The burden of proof in establishing violations under the Central Excise Act lies with the prosecution, and the failure to produce original documents and relevant evidence can lead to acquittal.

1. Aggrieved over the acquittal of the accused for various offences under the Central Excise Act, 1944, (relating to different periods), the Department – Central Excise has preferred these appeals.

2. Points arising for determination in all the four appeals are one and the same. Hence, all the appeals were taken up and heard together and are disposed of by this common judgment.

3. Thefacts which led to the prosecution against the Respondent/Accused could briefly be stated thus:

A-1 firm is holder of Central Excise license for processing cotton fabrics falling under Tariff Item No. 19(1)(b) scheduled to the Central Excise and Salt Act. A-2 is the partner and manager of A-1 firm. A3 is one of the partners of M/s.Akshaya Hantdex, Madras-7 who procured cotton fabrics from various parties and processed the same in the machinery of A-1 firm. During May 1984, the CBI Officers, Madras searched and seized records including Central Excise statutory records from the factory premises of A-1 firm and from certain garment exporters who have got the fabrics processed with A1 firm and the CBI officers handed over the records to the Central Excise Department for necessary action. The officers of the Central Excise Department, Madras also searched and seized certain records from the Garment exporters, Sivam Interior Exports (PW-2), Goyal Dresses (PW-3), Time Fashions and Sports Wear (PW-4) and several other garment exporters and obtained their statements. The investigation disclosed that A- 1 firm has cleared processed fabrics without payment of duty and collected processing charges through letter bills, cleared processed fabrics without payment of appropriate duty by collecting part of processing charges through regular invoices and part through letter head bills, cleared processed fabrics without payment of duty by preparing the invoices and Central Excise gate passes indicating the process as ‘Scouring’ which is exempted as against the actual process carried out viz., crinkling and dyeing, cleared processed fabrics without payment of duty by showing higher processing charges in the original copies of invoices and lower processing charges in factory copy meant for departmental verification and cleared processed fabrics of higher counts and lower width without payment of appropriate duty by declaring lower counts and higher width to avail lower rate of duty. The accused could not explain the discrepancies.

4. From the records seized and statement obtained from the various Garment exporters, it became clear that A-1 firm has cleared processed fabrics without payment of duty and without cover of Central Excise gate passes. A-1 firm is thus alleged to have violated the provisions of Central Excise Act under Sections 9(1)(bb)(ii) of Central Excise and Salt Act r/w Sec. 9(1) and 173-F of Central Excise Rules, Section 9(1)(bb)(ii) of Central Excise and Salt Act r/w Rule 52-A of Central Excise Rules, Section 9(1)(c)(ii) of Central Excise and Salt Act r/w 173-G of Central Excise Rules and Section 9(1)(c)(ii) of Central Excise and Salt Act r/w Rule 226 of Central Excise Rules.

5. In the evidence of PW-15, the following five violations are alleged against A-1 firm:

“Firstly, A-1 company have cleared the processed fabrics without payment of duty and without cover of Central Excise gate passes and collected the processing charges through letter head bills instead of in their invoices and the invoices alone were submitted to the department and the letter head bills were not submitted. Secondly, A-1 company have cleared the processed fabrics without payment of appropriate duty by collection of part of processing charges through their own letter-head bills and part of processing charges through their invoices. The company have not submitted the letter-head bills for collection of part of processing charges and thus evaded duty. Thirdly, A-1 company have cleared the processed fabrics by indicating the process as ‘scouring’ instead of dyeing etc.