Per Justice R.K. Abichandani: The Revenue have appealed against the order of the Commissioner (Appeals) dated 20.4.2005, by which demand of duty in respect of 23 consignments was vacated while confirming the demand in respect of one consignment to the tune of Rs.1575/- and reducing the penalty of the like amount, accordingly, to Rs.1575/-.

2. The case of the Revenue was that the range officer had procured five invoices from some informer and forwarded the same to the Deputy Commissioner, Central Excise Division, Sangrur by his letters dated 13.7.2000 and 19.7.2000 said to have been issued by the respondents who were manufacturing ordinary Portland cement. According to the Revenue, the Director of the respondent Shri Bhushan Bansal who was confronted with the said 24 invoices admitted that they did not tally with the invoices of the same number issued by the respondent for clearance of excisable goods, but the signatures therein were genuine. Even the other Director Shri S.K. Bansal who was confronted with these invoices admitted their signatures as genuine. One Baljit Singh who was working as clerk-cum-accountant with the respondent admitted having prepared/generated fake/duplicate invoices as per the directions of the said two Directors. He identified their signatures on the invoices and stated that the transaction of those invoices were not entered in the cash book or the ledger of the company. He also stated that they used to generate bills of particular serial numbers and after the goods of that invoice were delivered safe and sound, the bill was destroyed and another bill/invoice of same serial number in the name of other buyer/fake person was prepared. It is stated that the previous invoice was destroyed by these Directors. Enquiries from the Municipal Committees of various areas where the goods, allegedly removed in a clandestine manner, were sent revealed that there were no entries in the octroi posts of passage of such goods except in respect of invoice No.186 dated 27.8.1999 under which 150 cement bags were transported and octroi amount of Rs.750/- was paid, as established from the record of the Municipal Committee of Malerkotla. The adjudicating authority on the basis of the oral and documentary evidence on record found that the duty demand of Rs.41,212/- was established and confirmed the same, while imposing penalty of the like amount on the company and interest on the duty amount, and also imposed penalties of Rs.20,000/- each on the two Directors.

3. The Appellate Commissioner came to a finding that, the duty demand in respect of 23 invoices cannot be confirmed, as the evidence of such clandestine removal of goods was not established. He confirmed demand of duty only in respect of the goods removed under invoice No.186 dated 27.8.199. He also reduced penalty on the company to Rs.500/-.

4. The learned authorized representative for the department contended that the admissions made by the Director of the fact that the invoices were signed by them and that these invoices were having the same numbers as the statutory invoices which were shown in the record and that they were having different particulars from those shown in the original record, and further that the employee of the respondent who was accountant had admitted the fact of clandestine removal of goods which was corroborated by the octroi receipt showing removal of goods under the duplicate invoice No.186 dated 27.8.1999, established the case of the Revenue on the preponderance of probabilities. He stated that there was no need to invoke the standard of proof beyond reasonable doubt in such departmental proceedings and that the standard of proof of beyond reasonable doubt was confined to criminal prosecutions. He submitted that there was no valid ground for the Commissioner(Appeals) to interfere with the order of the adjudicating authority. He placed reliance on the decision of the Tribunal in Gulabchand Silk Mills Pvt. Ltd. Vs. CCE, Hyderabad, reported in 2005 (184) ELT 263(Tri.-Bang.), particularly on paragraph 10 of the judgment, in which the Division Bench held that in any type of clandestine activity, the persons try their best not to leave any evidence. It was observed that it cannot be expected that persons indulging in clandestine clearance would faithfully put the details of all such clearances in some register and append their signature. Clandestine activity at best can be established only by circumstantial evidence, and it should also be borne in mind that it will be humanly impossible to establish every link in the chain of clandestine activity. He also relied upon the decision in Commissioner of Central Excise, Surat-1 Vs. N.D. Textiles, reported in 2004 (168) ELT 381(Tri.-Mumbai), pointing out from para 6 of the judgment that it was held therein, that what is admitted need not be proved aliunde.

5. The learned authorized representative for the respondent company, on the other hand, submitted that the statement of Baljit Singh, former accountant of the respondent company cannot be relied upon because, he had been dismissed from the company. It was further submitted that clandestine removal of goods could not be inferred on the basis of such invoices, which were generated by the said accountant. He also submitted that there was no admission of clandestine removal made by any of the Directors and no clandestine removal can be inferred, on the basis that their signatures appeared in the invoices. He also submitted that the buyers named in these invoices and the transporters of the trucks who were mentioned therein did not support the Revenue. According to them, the goods were not transported under these invoices by them nor were they received by the buyers named therein. He further submitted that the respondent was not given an opportunity to cross-examine Baljit Singh. He relied upon the decision of the Tribunal in Eastern Silk Industries Ltd. Vs. Commissioner of Customs (Port), Kolkata), reported in 2007 (208) ELT 446(Tri.-Kolkata), for pointing out, from para 5 of the order, that where persons whose statements were relied upon, were not produced for cross-examination, though their cross-examination was granted by the Commissioner, failure to produce such persons for cross-examination would lead to a conclusion that the case was foisted on the appellant.

6. The nature of burden of proof, which lies on the Revenue need not detain us because, as is evident from Section 9C, the test of the burden being discharged by proving a fact beyond reasonable doubt is confined to criminal cases of prosecution before the Courts for the offences, as is evident from the provisions of Section 9C(2) of the Central Excise Act, 1944. The standard to be adopted in the Revenue proceedings would be whether the facts are established by preponderance of probabilities. The observation made in the BECO Industries Ltd. Vs. CCE, Jamshedpur, reported in 2000 (121) ELT 650 by the Tribunal in paragraph 5.1 of the order in BECO Industries Ltd. that : There is no doubt about the legal position that the charges of clandestine removal should be proved beyond doubt by production of affirmative evidences, were made in a case where the Tribunal did not find any evidences indicating towards the clandestine activities of the appellants. In that paragraph there is reference to an earlier decision of Saraya Steel Ltd. Vs. CCE, Allahabad, reported in 1998 (98) ELT 787 which was followed. In that decision, the Single Member Bench had, in para 5 of the order, held that the case of clandestine removal should be proved upto hilt, it should not be based on surmises, presumption or conjectures. There can be no quarrel over the proposition that clandestine removal cannot be proved by mere surmises and conjectures and that when there is no affirmative evidence to prove the charge of clandestine removal, it is not established. It is evident that there was no debate as regards the standard of proof to be adopted, as to whether it should be of beyond reasonable doubt or of preponderance of probabilities, in the said decision and the above observations should therefore, be confined to facts of that case where there was no evidence at all, since it did not lay down any proposition but only observes that there was no doubt about the legal position. The decision in BECO Industries Ltd. (supra) cannot, therefore, be said to be laying down any ratio decidendi on the question of burden of proof because the said observation is not founded on reasons, nor did procede consideration of the issue of standard of proof and was only a general observation or obiter dicta and not a ratio decidendi having any binding force (see State of Uttar Pradesh Vs. Synthetics (1991) 4 SCC 139 and Orient Paper v. State of Orissa AIR 1991 SC 672

7. The matter has, therefore, to be examined by adopting the standard of proof of preponderance of probabilities. As held by Honble the Supreme Court in Collector of Customs, Madras & Others Vs. D. Bhoormull, reported in 1983 ELT 1546, in appreciating the scope and the nature of onus cast on the department, we must pay due regard to other kindred principles, no less fundamental, of universal application. One of them is that the prosecution or the department is not required to prove its case with mathematical precision to a demonstrable degree. It was held that all that it requires is the establishment of such a degree of probability that a prudent man may, on its basis, believe in the existence of the fact in issue. Thus, legal proof is not necessarily prefect proof. Often it is nothing more than a prudent mans estimate as to the probabilities of the case (see paragraphs 30, 32 and 33 of the judgment).

8. So far as the duty demand and penalty in respect of the goods under invoice No.186 dated 27.8.1999 are concerned, since no appeal has been preferred by the assessee, the liability stands confirmed. Therefore, the matter is required to be examined only in respect of the alleged clandestine removal of 23 consignments. On one hand, we have the statement of Shri Baljit Singh, former accountant clearly implicating the assessee by alleging that the duplicate invoices were prepared as well as the statements of the Directors that the signatures appearing on the duplicate invoices were put by them, coupled with the solitary octroi in respect of invoice No.186, on the other hand, there are statements of the truck drivers and the buyers named, to the effect that no such goods were transported and delivered under the invoices in question.

9. It has come on record that Shri Baljit Singh was sacked by the Directors from the service on 14.4.2000. He has stated that he had worked as a clerk-cum-accountant of the respondent upto 14.4.2000. The information from the Range Officer in respect of the said 24 invoices was received by the Deputy Commissioner on 13.7.2000 and 19.7.2000. These invoices are said to have been procured by the range officerf from some informer. These invoices were prepared by Shri Baljit Singh, as admitted by him before he ceased to be an accountant on 14.4.2000. Both the Directors had denied having removed the goods under the alleged invoices. They had also denied having issued the invoices. According to Shri Bhushan Bansal, fraud was committed by Shri Baljit Singh who was later on dismissed from service. He tried to explain the alleged difference in the stock found at the time of search. It has come on record that a request was made by the Directors for cross-examination of Shri Baljit Singh, but cross-examination could not be offered because Shri Baljit Singh did not turn up inspite of two notices. When Shri Baljit Singh had tried to implicate the Directors and he did not turn up for cross-examination inspite of two notices, it was unsafe to rely upon his statement especially when he was dismissed from service, in the absence of any independent corroborative evidence to show the removal of goods under the said 23 invoices. The procurement of these invoices is shrouded in mystery. These are alleged to have been procured, from some informer by the range officer. These invoices were not found from the factory premises. These were also not produced by any buyer or transporter of the goods which are alleged to have been removed under the cover of these invoices. Admittedly, all the persons, including M/s. Vinod Industries (consignee of invoice No.186 dated 27.8.2004) to whom the goods were allegedly sold under the said invoices, had denied having receipt of any goods under the cover of these invoices. The transporters stated that they did not transport these goods. There was, therefore, no independent corroboration available for showing any clandestine removal of goods under these 23 invoices. As per the accounting procedure prescribed for the persons issuing invoices under rule 57GG of the erstwhile Rules (corresponding to the present rule 11 of the Rules 2004), sub-rule (4A) required such invoices to be made out in quadruplicate. The original copy of such invoice was meant for the buyer, the duplicate for the transporter, triplicate was sent to the officer and quadruplicate was to be retained by the registered person. It is not even clear from the record as to whether the said 23 invoices were original copy, duplicate copy or quadruplicate copy. Bare statement of inimical dismissed accountant does not inspire any confidence. Since the invoices were not recovered from the premises of the factory or from its record, they could not be quadruplicate copies. Triplicate copy did not have any existence because it was required to be sent to the Central Excise Department which would happen only in genuine cases. The buyers have stated that they did not receive any such goods under these invoices and therefore, these could not have been original copies meant for buyers. Even the transporters refused to have transported the goods under these invoices. Obviously, therefore, these 23 invoices could not be the copies meant for the transporters. Therefore, the said 23 invoices are not shown to have come from any reliable source and the alleged removal of goods thereunder is not established. There is, therefore, no warrant for interference with the impugned order. The appeal of the Revenue is, therefore, dismissed. [Dictated and pronounced in the open Court] [Justice R.K. Abichandani] President