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V.P. Gulati, Vice President

1. The issue in the appeal relates to the demand of duty in respect of certain shortages which were alleged. The appellants manufactured aerated water as a franchise holder of M/s. Parle Exports Ltd. The authorities came across Sales Manager's Report (SMR) which were submitted monthly to M/s. Parle Exports Ltd., and discrepancies in figures between those reflected in the RG1 and in the SMRs were found. The shortage based on the SMR as alleged in the show cause notice were found to be 11,65,884 bottles. Statements were also recorded from the appellant company's officials. The explanation offered by the respondents was that during certain months depending upon the demand in the respondents area and also for the reason of the shut down at certain times, the wholesale distributors purchased the goods from other distributors. These figures are reported to the respondents and which they incorporated in their SMRs. The learned lower authority while adjudicating the case took note of the documents which have been produced before him and accepted the fact that there had been purchases from other franchise holders for sale in the territory assigned to the respondents and, therefore, he has dropped the proceedings initiated in terms of the show cause notice issued to the respondents. The learned lower authority has also held as it is there was no evidence of clandestine removal of th bottles and also that no exercise was done by the authorities to correlate the use of the flavours and the concentrates with the production in the respondents unit. He has in the absence of any such exercise, the charge against the respondents had not been brought home.