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3.3 He also mentioned that the Department caused investigations from transporters and made enquiries to assess if the appellants had indulged in procuring Supari one of the main ingredients of their finished product, in cash, that the Departmental has not found anything, that the Departmental had also, not enquired from the transporters of the appellants' final products to find out if they had transported any clandestine goods to the appellants' distributors spread all over the country.

4.1 The learned Advocate contended that the entire case has been made against the appellants on the basis of statements of various persons of Sharp Industries despite the fact that the veracity of those statements has not been tested by cross examination; that except two wtinesses, none had turned up for cross examination; that the appellants successfully established in the cross examination of those two witnesses that they had no knowledge about the delivery of alleged clandestine material to the appellants; that Shri A.R. Patel, Managing Director of Sharp Industries, has answered in his cross examination, in reply to question, as to whether the goods cleared to three companies namely Ramlal Shyamlal and Shyam Sunder & Sons were delivered to the appellants, that "only Siddharth Ratan can say"; that in reply to question as to whether he had any proof to show that they were front companies of the appellants, Shri Patel had mentioned that they had no time to go into those questions and relied on their Manager, that he also denied to have meet Mr. Mathur of the appellants' company. He further, mentioned that Shri Rajesh R. Mahajan, Executive Director of Sharp Industries Ltd., has denied to have meet any person representing the above named firms; that he has also stated in cross examination that he was not aware personally that the laminates cleared by Sharp Industries without payment of duty were cleared to any particular party or consignee and that there was no valid basis for confirming the statement of Shri Sddharth Rattan. The learned Counsel emphasized that it is thus apparent from the cross examination of these two high officials of Sharp Industries Ltd., that they were not aware of the recipients of the laminates said to be removed by Sharp Industries without payment of duty.

5.1 The learned Counsel also contended that apart from bald assertion that the laminates cleared by Sharp Industries clandestinely were delivered to the appellants, there are no documents in support of the same; that they only documents relied in the show cause notice are couple of LRs and couple of RRs on which there is allegedly signatures of the erstwhile employees of the appellants; that mere presence of signature of their employees who were acting in concert with the employees of Sharp for ulterior motives cannot establish that all the clearance claimed by Sharp Industries were actually delivered to them; that in absence of any direct evidence or statement of any of the person who actually delivered the alleged clandestine material it cannot be alleged by the Department that the appellant received such material and used the same in the manufacture of final products which were cleared clandestinely; that though Shri Akhil Jain has identified the signature of Rajdev Maurya, he has never admitted the receipt of the material in the factory of the appellants; that in respect of one R.R. the delivery of the consignment has been taken by one Gauri Dutt, Peon of Sharp Industries Ltd., who has not been examined by the Department; that similarly Department has not recorded the statement of V.K. Jain who has signed one L.R.; that mere identification of his signature can not be construed to be receipt of material by the appellants; that V.K. Jain left their employment on 21.7.1993 as he was caught pilfering goods in the company in connivance with a driver; that unless the Department produces the transport documents of all the transactions supported by the statements of the transporter it cannot be assumed that whatever quantity of laminates Sharp Industries claim to have supplied to the units were actually sold to the appellants; that the law does not permit such wholesale assumptions to be made without any supporting documents. Reliance has been placed on the Judgment in the case of Oudh Sugar Mills Ltd. v. Unionof India 1978 ELT J172 (SC) : 1976 Cen Cus 81 D (SC) : ECR C 198 SC wherein it has bee held by the Supreme Court that the finding which "has been arrived at without any tangible evidence and is based only on inferences involving unwarranted assumptions" is vitiated by an error of law. He also asserted that the fact of the matter is that the alleged non duty paid laminates had been supplied by Sharp Industries to spurious manufacturer thereby bringing down the sales of the appellant resulting in the ultimate closure of their manufacturing activities from September, 1999.

(iii) Padmanabh Dyeing & Finishing Work v. CCB, Vadodara wherein it has been held that electricity consumption to work out the probable production is not by itself sufficient to assess the production.

(iv) Hans Castings Pvt. Ltd. v. CCB, Kanpur .

6. Countering the arguments, Shri Kumar Santosh, learned SDR, reiterated the findings as contained in the impugned Order and submitted that during the search of the factory premises of the appellants on 2.8.1994 excess stock of laminates worth Rs. 25.84 lakhs was found; that Shri V.K. Singhal, Director, was not in a position to explain the stock vis-a-vis RG23A, Part-I; that he stated that he would prepare a reconciliation statement and furnish the same to the officers; that he, however, has never submitted the same; that again in his subsequent statement dated 9.8.1994, Shri V.K. Singhal could not explain the stock of laminates. He emphasized that the seizure of unaccounted quantity of packing material itself indicates that the appellants were purchasing non-duty paid raw materials for cleandestine manufacture of finished goods to evade payment of duty. He, further, mentioned that unaccounted cash of Rs. 7.22 lakhs was seized from the Regional Office of Sharp Industries Ltd., at Delhi on 2.8.1994; that Shri Siddharth Rattan, Regional Manager of Sharp Industries at Delhi, has deposed in his statement that Shyam Sunder & Co., Delhi Zarda Co., R.K. Trading etc. used to make the cash payments for which he did not maintain any documents and that no document regarding the seized cash was available; that Shri Anil Ram Patel, Managing Director of Sharp Industries, has admitted in his statement dt. 3.8.1994 that they were receiving the amount in cash for the clearance effected without payment of duty and that two days back he had received Rs. 10 lakhs from Jagat Pal Group of Companies through angadia which was seized from his residence on 2.8.1994 and that the appellants had also paid Rs. 7 laksh approx. to their Delhi office; that Shri Patel in his further statement dated 19.9.1994 has deposed that Delhi Zarda, Ramlal Shyamlal and Shaym Sunder & Sons were front companies of the appellants and the decision of creating purchase orders and bills in the name of these front companies was taken as per the advice of the appellants; that Shri Patel has confirmed his statements in cross-examination. The learned SDR further mentioned that as per the statement dated 4.8.1994 of Siddharth Rattan, their major clients included the appellants and sales in cash to the appellants were made by invoices under different names and in such cases orders were verbally placed and that in regard to despatches made to front companies, the orders were placed for the brand names of the appellants and the material was sent by Bombay factory directly to the appellants; that Siddharth Rattan admitted in the statement that the front firms and their addresses were bogus and were not in existence at all; that Mr. Mathur, Manager of the appellants used to make the cash payment for the purchases made by the front companies. The learned SDR also emphasized that after seeing two files seized from his Delhi office containing invoices in respect of Ramlal Shyamlal and Delhi Zarda Siddharth Rattan has confirmed that all the material despatched through these invoices was delivered to the appellants against cash payment.

7. The learned SDR submitted that Shri Vineet Dinesh Sharma of M/s VIP Enterprises (Transporters), has deposed in his statement dated 2.8.1994 that materials of Tasty Gutkha and Superfit brands used to go in the name of the appellants, Ramlal Shyamlal, Shyam Sunder & Sons and Delhi Zarda; that he was informed by Shir Parab of Sharp Industries that such materials were to be delivered at the appellants premises; that Shri S.S. Parav, Partner of M/s Bhagwati Roadways in his statements has deposed that particulars in the consignment note were filled on the basis of delivery challans, gate passes and invoices given by Sharp Industries at the time of loading of goods. He also mentioned that some of the lorry receipts show that goods were received by the employees of the appellants; that three RRs were signed by Mr. Raj Dev of the appellants, that similarly one LR of Bhagwati Roadways shows that material despatched for Prakash Zarda was received by the appellants and another lorry receipt of Bhagwati Roadways show that despatch of material to Shyam Sundar & Sons was received by Sharp Industries Delhi for further delivery to the appellants. The learned SDR contended that the plea of spurious market of Pan Masala being in existence is nothing but an after thought; that had there been any spurious market being in existence, the appellants would have gone to Police and/or made their own enquiries in this regard; that all the evidence in the form of lorry receipts, railway receipts, statements go to show that the laminates removed by Sharp Industries Ltd., clandestinely without payment of duty in the names of front companies were received by the appellants and used in the manufacture of their finished products which in turn had been cleared without payment of duty; that the statements have not been retracted and as such are admissible in law. He relied upon the decision in the case of Surjeet Singh Chhabra v. Union of India wherein it has been held by the Supreme Court that cross-examination of witness regarding the place at which recovery was made has to be allowed but where petitioners has confessed the recovery, non allowing of cross-examination is not violative of principles of natural justice even if confession was retracted. Reliance has also been placed on the decision in Bhana Khalpa Bhai Patel v. Assistant Collector of Cus., Bulsar wherein it has been held that statements recorded under Section 108 of the Customs Act, when found to be voluntary and not vitiated in any manner, are admissible in evidence. The learned SDR also mentioned that the statements made by other persons can also be relied upon for penalizing as held by the Bombay High Court in the case of Blue Star Ltd. v. UOI . He has also relied upon the decision of the Supreme Court in the case of Triveni Rubber & Plastics v. CCE, Cochin wherein the Supreme Court has upheld the demand arrived at by assessing normal production on the basis of electricity consumed. Finally the learned SDR submitted that in a case of clandestine manufacture and clearance of excisable goods, there can not be any direct evidence; that as held by the Supreme Court in the case of Collector of Customer v. D. Bhoormull , the department is not required to prove its case with mathematical precision, but what is required is the establishment of such a degree of probability that a prudent man may on its basis believe in the existence of the facts in issue. He contended that the Departmental has established its case on the basis of circumstantial evidence. Reliance has also been placed on the decision in the case of Shah Guman Mai v. State of Andhra Pradesh 1983 (13) ELT 1031 (SC).