G. Sankaran, Sr. Vice-President

1. These appeals are against Order-in-Original No. 23/Collr/MP/82 dated 18.8.1982 passed by the Collector of Central Excise, Kanpur. By this order, the Collector-

(a) imposed a penalty of Rs. 5 lakhs under Rules 9(2), 52A, 226 and 173Q of the Central Excise Rules, 1944 ("the Rules", for short) on Jain Industries;

(b) confiscated seized goods valued at Rs. 85,129.82 under Rules 173Q but allowed an option for redemption of the goods on payment of a fine of Rs. 20,000/-; and

(c) demanded under Rule 9(2) payment of Central Excise duty amounting to Rs. 6,96,800.43 on excisable goods (steel-furniture) cleared during the period 1975-76 to 1979-80.

2. We have Heard Shri. V. Sreedharan, Advocate, for the appellants and Shri L.C. Chakraborty, DR, for the respondent.

3. A few undisputed facts may be stated M/s. Jain Industries had an industrial unit at No. 87, Acharya Nagar, Kanpur, where furniture was being manufactured but without the aid of power. M/s. Techmechos had an industrial unit at 55, Industrial Estate, Kanpur, where manufacturing operations were being carried out with the aid of power. The former firm had father and two sons as partners while the latter had only the two sons as partners.

4. The Department's case is that both firms are one and the same, though functioning under two different names, that steel furniture parts were being manufactured with the aid of power at 55, Industrial Estate, then transferred to 87, Acharya Nagar, where steel furniture was being assembled out of these parts though without the aid of power. Hence, the items of furniture manufactured at 87, Acharya Nagar, and cleared during the material period were liable to be charged to Central Excise duty and since such operations had been carried on clandestinely, the firm was liable to a penalty. The case for the appellants, briefly stated, is that the two firms were distinct and different and that no furniture parts were being manufactured at 55, Industrial Estate. The Collector has found against the appellants on both these contentions.

5. For our present purpose, it does not seem necessary to go into the question whether the two firms were one and the same or were distinct and different entities. This is because, even if they were one and the same, duty liability will attach to the steel furniture manufactured and cleared by the unit at 87, Acharya Nagar, only if it is shown that the furniture parts used in their manufacture had been manufactured at the unit at 55, Industrial Estate. The whole thrust of the submissions made before us by the counsel for the appellants was that this was not the case. It is, therefore, just as well to go into this aspect first.

6. The evidence adduced in support of the Department's allegations are :-

(a) an entry in the "Gate Entry Register" showing the despatch inter alia of 148 brackets and other parts of steel furniture from the unit at 55, Industrial Estate to that at 87, Acharya Nagar;

(b) the statements recorded from Shri Ram Assary, a Rikshaw puller, Shri Bajrang Singh, an employee of the firm and Shri H.K. Sharma, a supervisor of the firm; and

(c) The panchnama dated 12.3.1980 which is said to contain an admission by Jain Industries that they had received parts of steel furniture from the Industrial Estate unit and used them in the manufacture of furniture at the Acharya Nagar unit.

7. The collector in his order, has stated that it had been admitted by Jain Industries that in the workshop portion at 55, Industrial Estate, power-operated machines had been installed for the manufacture of parts of steel furniture with the aid of power. The counsel for the appellants, however, submitted that the appellants had right from the beginning been denying this position. No such admission was made. Shri Chakraborty's submission on this point was that the Collector seems to have relied, for this purpose, on the panchnama dated 12.3.1980 at page 39 of paper book - II filed by the appellants and the lett