P.C. Jain, Member (T)

1. Brief facts of the case are that on 14-1-1981 in pursuit of an information Hqrs. Preventive Staff of Central Excise Collectorate paid a surprise visit to the appellant's factory licensed for the manufacture of wrist watches. On checking the physical stock vis-a-vis book balance lying in the factory and in the Bank's godown pledged with the Indian Overseas Bank, 100 wrist watches unaccounted for and fully assembled found in the factory and 100 wrist watches found in the Bank's godown pledged with the Bank were seized as they were considered liable to confiscation by the Seizing Officers. On the scrutiny of accounts maintained by the appellant, it was also alleged that 2828 watches were clandestinely removed by the appellant inasmuch as the above number of watch movements imported by the appellant could not be accounted for against the total number of watch movements imported and the total-number of wrist watches produced out of such watch movements.

After due process of adjudication, the adjudicating authority has released 100 watches seized from the factory premises as he considered them to have been assembled on the same day on which the officers visited and therefore, those watches were to be accounted for in R.G. 1 at the end of the day. Remaining 100 pcs. of watches seized from the Bank's godown have, however, been confiscated under Rule 173Q on the ground that the appellant could not produce adequate evidence of payment of duty thereon. An option, however, has been given to the appellant to redeem those 100 watches on payment of a fine of Rs. 2,000/-. Learned adjudicating authority has also demanded duty on 1329 watches manufactured and cleared by the appellant clandestinely without payment of duty. A penalty of Rs. 10,000/- has also been imposed under Rule 173Q for contravention of Rules 9(1), 52, 52A, 53, 226 and 173G of the Central Excise Rules.

2. Learned advocate Mrs. Archana Wadhwa appearing for the appellant has stated that there is absolutely no evidence with the department that the 10Q watches seized from the Bank's godown and pledged with the Bank were removed from the factory without payment of duty. It has been urged by the appellant that the onus' to prove the non-duty paid character of the goods lies on the department. On the other hand, the appellant has urged that these watches form part of the consignment which were cleared on payment of duty on 24-12-1980 and taken to his duty paid godown in the sales office in the city. From that duty paid lot these 100 watches were pledged with the Bank to obtain more credit and finance. The only ground on which these watches have been held to be non-duty paid by the adjudicating authority is that the address of the appellant in respect of these watches given with the Sank is that of his factory and not of his sales office. Learned advocate has' urged that this can hardly form the basis of proving the non-duty paid character of the goods inasmuch as the goods have not been pledged with the Bank by the appellant at two different addresses one pertaining to his sales office and other pertaining to his factory.

3. Heard learned SDR as well on this plea. She has nothing more to say than what has been stated in the impugned order.

4. I agree with the plea of the learned advocate for the appellant. Address of the factory by itself with regard to the pledging/hypothecation of the watches with the Bank cannot form the basis of treating the goods as non-duty paid, I also agree with the learned advocate for the appellant that the onus of proving the non-duty paid character of the goods lies on the department and no adequate evidence had been adduced by the latter to that effect. Accordingly, I order release of 'these 100 watches which have been confiscated by the adjudicating authority. As regards the demand of duty on the watches held to have been manufactured and removed clandestinely by the adjudicating authority, learned advocate for the appellant ha