Customs, Excise and Gold Tribunal - Delhi
Satpushp Steels (P) Ltd. vs Commissioner Of Central Excise on 30 September, 2005
Equivalent citations: 2007[8]S.T.R.319
ORDER
S.S. Kang, Vice-President
1. Heard both sides.
2. The appellant filed this appeal against the Order-in-Appeal passed by the Commissioner (Appeals).
3. The brief facts of the case are that on 5.12.91, the officers of Revenue visited the factory premises of the appellant and certain loose papers were recovered from Shri D.K. Rana. Shri D.K. Rana was an employee of the contractor who supplied labour to the appellant-firm and these loose papers shown the production from 1-11-91 to 30-11-91. According to these loose papers, the production of ingots is much higher than reflected in the RG-1 record. Physical verification was also conducted in respect of the final production found in the factory and it was found that there was shortage of final product. Show cause notice was issued asking for duty in respect of the final product found in short and in respect of the ingots as per slips recovered from Shri D.K. Rana which were not reflected in the RG-1 record. The adjudicating authority dropped the demand on the ground that the demand was raised on the basis of unsigned slips and Shri D.K. Rana was not the employee of the present appellant, in respect of shortage of the final product found in the factory. The adjudicating authority held that the shortage was recorded on the average basis.
4. The Revenue filed appeal and the Commissioner (Appeals) set aside adjudication order and confirmed the demand.
5. The contention of the appellant is that Shri D.K. Rana was not their employee, he is working on behalf of the labour contractor and the loose slips which were made basis for the demand are not signed by D.K. Rana. The contention is that the Commissioner (Appeals) in the impugned order wrongly held that the slips were singed by Shri D.K. Rana in fact Shri Rana put their signature at the time of recovery. On 5-12-91 the contention is that the Revenue is relying on the statement of Rana which is not signed by any excise officer. As per Section 14 of Central Excise Act the statement is to be recorded by the Central Excise Officer as the statement was not signed by any Central Excise Officer, it cannot be relied upon by to raise demand. The appellant relied upon the decision of the Tribunal in the case of DM. Gears Pvt. Ltd. v. CCE to submit that the Revenue cannot rely upon the statement which were not signed by any Central Excise Officer who recorded the statement. The appellant also submitted that criminal proceedings initiated against the appellant which was dropped vide order dated 17-12-96 and in these proceedings also it was held that statements were not signed by excise officer.
6. In respect of the goods found short in the factory the contention is that these shortages was arrived at only estimate basis. The appellant relied upon Panchnama prepared at the time of verification which says the goods were never weighed and only the average weight was taken. The contention is that the demand cannot be made which is arrived at on the basis of average.
7. The contention of the Revenue is that Shri D.K. Rana never retracted in his statement. As per his statement, he admitted that the recovery of the slip which petains to the production of the ingots during the period 1-11-91 to 30-11-91. The contention is also that Shri Mahendra Pal Agarawal, Director of the appellant could not explain the difference of production shown in the loose slips recovered from the Shri D.K. Rana and reflected in the RG-1 record. The contention is that Shri Rana never retracted his statement, therefore, the facts mentioned in the statement regarding the slips can be made basis for demand which shows the actual production of the ingots which is not reflected in the RG-1 record. In respect of the goods found short in the factory, the contention is that no objection was raised, now the appellant cannot challenge the correctness of that. The Revenue relied upon the decision of the Tribunal in the case of Majestic Auto Ltd, v. CCE . In this case, the demand was raised on the basis of certain loose slips recovered from Shri D.K. Rana who is not the employee of the appellant and is working under the labour contractor. From the statement as on record, it is clear that it is not signed by any Central Excise Officer. This fact is also clear from the order passed by the Judicial Magistrate whereby the proceedings were dropped. In the order it is specifically mentioned that the statement was not signed by any Central Excise Officer. I find that the Tribunal in the case of DM. Gears (supra) after considering the relevant provisions of the Section 14 of Central Excise Act is relevant that the adjudicating authority on Chose statement of workers which did not bear the signatures and did not disclose the identity of Central Excise Officer who recorded such statements cannot be sustained. In the present case, signature of the Central Excise Officer who recorded statement is not there. In view of the above decision of the Tribunal, such statements cannot be relied upon for confirming the demand. The loose slips which were recorded from Shri D.K. Rana were not signed by anybody the signatures were obtained by the Revenue on 5-12-91 at the time of recovery, therefore, the finding of the Commissioner in the impugned order that slips were signed by Rana is also not sustainable,
8. In respect of the goods found short in the factory on the Panchnama, it is clear that the shortage was recorded on the average basis. The Revenue relied upon the decision in the case of Majestic Auto Ltd. (supra). I find that the facts of that case are different where the appellant was manufacturer of two wheelers and those were accounted in the presence of the assessee. In such a situation, the correctness of that accounting method was found to be good in absence of any challenge at the time of verification. In the present case certain weighment has been arrived on average basis, therefore, the shortage arrived at without physical weighment and only on average basis is not sustainable. In view of the above decision the impugned order is set aside and the appeal is allowed.
(Dictated & pronounced in open Court on 30-9-2005)