Per J.H. Joglekar :

The appellant processed grey fabrics received from traders on job work basis. On 05/01/1989 a vehicle containing goods cleared from the premises was intercepted and was brought back to the factory. Discrepancies were noted in the original and other copies of the gate passes covering the consignment. Examination of gate passes under which goods had earlier been removed showed that while the first copy was fully completed the other copies were left blank. The fabrics totally valued at Rs. 4,04,124/- were seized along with the tempo. The Excise Clerk admitted that the modus of leaving the other copy blank was to enable evasion of duty and that it was done at the instance of Champalal Chopra, Director.

2. Investigations showed number of discrepancies in the lot registers which the Excise Clerk admitted were done deliberately under the instructions of Champalal Chopra. Chopra in his statement dated 09/01/1989 accepted the large-scale variations, erasions and scoring out in a number of registers and attempt to preparing fake invoices and gate passes and also offered to pay the duty leviable thereon. Thereafter officers contacted the octroi naka which kept detailed entries of the grey fabrics received by the present appellant and also the processed goods sent out by them and took extract from the said register. Three statements were made therefrom and were annexed to the show cause notice. Statement at Annexure 'A' showed man made fabrics entered in the lot register but latter erased but where the entries were found in the octroi register. The statement at Annexure 'B' showed the entries in the octroi register for which no corresponding entries existed at all in the excise register. The statement at Annexure 'C' recorded similar details with reference to the entries made in the lot register of the assessees. Thereafter the statements of merchant manufacturers were recorded. They were shown the statement at Annexure 'A'. A number of them accepted the fact of receipt of processed fabrics for which appropriate duty had not been paid. The statement of Sunderlal Chopra, another Director was also recorded. He was shown the annexures and the supporting documents. As regards the erasers in the register he claimed that the Excise Clerk had done the same. He also made the claim that some grey fabrics were not actually processed but were returned as such. He was specifically asked about 62 missing grey challans in which case he had claimed to have returned the grey goods back to the traders. He was asked whether he could produce the octroi documents to cover the return to which he replied in the negative. In a later statement Champalal Chopra's earlier admissions as to evasion were reiterated. He was shown certain statements of the traders indicating evasion of duty and he signed the statement made by them but professed ignorance as to why the traders had chosen to pay the duty. He was shown a number of challans indicating receipt of grey sent by the merchant manufacturers but accepted physical receipt only in a few cases and denied that the grey fabrics were received by them in the case of 37 challans. On later occasions also being shown the lack of accounting he gave similar replies.

3. Show cause notices were issued alleging evasion of duty, liability to confiscation of the seized goods and liability to penalty on M/s. Suman Silk Mills and Suman Silk Mills (Depot) as well as the traders who had sent the grey fabrics for processing. After hearing the manufacturers and traders the Collector of Central Excise, Vadodara passed orders. He confiscated the seized man made fabrics and the tempo but permitted their redemption on payment of fine. He confirmed duty of Rs. 20,36,114.47 and appropriated the amount of Rs. 4,44,561.07 paid by M/s. Suman Silk Mills Pvt. Ltd. on behalf of certain traders. He imposed penalties on the driver of the tempo; on M/s. Suman Silk Mills Pvt. Ltd., as well as on Sales Depot of M/s. Suman Silk Mil