V.P. Gulati, Member (T)

1. These three appeals arise out of the common impugned order passed by the Collector of Central Excise, Madurai.

2. Brief facts of the case are that on a check of the appellants' factory premises the Central Excise authorities found that the work relating to frame filling of splints and box filling of matches was being carried on in these three units and there was no stock of essential raw materials like Chlorate, Sulphur, red-phosphorus, etc. nor the Central Excise statutory accounts were available in the premises. The authorities also found that there was no stock of any residuary chemical composition of match heads. The explanation given by the appellants was that the raw materials and accounts books were kept in the godown of M/s. Manohara Match Works, referred to as the main factory, and in their office (Manohara Match Works). The lower authorities charged the appellants that all the factories were working as one unit and that they were liable to pay higher rate of duty i.e., instead of Rs. 1.60 per gross Rs.3.50/4.50 per gross. The learned lower authority has held that since only the job of frame filling alone was being done in the 3 units and the other job of dipping of match head composition and dipping in the wax was not being done the manufacture of matches in fact was not being carried out in the 3 units. Since the appellants were all found to be related to the proprietor of M/s. Manohara Match Works, the lower authority concluded that all these three factories jointly produced matches outside their licensed premises and were doing only the work of box filling and were clearing all the matches at concessional rate. The lower authority, therefore, demanded the differential duty of Rs. 1,36,762.50; Rs. 1,61,787.50 and Rs. 1,43,262.50 from M/s. Sekar Match Industries, M/s. Thenmoli Match Industries and M/s. Shenbagalli Match Works respectively. A penalty of Rs. 2,000 was also imposed on each of the three appellants.

3. The learned Advocate for the appellants pleaded that the charges against the appellants have been upheld by the learned lower authority only for the reason that there was no stock of raw materials in the appellants' factories and also their account books were not found there and also that on the day of the visit of the officers the work of dipping of splints with the match head composition and with the wax was not being carried out. He pleaded that all the three appellants have been stated to have been related to proprietor of M/s. Manoharan in whose premises the raw materials were kept and in whose office the appellants' records were kept. He pleaded that there was no finding by the lower authority as to where the matches had been manufactured and by whom and merely on a presumption it has been held that all the three units were getting their matches manufactured together and no evidence has been brought on record regarding the place where matches were manufactured. He particularly pointed out that the proprietor of M/s. Manohara Match Works, where all the records were kept as also the raw materials, has not even been questioned and no charges have been made against him. He pleaded merely on presumption or suspicion the appellants cannot be found fault with.

4. The learned JDR for the Department stated that while there is circumstance of suspicion against the appellants, there was no information with him or in the records as to where the matches had actually been manufactured and he has no specific plea to make in regard to this missing link.

5. We observe this is a case where large tax evasion was indicated and the authorities felt that the matches were not in fact manufactured by the appellants but these were manufactured outside and clubbed the clearances of all the three units. We observe that no statement has been recorded from the workers to ascertain the nature of the operations carried out in each of the units on a regular basis nor the facts have been elicited as to whe