Customs, Excise and Gold Tribunal - Delhi
Roxy Enterprises (P) Ltd. vs Collector Of C. Ex. on 4 January, 1991
Equivalent citations: 1992ECR361(TRI.-DELHI), 1991(53)ELT585(TRI-DEL)
ORDER G.A. Brahma Deva, Member (J)
1. This appeal arises and directed against the Order-in Original No. 4/87 issued under C. No. V (33B)/15/45-CE/85/1035 dated 5-5-1987 passed by the Collector of Central Excise, New Delhi.
2. The appellants M/s. Roxy Enterprises (P) Limited, Delhi are manufacturers of Electric wires and cables falling under Tariff Item 33-B of Central Excise Tariff. The subject matter of this appeal, according to the Department, is that the appellants have suppressed their production of Electric Wires and cables valued at Rs. 86,97,946.80 and evaded Central Excise duty to the tune of Rs. 10,31,772/-. On 10-7-1985 Central Excise (Preventive) staff of MOD-II, New Delhi visited the factory to verify the stock and central excise records maintained by the appellants and noticed that stock declared by the appellants to the State Bank of India, Chandni Chowk, Delhi as on 25-2-1985 and stock taking report of the State Bank of India on 25-4-1985, when compared with the entries in their RG-1 Register on their respective dates it was revealed that items/quantity was not entered in the R.G. 1 Register to the extent goods worth Rs. 86,97,946.80. Accordingly, a show cause notice was issued calling upon the appellants to show cause why a penalty should not be imposed under Rule 173Q of the Central Excise Rules and why the duty payable on the above said goods is not to be demanded under Rule 9(2) of the Central Excise Rules for suppression of their production and clearance of goods without payment of Central Excise Duty for having contravened the provisions of the Central Excise Rules. In the reply to the Show Cause Notice the appellants denied the clandestine manufacture and removal of Electric wires and cables and explained that the goods which had been pledged with the Bank were not manufactured by them. Inflated stock figures given in the statement and prepared as per requirements of the Bank to get more credit facility and furthermore the goods shown in the Stock Statement had been purchased from the market but they could not prove with documentary evidence as the connected records were destroyed in a fire which had taken place in their factory on 31-10-1984 after the assassination of the Prime Minister for which they had filed a FIR No. DD15 dated 15-11-1984 with the Local Police. No additional machinery has been added during the period to conclude that they had manufactured more goods than they had been doing normally. The Collector of Central Excise negatived the contentions of the appellants and confirmed the demand of Rs. 10,31,772/- and also imposed a penalty of Rs. 3,00,000/- (Rupees three lacs) under Rule 173Q of Central Excise Rules.
3. We have heard Shri J.S. Aggarwal, learned Advocate for the appellants and Shri R.M. Ram Chandani, learned S.D.R. for the respondent. Shri J.S. Aggarwal contends that the burden is on the Department to establish that the appellants have manufactured so much of goods and cleared without payment of duty within that relevant period and in the absence of any material evidence to show that it was manufactured during that period and simply relying upon the certain figures of stock given by the party to Bank and stock taken by the Bank cannot be taken as basis for clandestine manufacture and removal of goods to attract duty and penalty under Rules 9(2) and 173Q of the Central Excise Rules, 1944. He submitted that it was impossible to produce such alleged huge quantity of production within that period without additional machinery and additional raw material. The Excise Officers who had been visiting frequently noticed no such large variation or discrepancy for such large production and no evidence to show for addition of machinery or consumption of more electricity to vary from fixed norms of production besides the installed capacity. He submitted that there would not have been case of suppression but for the complaint by the Bank with whom the appellant has entered into a dispute regarding credit facility and still the litigation is going on in Delhi High Court. The order of the Collector relying on stock figures supplied by such Bank is not sustainable. The Collector ought to have considered the facts of inflated stock figures given to Bank and that too out of purchases from the outside persons, non-production of purchase invoices due to destruction in the fire on account of disturbance of assassination of Prime Minister before passing the impugned order in the absence of any material evidence for such huge production. In support of his contention he cited the following decisions:-
(i) 1983 (13) ELT 1611 (S.C.), J.A. Naidu, Etc. Etc. v. State of Maharashtra,
(ii) 1987 (10) ECR 407 (CEGAT SB-D), Ebenezer Rubbers Limited v. Collector of Central Excise.
(iii) 1986 (9) ECR 323 (Cegat NRB), Premier Packaging Pvt. Ltd. v. Collector of Central Excise, New Delhi.
(iv) 1988 (33) ELT 376 (Tribunal), Alwyn Industries Corporation v. Collector of Central Excise, New Delhi.
(v) Order No. 114/84-NRB, Raja Radio Company, Bombay, v. Collector of Customs, Bombay.
(vi) Order No. 563/86-NRB, Standard Cylinders (P) Ltd. v. Collector of Central Excise, New Delhi.
Among the cases cited, particularly he submitted that Alwyn Industries Corporation v. Collector of Customs, Bombay [1988 (33) ELT 376 (Tribunal)] in all fours is applicable to the present case wherein it was held that in the absence of proof of manufacture, the reliance only on the letters from the Bank was insufficient to come to the conclusion that the appellant was engaged in the manufacture of wires and cables.
4. On the other hand, Shri Ram Chandani, learned SDR, submitted that the appellants themselves admitted the stock position on 25-2-1985 and the responsible Bank Officials have taken the stock report on 25-4-1985 and relying on these figures the Collector was justified in charging for clandestine manufacture & removal of goods as it was not duly entered in the register (R.G.I). Further, it cannot be said that these were purchased from outside in the absence of any proof or to show for having purchased or the appellants were permitted under Rule 51-A. He contends that the decision cited by the counsel was concerned with charge of manufacturing cables without licence in case of factory which was not in existence is not applicable to the existing factory in this instant case.
5. After hearing both sides at length on merits, we have closed the case and reserved for order. Based on the arguments addressed, while dictating the order on perusal of the records we found that the appellants were charged for clandestine manufacture and removal of goods based on two stock reports available with the Bank, one was admitted by the Bank and the other was taken by the Bank. Apart from this, there was no evidence to show that these goods were manufactured and cleared without payment of duty. Even the appellants too have not produced any evidence to show that these goods were purchased from outside. Further we observed that the annexures to the appeal filed by the appellants herein particularly copy of the plaint in the original suit against State Bank of India filed before the High Court of Delhi wherein some of the averments made in that plaint particularly in respect of production are contrary to the stand taken by the appellant in the present case. We felt that this aspect has to be clarified by both sides and accordingly we have reopened the case to hear on this particular issue.
6. The averments made in paras 3 & 7 of the plaint are reproduced as under :-
"3. That the plaintiffs by the utilisation of the various limits afore-referred boosted their production and sales and it may be appreciated that the sales had the upward trends inasmuch as that in 1979-80 the sales were to the tune of Rs. 68.00 lakhs and the same were in the year 1980-81 to the tune of Rs. 157.00 lakhs approximately. The sales further increased to Rs. 176.00 lakhs approximately in the year 1981-82 and to Rs. 225.00 lakhs in the year 1982-83, and to Rs. 230.00 lakhs in the year 1983-84. The target to be achieved in 1983-84 was around 300.00 lakhs but due to the Defendant No. 1 withholding the bill discounting facility, the plaintiffs suffered a set-back.
7. That in the execution of the project afore-referred, the mode is that on the finance which may be released by the defendant Bank, stocks and raw materials are purchased and from the same finished goods is manufactured. The orders from the State Electricity Boards and other purchasers are secured relying on the commitments of the Bank to keep provided the facility and finance as per the limits granted..."
When the above averments were brought to the notice of the appellants' counsel Shri J.S. Aggarwal at the time of rehearing, he submitted that main dispute is in between the appellants and the Bank and whatever the inflated figures given or stated before any authority either for obtaining loan or in litigation cannot be taken note of at this stage and he drew our attention to para-12 of the plaint which reads as under :-
"12. That the defendant No. 2 with a view to cause harm and injury had planned to get trapped the plaintiffs and on one hand he suggested of filing statement of stock in such a way so as to enable him to start allowing facilities and in this regard he himself got inflated the figures in the said statement and later in utter disregard of the confidence got reposed in him and the Bank, the defendant No. 2 made false report to the Excise Department, suggesting actions and sought to utilise his own tricky and trickly procured statement."
Further it was contended by him that burden squarely lies on the Department to prove that clandestine manufacture and removal of the goods. In the absence of proof of such material evidence the admission made by the party in different context for different purpose cannot be considered as conclusive evidence for production and that too this aspect was not considered and substantiated by the authority adjudicating at the original instance. He contended that affidavit itself is not a proof, fact or conclusive evidence unless it was proved as held by the Hon'ble Supreme Court in the case of Smt. Savithramma v. Cicil Naronha and Anr. (1988 AIR SC 1381) and in the case of Mansingh Lamba & Sons and Ors. v. Collector of Customs & Central Excise, New Delhi [1987 (32) ELT 730]. It was argued by him that it is not open to Central Excise authority to urge on points based on plaint or on affidavit in reply to a ground not taken in the order sought to be impugned thereby seek to make out a new case in justification of the impugned order as held in the case of Bush (India) Ltd., v. Union of India and Ors. [1980 (6) ELT 258 (Bom.)]. He said that even inflated figures given by the appellants for getting more advances is not a conclusive proof with regard to allegation of clandestine removal and he relied on the following decisions :-
(1) Rakesh Bulb Industries v. Collector of Central Excise, Pune, [1989 (22) ECR 171].
(2) Commissioner of Income-tax, Madras v. Ramakrishna Mills (Coimbatore) Ltd., (1974 93 ITR 49).
7. Smt. Dolly Saxena appearing for the Revenue at the time of rehearing sub-mitted that averments made in the plaint before the Delhi High Court is admission which amounts to clear confession and sufficient proof for clandestine manufacture and removal of the goods.
8. The following issues arise for our consideration :-
(i) Whether the Department was justified in relying upon the stock reports available with the Bank as sufficient material to hold that appellants have clandestinely manufactured and cleared the goods without payment of duty ?
(ii) Whether averments made in the plaint before the Delhi High Court can be considered at this stage and the statement made by the appellant before the Court amounts to conclusive proof ?
9. Now, we shall consider and analyse the ratio of the decisions cited by the counsel for the appellants.
(i) In the case of J.A. Naidu, Etc. Etc. v. State of Maharashtra (1983 (13) ELT 1611), the Supreme Court while dealing with the Criminal appeal matter relating to contraband articles under the Customs Act, observed that "it was for the prosecution to prove affirmatively that the contraband articles were in the conscious possession of accused and that the accused had received currency notes as claimed by the prosecution. To presume the accused guilty unless he proved innocence was not the correct approach to the appreciation of evidence. Nor the suspicion, however, grave can take the place of proof. Therefore, conviction based on such criteria was illegal and invalid."
(ii) The Tribunal has taken the view in case of Ebenezer Rubbers Limited v. Collector of Central Excise, Ahmedabad [1987 (10) ECR 407] that the penalty cannot be imposed on the basis of material which points out to only a possibility of clandestine removal and further held that clandestine removal must be proved and supported by sufficient evidence so as to demand duty by observing that "there is no evidence that the department has made any attempt to check with the octroi authorities whether the payments of the appellants have been as per those invoices. These invoices have not got linked or related to any other documents which would establish the existence of any goods other than those accounted for."
(iii) Further it was observed by the Tribunal in the case of Premier Packaging Pvt. Ltd., v. Collector of Central Excise, New Delhi [1986 (9) ECR 323] that "Demand-Show Cause Notices containing no evidence or specific allegation of clandestine manufacture and removal is vitiated - Demand based on unwarranted assumption is illegal - Rule 9 is not applicable when there is no evidence of clandestine removal and manufacture - Rule 173E which provides for assessment on the normal quantum of production at a given time determined by the proper officer, is not applicable when no norm of production has been fixed."
(iv) The case of Alwyn Industrial Corporation v. Collector of Central Excise, New Delhi [1988 (33) ELT 376 (Tribunal)] where the appellant strongly relied on in which it was held that in the absence of any proof of manufactured goods the reliance only on the letters from the Bank is insufficient to come to the conclusion that the Appellant was engaged in the manufacture of wires and cables. The consistent case of the Appellant that no such activity was carried on by the Appellant cannot be rejected merely on the basis of two letters from the State Bank of India wherein also no specific statement is made about the actual manufacturing operations.
10. On going through the factual position and as per legal position of the above decisions, it is clear that the Department has not discharged the burden in proving the clandestine manufacture and removal of goods except to the extent relying upon stock report available with the Bank, although burden is more on the Department in proving the clandestine manufacture of goods. The material relied upon by the Department is not sufficient to hold clandestine manufacture and removal of goods and to bring charge under Rule 9(2) and 173Q of the Central Excise Rules for levy of duty and penalty. In the absence of sufficient material of evidence the Department was not justified in levying duty and penalty for charge of clandestine manufacture and removal of goods. Hence, the Department fails on the first issue.
11. As regards second issue, the averments made in the plaint in the original suit filed by the appellants against State Bank of India before the Delhi High Court prima facie seems to be contrary to the stand taken by the appellants in the present case. But this aspect was noticed by the Bench at later stage and neither it was considered nor was it substantiated by the Adudicating authority at the original instance. Further the case of the Department in charging clandestine manufacture and removal of goods was based on stock reports available with the Bank either as admitted by the party or taken by the Bank. These figures were supplied by the Bank due to dispute in between the Bank and the appellants. For the reasons given in the foregoing paragraphs we hold that information obtained by the Bank itself is not sufficient proof to show that the goods were manufactured unless it was substantiated with other evidence to show that goods were clandestinely manufactured and removed. On the same analogy we hold that even admission, confession or sworn statement given by the appellant before the other authority in different context for different purpose cannot be taken as conclusive proof in the absence of positive evidence adduced by the Department. At best it may be an inference but not substantial proof. Further this aspect was not considered by the original authority. Under taxing statute while concluding best judgment assessment it should be based upon facts and circumstances found by the assessing authority himself and he is not entitled to act wholly on the basis of the report made by the other authorities or an admission made by the party before the other authorities. Under these circumstances it is too late to consider this fresh point at this stage. Accordingly, the appellants succeed on the second issue also.
12. In the view we have taken, the impugned order is set aside and the appeal is allowed.
P.C. Jain, Member (T)
13. I have carefully perused the order prepared by learned Brother Shri G.A. Brahma Deva, Judicial Member. But I regret I am unable to persuade myself to agree to the conclusion reached therein.
14. It is observed from the discussion of the pleas and evidence on record made by the adjudicating authority that it would be wrong to attribute the findings and conclusion in the impugned order of the Collector merely to the statements of stock given by the appellant to the Bank. Following are the salient facts and circumstances which have led the adjudicating authority to find against the appellants :-
(i) Shri S.L. Nagpal, one of the Directors of the appellant company in his written statement dated 31-7-1985 had not given any indication of their having purchased stocks from the market although he had verified the stock differences as brought out by comparing the various statements and stocktaking reports with their R.G.I balance on particular dates.
(ii) The appellants have not supported their story of purchase of the finished goods to the extent of Rs. 86 lakhs from the market by adducing any evidence in the shape of any accounts, records or documents.
(iii) Even if it is presumed that their purchase records etc. were burnt in the fire, their bank statements etc. showing payment for purchases in the market, or any evidence from whom the goods were purchased could have been produced. But nothing has been done.
(iv) On the other hand, statements of various responsible officers of the State Bank of India clearly show that they had not only verified the stocks as declared by the party (appellant herein) by physical verification but also that this is supported by an earlier letter dated 14-3-1985 of the party to the bank which says that they were holding physically goods worth Rs. 78.87 lakhs as on 28-2-1975.
(v) When the Central Excise Officers wanted to verify the R.G.I register on the very first day of their visit i.e. 10-7-1985 the registers were neither made available at the factory nor at their head-office and the party produced registers only after a lapse of 5 days.
(vi) Even if they had purchased any stocks from the market, the party in normal course would have taken permission from the department to bring in duty paid goods in the factory under Rule 51A of the Central Excise Rules, 1944 which was not done in this case.
15. It is no doubt true that the burden to prove clandestine manufacture and removal of excisable goods is on the department. Clandestine manufacture and removal of goods is an activity, which is done surreptitiously; secrecy and stealth are its covering guards. In such cases, direct evidence would rarely be forthcoming which would prove a case beyond all doubts. It is for this reason that the apex court has held that the standard of proof in such cases has to be necessarily on the basis of pre-ponderance of probabilities. Supreme Court's observations in 1983 (13) ELT 1546 - paras 31 & 32, in the case of Collector of Customs, Madras and Ors. v. D. Bhoormal are relevant. For the sake of convenience, these are reproduced below :-
"31. The other cardinal principle having an important bearing on the incidence of burden of proof is that sufficiency and weight of the evidence is to be considered to use the words of Lord Mansfield in Blatch v. Archar (1774) 1 Cowp 63 p.65 'According to the Proof which it was in the power of one side to prove and in the power of the other to have contradicted'. Since it is exceedingly difficult, if not absolutely impossible for the prosecution to prove facts which are especially within the knowledge of the opponent or the accused, it is not obliged to prove them as part of its primary burden.
32. Smuggling is clandestine conveying of goods to avoid legal duties. Secrecy and stealth being its covering guards, it is impossible for the Preventive Department to unravel every link of the process. Many facts relating to this illicit business remain in the special or peculiar knowledge of the person concerned in it. On the principle underlying Section 106 of Evidence Act, the burden to establish those facts is cast on the person concerned: and if he fails to establish or explain those facts, an adverse inference of facts may arise against him, which coupled with the presumptive evidence adduced by the prosecution or the Department would rebut the initial presumption of innocence in favour of that person, and in the result prove him guilty. As pointed out by Best in 'Law of Evidence (12th Edn. Article 320, page 291), the 'presumption of innocence is, no doubt, presumptio juris: but every day's practice shows that it may be successfully encountered by the presumption of guilt arising from the recent (unexplained) possession of stolen property,' though the latter is only a presumption of fact. Thus the burden on the prosecution or the Department may be considerably lightened even by such presumption of fact arising in their favour. However, this does not mean that the special or peculiar knowledge of the person proceeded against will relieve the prosecution or the Department altogether of the burden of producing some evidence in respect of that fact in issue. It will only alleviate that burden to discharge which very slight evidence may suffice".
Applying the aforesaid principles of law to the facts and circumstances of this case, it is apparent that the department had initially based its case on the two statements of stock furnished to the Bank by the appellants and the Bank's stock-taking report. A statement was recorded from Shri S.L. Nagpal, a Director of the appellant company. Although he has stated that the stock-position reports dated 25-2-1985 and 25-4-1985 are not correct because these were prepared by the bank authorities as per their convenience, it is significant to note, as rightly pointed out by the adjudicating authority, that not a whisper of purchase of stock of finished goods from the market has been made by the Director in his statement.
15.1 Assuming for a moment that the appellant is correct that he purchased the finished goods from the open market, it is for him to substantiate this assertion with some evidence because this is a fact which is within his special knowledge. Leave apart sub-mitting any documentary evidence of such huge purchases, the appellant has not even disclosed the names of a few persons from whom the goods have been purchased so that the department could verify the claim of the appellant. It is unbelievable that the appellants would have forgotten the names of all the sellers of the finished goods to them. The burden shifted to the appellant on the basis of statement furnished to the bank and Bank's stock-taking report as to how the discrepancy occurred, but they are attempting to rebut the department's inference on no evidence at all. Inference of the adjudicating officer in the overall facts and circumstances is reasonable.
16. It is appropriate to discuss the cases on which the appellants Id. advocate has placed reliance. It may be mentioned at the outset that the decisions in all those cases rest upon the peculiar facts and circumstances obtaining in each case. Great stress has been laid on the decision of the Tribunal in Alwyn Industries Corporation v. Collector of Customs, Bombay [1988 (33) ELT 376] which I will presently discuss.
17. I will first discuss the other cases first.
(i) 1983 (13) ELT 1611 (SC) The learned advocate relies upon the Supreme Court's observation in this case that it was for the prosecution "to prove affirmatively that the contraband articles were in the conscious possession of accused Nos. 1 to 11...and neither of these matters was a matter of assumption, although of course the same could be inferred from circumstances which in our opinion, have not been shown to exist". It is no doubt true that the burden to prove its case lies upon the department. From the facts and circumstances set out earlier, it can be reasonably inferred that the appellant herein manufactured and removed clandestinely the goods without payment of duly as alleged and found by the adjudicating authority.
(ii) 1987 (10) ECR 407 (Cegat SB-D) This is a decision based on the peculiar facts available in that case. It is a matter of appreciation of the evidence on record. In that case, no doubt a set of invoices were detected by the department from the appellant therein, but the Tribunal came to the conclusion that the set of invoices did not represent removal of unaccounted for goods on overall evidence. The facts and circumstances which weighed with the Tribunal in coming to that conclusion were: "The dealers who are named in the invoices have denied receipt of the goods. There is no trace of the goods, nor any evidence that they were actually transported and received by these dealers"....The fact, however, remains that there are a set of invoices which the manufacturer has said, are meant only for showing to the octroi authorities. There is no evidence that the department has made any attempt to check with the octroi authorities whether the payments of the appellants have been as per invoices". On these findings, learned advocate for the appellants urges that here too there is no other corroborative evidence like octroi receipts that the unaccounted for goods have been removed clandestinely. The content ion of the Id. advocate is without substance. In the instant case, the appellant has not disclosed the names of the purchasers of the goods at all. His case is that he has purchased the goods from the open market. But the appellants do not disclose the names of the sellers of the goods to them, even of some of them, despite the fact that the appellants have purchased goods worth Rs. 86 lakhs. It is not that octroi receipts are essential pieces of evidence in every case of removal of goods. The fact that the goods were manufactured is proved not only by the statement furnished by the appellants to the Bank, but also the stock-taking report of the Bank authorities. Physical stock-taking is confirmed by several officers of the Bank. Their statements cannot be dismissed as unbelievable.
(iii) 1986 (9) ECR 323 (Cegat NRB) I am unable to understand the reason for which the appellants rely on this decision of the Tribunal. That was a case where the Tribunal found that "there is no evidence whatsoever of such surreptitious manufacture and removal" (paras 21 and 24 of the Report). Further, the show-cause notice in that case "essentially alleges only the short accountal of raw material i.e. kraft paper. There is nothing at all in the show cause notice to show cause as to what is the basis for the conclusion that kraft paper, if short-accounted for, was necessarily manufactured into corrugated Board and thereafter removed without payment of duty". Further, even the basis of computation by the department was not disclosed to the assessee in that case.
18. Similarly two other cases namely (i) 1989 (22) ECR 171 and (ii) (1974) 93 ITR 49 relied upon by the appellants have been decided on their own facts.
19. Now I discuss the case of Alwyn Industries Corpn., supra, which according to the Id. advocate is on all fours with this case. This contention is belied by the finding of the Tribunal that the department has not been able to prove that the appellants had undertaken any manufacturing activity at all. In the instant case, there is no doubt that the appellants have a regular factory and manufacture wires and cables. Only doubt thrown by the appellants' Id. advocate is that the appellants do not have the manufacturing capacity at all to the extent of allegations of manufacture and removal of goods made by the department. Para 6 of 1988 (33) ELT 376 is relevant to rebut the contention of the appellants about that case and the present case being on all fours. Therefore, no general principle can be drawn that statement alone made by the Bank or furnished to the Bank cannot be relied upon for the purpose of proving the contravention of Rule 9(1) of the Central Excise Rules. Each case has to be decided on the facts and circumstances available in it.
20. The story put up by the appellants that the statement furnished to the Bank on 25-2-1985 or the stock-taking report prepared by the Bank authorities on 25-4-1985 was with a view to getting higher loans from the Bank gets further demolished by appellants' own admissions in a Civil suit for damages filed by them against the Bank in Delhi High Court. This is a piece of evidence brought on record by the appellants themselves as Annexure 'D' to the appeal. The ground taken in the appeal for relying on this evidence is as follows :-
"(1) Because there was no intelligence with the department that the appellants have been suppressing production. The case has been made against them on the basis of a complaint by the Bank, who made similar complaints to the other various Govt. departments and with whom litigation is going on in Delhi High Court (Annexure-D)".
Having themselves relied on their suit-plaint before the High Court, it cannot be said that the admissions made by them in the plaint cannot be relied upon against them, because it was not there before the adjudicating authority and was not a part of the show cause commencing the present proceedings against them. I do not see either logic or good law in this contention.
20.1 Section 21 of the Evidence Act reads as follows :-
"Section 21 :- Admissions are relevant and may be proved as against the person who makes them...but they cannot be proved by or on behalf of the person who makes them...."
Further the Supreme Court has observed :-
"Admissions as defined in Section 17 & 20 and fulfilling the requirements of Section 21 are substantive evidence, propio vigore. An admission is the best evidence against the party making it and though not conclusive shifts the onus to the maker on the principle that what a party himself admits be true may be reasonably presumed to be true so that until the presumption is rebutted the fact admitted must be taken to be true (AIR 1977 SC 1724 - Thiru John)".
The aforesaid rule is a rule of prudence and would equally apply to the departmental proceedings where strict rules of evidence under the Evidence Act are not applicable.
21. Ratio of decision in Man Singh Lamba & Sons mentioned supra does not apply because that is a case of admissions by the maker in his own favour.
22. Averments made in paras 3 and 7 of the plaint have already been set out in para 6 of the Order/judgment prepared by my Id. Brother. These averments clearly knock the bottom out of the appellants' case that they did not have the requisite capacity to manufacture the goods to the extent of Rs. 86 lakhs as alleged when they have themselves admitted to have achieved the sale of Rs. 230 lakhs in the year 1983-84. It is not the department's case that they have manufactured goods worth Rs. 86 lakhs within a span of two months as contended by the appellants. Department's case is based on the difference in slock position as reflected in the two statements with the Bank as on 25-2-1985 and 25-4-1985 vis-a-vis the R.G.I. record maintained by the appellants for the purpose of Central Excise production record.
23. What is worth noting in the plaint for the purpose of testing the story of the appellants preferred before the lower authorities is that they have described their activity as one of manufacturing wires and cables. The appellants speak of boosting their production and sales. Not even once have they hinted at their activity being of purchasing wires and cables and then selling. Hence their stand before the lower authority of purchasing and selling wires and cables, which has already been found to be unbelievable in the facts and circumstances as available earlier, sounds completely hollow. The plaint presented by the appellants before Delhi High Court lends a strong assurance to the conclusion already reached by me.
23 A. Reliance placed by the Id. advocate on Bush India Ltd. v. U.O.I. [1980 (6) ELT 258 (Bom.)] is not at all relevant. In that case, order of a departmental authority impugned before the High Court of Bombay was sought to be defended by the department on a totally new ground. Here, the lower authority's order is sought to be given additional support by an evidence relied upon by the appellants themselves.
24. In the quasi-judicial proceedings before the departmental authorities, any evidence is admissible so long as the party charged is given an opportunity to rebut it. That has been amply done in this case.
25. In view of the foregoing discussion, I reject the appeal and confirm the impugned order.
26. I have added a separate order at pages 16-22 reaching a different conclusion. Ld. Brother Shri. G.A. Brahma Deva may please see.
27. In view of the above, the following point of difference arising from the two orders is referred to the President in terms of Section 35D of the Central Excises and Salt Act, 1944 :-
"Whether in the facts and circumstances of the case, the appeal deserves to be allowed as held by the Judicial Member or rejected as held by the Technical Member".
D.C. Mandal, Member (T)
28. The following point of difference arising from the orders written by Shri P.C. Jain, Member (Technical) and Shri G.A. Brahma Deva, Member (Judicial) in this appeal has been referred to me by the President, CEGAT under Section 35D of the Central Excises and Salt Act, 1944 :-
"Whether in the facts and circumstances of the case, the appeal deserves to be allowed as held by the Judicial Member or rejected as held by the Technical Member."
Accordingly, I heard Shri J.S. Aggarwal, learned advocate for the appellants and Shri S.K. Sharma, learned Junior Departmental Representative for the respondent. The learned advocate argued on the same line in which he argued before the original Bench and also relied on the same set of judgments. The main thrust of the arguments of the learned advocate is that the Department has not proved clandestine removal of the goods producing sufficient evidence and the statements submitted by the appellants to the bank for the purpose of taking loan and the stock verification report are not sufficient evidence to establish the charges levelled against the appellants. The learned Departmental Representative argued that the figures were not inflated. The goods were physically verified. The judgments cited by the learned advocate are not, therefore, applicable in the facts of the present case. The stock verification report is in addition to the statements filed by the appellants to the Bank. In this connection, he has drawn my attention to the adjudication order and the statements in Annexure-B to the appeal. He has also drawn my attention to the physical stock verification report, copy of which has been filed before me.
29. I have carefully perused the orders written by the learned brothers Shri Brahma Deva and Shri Jain. I have also gone through the records of the case placed before me and have carefully considered the arguments of the learned advocate and the learned Departmental Representative. From the records placed before me, I observe that the stock was physically verified and the report was signed by the appellants and the officials of the State Bank of India. The duty demanded has been calculated on the difference found in the RG-1 balance and stock found on physical verification by the Bank officials in the premises of the appellants and the stock verification report is duly certified and authenticated by the appellants and the bank officials. In the circumstances, it cannot be said that the charges are not based on adequate evidence. I, therefore, fully agree with the analysis made by the learned Technical Member Shri P.C. Jain. Agreeing with him I uphold the impugned order and dismiss the appeal.