1991 (8) TMI 201 - AT - Central Excise

Summary

Issues Involved:
1. Alleged illicit manufacture and removal of vegetable products and soap.
2. Validity of evidence based on private register and statements.
3. Time-bar under Section 11A of the Central Excises and Salt Act, 1944.
4. Penalty under Rule 173Q of the Central Excise Rules, 1944.

Summary:

1. Alleged illicit manufacture and removal of vegetable products and soap:
The appeal was filed against the Order-in-Original passed by the Collector of Central Excise and Customs, Vadodara, confirming the demand of Rs. 3,39,463.35 Ps. on 32636 tins of "Vegetable Products" and Rs. 16,588.70 Ps. on 3338 cases of 'Soap' alleged to have been illicitly manufactured and removed without payment of duty from July 1983 to January 1984. The Collector also imposed a penalty of Rs. 7 lakhs u/r 173Q(1) of the Central Excise Rules, 1944.

2. Validity of evidence based on private register and statements:
The department's case was based on a private register found during a preventive check, which allegedly showed unaccounted production and removal of goods. Statements from various employees and directors of the company were recorded. The assessee argued that the private register contained records of unfinished goods used for labor control and statistical purposes, and that entries in the R.G. 1 register were made only after the goods were fully processed and tested. The Collector rejected these contentions, concluding that the entries in the private register indicated finished goods and clandestine removal.

3. Time-bar under Section 11A of the Central Excises and Salt Act, 1944:
The assessee contended that the demand was time-barred as the clearances of soap manufactured without the aid of power were made at NIL rate of duty after filing declarations with the Range Officer. The Collector rejected this contention, holding that the assessee had suppressed facts with intent to evade duty.

4. Penalty under Rule 173Q of the Central Excise Rules, 1944:
The Collector imposed a penalty of Rs. 7 lakhs u/r 173Q(1) based on the alleged clandestine removal of goods.

Tribunal's Findings:
The Tribunal found that the private register was not a reliable piece of evidence for proving clandestine removal, as it was maintained for production purposes and not for recording finished goods. The statements of the employees and directors did not conclusively prove clandestine removal. The Tribunal also noted that the Collector had not properly scrutinized the private register or the statements, and had not provided sufficient corroborative evidence. The Tribunal relied on previous rulings that unauthenticated entries in a private register without corroborative evidence cannot establish clandestine removal. The demand for duty on soap manufactured without the aid of power was also found unsustainable, as it was within the department's knowledge.

Conclusion:
The Tribunal set aside the impugned order and allowed the appeal, holding that the evidence was insufficient to prove clandestine removal and that the demand for duty on soap was unsustainable.