants and bank officials, constituted adequate evidence. The appeal was dismissed.

Conclusion:
The appeal was ultimately dismissed, with the majority finding that the stock verification report and the statements of bank officials provided sufficient evidence to support the charges of clandestine manufacture and clearance of goods.