Customs, Excise and Gold Tribunal - Calcutta
Shakti Products vs Commissioner Of Central Excise, Patna on 11 February, 2002
Equivalent citations: 2002(143)ELT65(TRI-KOLKATA)
ORDER Archana Wadhwa, Member (J)
1. The appellants are engaged in the manufacture of cleansing and washing powder classifiable under Chapter 34 of the Central Excise Tariff Act. During the relevant period for the purposes of the present appeal, the appellants were working under the small scale exemption notification. The appellants' factory was visited by the Central Excise Officers on 27-10-98 and various checks and verifications were conducted. It was found that the total quantity of 568 bags of powder weighing 50 kgs. each were lying in stock. The appellants could not produce the records showing the entries of such bags and submitted that the same were available with his part time Munsi. However, the records were subsequently produced with entries of 568 bags.
2. At the time of investigation by the Officers, the statement of Shri Pradeep Kumar Guddewala, Proprietor of the appellants' Unit was recorded. In his statement, he stated that the average production of the powder was around 200 bags per month (approximately). The statement of Shri Ramjatan Prasad Sah, Labour-in-Charge was also recorded which stated that on the date of the visit by the Officers, the total number of labours and employees were six in number in three batches and the total number of bags packed in the packing section was 16 of 50 kgs, each and the factory rans with 20 days on an average each month.
3. Based upon the above statement of Shri Ramjatan Prasad Sah, the Revenue calculated the estimated production in a month and based upon the same, the Revenue entertained a view that the appellants have manufactured and removed the powder clandestinely without payment of duty by exceeding the exemption limit of Rs. 30 lakhs available under the small scale exemption notification. Accordingly, proceedings were initiated against the appellants vide issuance of the show cause notices for confirmation of demand of Rs. 4,09,2007- for the years 1995-96 and 1996-97. Another notice also proposed to confirm the demand of duty of Rs. 59,960/- in respect of excess clearances made during the period April, 1997 to March, 1998. The said notices culminated into the impugned order passed by Joint Commissioner of Central Excise confirming the total amount of duty and imposing personal penalty of an equivalent amount under the provisions of Section 11 AC of the Central Excise Act, 1944 along with the confirmation of interest. Appeal against the above order of Joint Commissioner was disposed of by the Commissioner (Appeals) vide his order-in-appeal upholding the order passed by the original adjudicating authority. Hence the present appeal.
4. Shri B.N. Chattopadhyay, Id. Consultant appearing for the appellants, submits that the duty has been confirmed against them and the penalty imposed on the findings of the clandestine removal of the powder allegedly manufactured by the appellants during the period 1995-97 to 1997-98. He submits that during the relevant period, the appellant was availing the benefit of small scale exemption notification and had filed the declaration with the Central Excise authorities on 23-9-97 by registered post. It was also only after the receipt of the declaration that the appellants' factory was visited by the Central Excise Officers. He submits that the entire case of the Revenue rests on the statement of Shri Sah, Labour-in-Charge of the appellants' unit recorded at the time of visit of the Officers. He submits that the said Labour-in-Charge was admittedly working with the appellants with effect from August, 1997 and as such was only with them for the last two months. In any case, Shri Sah's statement is to the effect that on the day of visit of the Officers, six workers were working in three batches and 16 bags are packed in one batch. Shri Chattopadhyay submits that the said statement of the worker, who has been with the appellant only for a period of two months prior to recording of the statement, cannot be made the basis for arriving at a finding that the appellants had been manufacturing identical number of bags during the preceding financial years. The said statement is also to the effect that it is only on the day of visit of the officers, six workers were working in three batches. This does not mean that the same production was made on each and every day. He submits that the charges reflecting upon to clandestine removal of the goods are required to be proved by production of positive and sufficient evidence. There is no other evidence relied upon by the authorities for calculating that the appellants had exceeded the exemption limit.
5. Countering the arguments, Shri A.K. Pandit, ld. JDR submits that even on the day of visit of the officers around 568 bags of detergent powder were found lying in the appellants' premises. No records could be produced by the appellants on the ground that the same have been given to their Munsi. The said bags were subsequently entered in the records and the same were produced before the officers. He submits that this factum is sufficient to reflect upon the activities of clandestine manufacture and removal of the goods.
6. I have considered the submissions made from both sides and have gone through the impugned orders. I have also perused the statements made by the Proprietor and Labour-in-Charge. The Proprietor of the appellants' unit, in his statement made at the time of visit of the officers, has clearly deposed that their average production was around 200 bags per month. However, it is the statement of Shri Sah, Labour-in-Charge which has been made the basis for arriving at the finding against the appellants. Apart from the fact that Shri Sah was working with the appellants only for a period of two months and as such his statement cannot be made the basis for applicability for the previous three financial years. I also note that the said statement is only to the effect that on the date of visit of the officers, six workers were working in the Packing Section. This cannot be interpreted to mean that all the days identical number of workers were working in the Packing Unit and they packed the identical number of bags. There is nothing in the said statement to suggest that the identical number of workers worked through out the period in question. The demand of duty on excess production based on such calculation cannot be sustained.
7. I also note that there is no other evidence on record reflecting upon the factum of such huge production in the appellants' Unit during the years involved in the present appeal. The appellants have taken a categorical stand before the authorities below that the capacity of the machines installed in their factory is 100 kgs. per hour and the machine works 8 hours a day. The Revenue has not rebutted the above contention of the appellants as regards their production capacity. Merely because 568 bags were found in the appellants' stock on the day of visit of the Officers is not an indicator towards the appellants' activities of the clandestine manufacture and clearances especially when the Proprietor of the Company in his statement had stated that the same may be the surplus stock of the previous month inasmuch as they are some time not able to sell the goods. Similarly, non-production of records on the ground that the same were in the custody of their Munsi, may amount to raising some doubt against the appellants but cannot take the place of evidence. It is well settled that the small scale units work with limited number of workers and employ part time accountant and it is not unlikely that the account registers might have been taken by the Munsi for completion purposes. The Revenue apart from alleging that the records were subsequently completed reflecting upon the entries of 568 bags has not produced any evidence to prove the said allegations.
8. In view of the foregoing, I am of the view that there is no evidence on record to reflect upon the clandestine activities of the appellants. The confirmation of demand and imposition of penalty imposed upon them, cannot be sustained. Accordingly, I set aside the impugned order and allow the appeal with consequential relief to the appellants.