1997 (10) TMI 138 - AT - Central Excise

Summary

Issues Involved:
1. Confirmation of demand of Rs. 2,77,389/- u/r 9(2) of the C.E. Rules, 1944 read with Section 11A(1) of the CESA, 1944.
2. Imposition of penalty of Rs. 40,000/- u/r 173Q of C.E. Rules, 1944.
3. Validity of evidence based on a private diary and statements.
4. Requirement of corroborative evidence for clandestine removal.

Summary:

1. Confirmation of Demand:
The appeal arises from the Order-in-Original dated 25-5-1993, where the Collector of Central Excise, Jaipur confirmed a demand of Rs. 2,77,389/- u/r 9(2) of the C.E. Rules, 1944 read with Section 11A(1) of the CESA, 1944. The demand was based on the seizure of a private diary during a visit by Central Excise officers, which indicated the clearance of M.S. Ingots without payment of duty.

2. Imposition of Penalty:
A penalty of Rs. 40,000/- was imposed u/r 173Q of C.E. Rules, 1944. The appellants denied the allegations, arguing that the diary was not an authenticated record and that all clearances were made after payment of duty under valid gate passes.

3. Validity of Evidence:
The appellants contended that the private diary maintained by Shri R.B. Singh was not reliable evidence for confirming the demand. They argued that statutory records and gate passes should be considered, and the department failed to produce corroborative evidence to substantiate the charge of clandestine removal.

4. Requirement of Corroborative Evidence:
The Tribunal has consistently held that private registers alone cannot be the sole basis for confirming demands without corroborative evidence. The judgments in the cases of Ganga Rubber Industries v. Collector of Central Excise and Kashmir Vanaspati Pvt. Ltd. v. Collector of Central Excise were cited, emphasizing the need for corroborative evidence such as verification from statutory registers, electricity records, and input registers.

Conclusion:
The Tribunal found merit in the appellants' arguments, noting that the Collector did not verify the contents of the diary against statutory records. The Tribunal reiterated the need for corroborative evidence in cases of clandestine removal and set aside the impugned order. The matter was remanded to the original authority for de novo proceedings, with directions to grant the appellants an opportunity to defend their case and to verify the evidence in light of the Tribunal's judgments.