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 c