S. Kalyanam, Member(J)

1. This appeal by the Collector of Central Excise, Madras, is directed against the order of the Collector of Central Excise (Appeals) referred to supra, setting aside the order of the Deputy Collector dated 21-5-1984 and exonerating the respondents herein of the charge under Rule 9(2) of the Central Excise Rules, 1944, hereinafter referred to as the Rules.

2. On 14-4-1982, the officers attached to the Special Anti-Evasion Squad, Headquarters Preventive Unit, Madras, proceeded to the respondents-factory and recovered a private slip and a small pocket diary with red plastic cover from A.J. Patel. A.J. Patel happens to be the son of N.D. Patel, who is one of the partners of the respondent-firm. A.J. Patel's father, J.C. Patel, who was also looking after the affairs of the respondent-firm, and one R. Jayaraman, power agent of the respondent-firm were also present at that time. The paper slip and the red pocket diary recovered from the possession of A.J. Patel contained certain accounts regarding manufacture and removal of sodium silicate pertaining to the respondent-firm and on interrogation, A.J. Patel explained the notings in the red diary and admitted that they represented clandestine removal of sodium silicate contrary to law. A.J. Patel gave a statement before the authorities on 14-4-1982 giving details about unlawful and clandestine removal of manufactured goods from the respondent-firm and explaining the various entries, figures and letters in the red pocket diary recovered from his possession. The statement recorded from A.J. Patel which was inculpatory in nature was also attested by the power agent of the respondents who also made an endorsement that what was stated in the statement was correct. J.C. Patel, father of A.J. Patel, has also attested the inculpatory statement of his son, A.J. Patel. On 20-9-1982 the mother of A.J. Patel, N.D. Patel, who is a partner of the respondent-firm also sent a communication to the Superintendent of Central Excise, Special Anti-Evasion Squad, Madras, to the effect that she was aware of the statement given by her son and would 'not deny any of the averments therein. It is in these circumstances, after further investigation, proceedings were instituted against the respondents herein by issue of a show cause notice by the Deputy Collector of Central Excise, Madras, who, by her order dated 21-5-1984 found the respondents liable to pay duty in a sum of Rs. 23,495.37 in respect of the quantities of manufactured items clandestinely removed under Rule 9(2), besides a penalty of Rs. 15,000 under Rule 173Q. The appeal preferred by the respondents before the Collector (Appeals) was allowed as against which the Collector of Central Excise has come by way 'of appeal before the Tribunal.

3. The learned SDR submitted that the Collector (Appeals) under the impugned order has misdirected himself in placing reliance on the order of the Additional Collector in respect of the charges relating to the sister concern of the respondents. It was urged that the statement recorded from A.J. Patel immediately, on recovery of the pocket diary from his possession is true and voluntary and is entitled to credence. He also drew my attention to the fact that the inculpatory statement recorded from A.J. Patel is also attested by J.C. Patel, the father of AJ. Patel, who was looking after the affairs of the respondent-firm. The learned SDR further submitted that the statement of the power agent, Jayaraman, dated 11-5-1982 would also lend support to the Department's case that the original statement recorded from AJ. Patel is true and voluntary. He also assailed the reasoning of the Collector (Appeals) in the impugned order as incorrect contending that under law the Department need not go about making enquiries with reference to the various entries found in the pocket diary recovered from A J. Patel.

4. The learned representative for the respondents submitted that the statement of AJ. Patel, even tho