Deepak Gupta, J.:— This Excise Reference was admitted on the following question of law:

Whether in the facts and circumstances of the case, the Custom, Excise and Gold (Control) Appellate Tribunal was right in applying the principles laid down in various decisions and in holding that the burden of proof was not shifted on the assessee?

2. The brief facts giving rise to this petition are that the H.P Police seized 822 cylinders from the godowns of respondent No. 1-Company. During the investigation, the police seized various records from Taruwala Municipal Barrier and the Police Barrier at Behral and Kala Amb. On investigation, the police found that the respondent No. 1-Company had cleared 53 trucks carrying cylinders or scrap from the factory premises without any excise documents during the period 1986 to 1992. Thereafter the Excise Department took up the matter, ft obtained copies of the documents from the police including the abstract of the records of the barriers. The Director of the respondent Company was questioned who admitted that trucks bearing registration numbers HPN-2388 and HP-17- 3288 belonging to the respondent-Company were utilized by it for transportation of goods. However, according to this Director, sometimes the aforesaid trucks were also utilized for transportation of stones of other parties from Sataun area.

3. The Statements of various persons were recorded. Notices were issued to the respondent-Company and reply of the respondent No. 1 was considered. The drivers of the two vehicles admitted that the trucks were taken by them on various days. It was also not disputed that each truck had the capacity to carry 400 cylinders or 5 metric tonnes of scrap. The Manager of the respondent-Company Shri K.C Kohli was also examined and he could not give any explanation as to how and why trucks in question had crossed Taruwala police barrier and entered in the record of the barrier. One employee of the Company, namely, Ram Bilas Choudhary was also examined. According to him, the respondent-Company was engaged in manufacture of illicit cylinders. He stated that these cylinders were manufactured at night and that no excise duty was paid on the same. According to him, workers were paid in cash for working during this period. He admitted that he was the President of the Labour Union but later his services were terminated by the Company. Sarwan Singh and Darshan Pal, the two drivers admitted that they had driven the trucks and crossed the barriers on the relevant date. According to them they always carried the relevant documents but could not say whether these documents were correct or not. These witnesses also stated that many times cylinders were unloaded at many places out side Himachal Pradesh. A number of other witnesses including the employees of the respondent-company were examined. The department also examined the record of the company to prove that about 71.770 metric tonnes steel used in the manufacture of cylinders have been clandestinely imported in H.P by the respondent-company.

4. The Collector on the basis of the material before him, finally held as follows:—

“The department has brought on record overwhelming evidence for proving its case against the Noticees. Even when the department is not required to mathematically prove the illicit manufacture and removal, it has brought on record the receipt of the sheet and valves which are the main raw material for the manufacture of the cylinders. The quantity of sheet brought illegally favourably tallies with the number of cylinders for which the Noticees have been charged. Taking into account the receipt of uncounted raw material, illicit manufacture, illicit storage at Nariwala godowns coupled with the records of the barriers, I am fully satisfied that the Noticees have engaged themselves in the manufacture of cylinders and clearance thereof in a manner not known to law.

The person whom the Noticees engaged for the manufacture of illicit cylinders at night even admitted that the noticees used to manufacture LPG cylinders even without caring for the quality. Perhaps, the Noticees perceived that in the absence of quality control officers, quality was not required to be mentioned, it would not really be out of place to maintain here that the notices with their nefarious activities have not only played with the Revenue, they have also played with the lives of human beings by putting in the market explosive material which otherwise was spurious.

In view of the foregoing, I unhesitatingly hold that the Noticees had engaged themselves in the manufacture and clandestine removal of the goods thereby causing loss to the exchequer. They have, therefore, rendered them-selves liable to penal section apart from the payment of duty demanded in the show cause notice. Therefore, I pass the following:”

5. The respondent-Company filed an appeal before the Custom, Excise & Gold (Control) Appellate Tribunal (CEGAT). The Tribunal accepted the appeal. The main reason which weighed with the Tribunal was that there was no material on record to prove that 400 cylinders were being carried in the trucks every time they crossed the barriers. The statement of Ram Bilas Choudhary was not relied upon since according to the Tribunal the same may be biased. In respect of the statements of Sarwan Singh and Sukhdev Singh, the Tribunal only stated that there seems to be some contradictions in their statements. The Tribunal also placed heavy reliance on the fact that the department had failed to show that the respondent had received 296 metric tonnes of LPG sheets which would be required for manufacture of 14,800 cylinders. The Tribunal, however, held that the department had proved that the respondent-company had received 52.690 metric tonnes LPG sheets for illicit manufacture of cylinders but according to it, this material was being used for manufacture of foot rings. The Tribunal finally came to the conclusion that there is no clinching evidence on record to show that the materials required for the manufacture of 14,800 cylinders had been received. The statements relied upon by the department were not tested by cross-examination by the respondent-company and the entries in the octroi/sales tax/police barriers do not tally with the actual transportation of the cylinders on each truck. The department applied for a reference on various grounds. The tribunal failed to make a reference and, therefore, the present reference petition was filed which was admitted.

6. From the facts stated above, it is apparent that many trips were made by the trucks of the respondent-company and on these occasion, the trucks went through the barriers. There is no entry of these trips in the record of the respondent-company. The best evidence was available with the respondent-company to show what was being carried in these trucks on these occasions when they crossed the barriers. There is no explanation by the respondent-company in this regard. It has not produced any record to show what was being carried in the trucks.

7. Admittedly, the entries in the barriers clearly show that on these trips either scrap or empty cylinders or LPG cylinders were being carried. These entries clearly show that this material was being carried in the trucks. There is a presumption of truth attached to official records maintained during the ordinary course of business. It is also come in evidence that the persons at the barriers used to verify the nature of goods being carried in the trucks. Therefore, though the quantity of goods being carried in the trucks may not be proved on record by the entries made in the record of the barriers but the fact remains that the identity or type of goods being carried in the trucks is proved by the entries in the records of the barriers.

8. Another very important factor is that according to the department 71.770 metric tonnes of LPG sheets had been imported without payment of Central Excise Duty. Even the Tribunal has held that the department has proved that52.690 metric tonnes LPG sheets were imported without payment of excise duty. This was a clear indicator of the fact that some illicit and illegal manufacturing work was being carried in the factory. The explanation of the respondent that this material was used for making foot rings of the Cylinders cannot be accepted. No sane manufacturer of goods would use the high quality and expensive sheet of the thickness of 3 to 3.15 mm meant for manufacture of the cylinders for the manufacture of the foot rings.

9. In our opinion, there can be no manner of doubt that there was some clandestine manufacture of cylinders going on in the factory. What was the extent thereof, and what was the excise and penalty payable thereon are matters which cannot be decided in this petition. However, we are clearly of the view that the approach of the learned Tribunal was wrong and against the law. Once the department proves that something illegal had been done by the manufacturer which prima facie shows that illegal activities were being carried, the burden would shift to the manufacturer. It was impossible for the department to prove how many cylinders were being carried in the trucks. However, if the department proves that the trucks crossed the barriers carrying some cylinders for which no record was maintained in the factory nor any excise duty was paid then the presumption can be drawn that the trucks were carrying cylinders as per the capacity of the trucks. The approach of the Tribunal that it was for the department to prove what was the quantity of goods carried in each truck which crossed the barrier and of which there is no entry in the records of the Company is totally illegal. Once the illegal activity was proved, the burden shifted upon the assessee.

10. No law can be interpreted in a manner so as to give premium to illegal and criminal activities. It is a basic common sense that no person will maintain authentic records of the illegal activities or manufacture being done by it. In the present case, there are certain facts which the department has proved and which have been upheld by the Tribunal itself; (i) that a large number of trucks belonging to the company crossed the octori/sales tax/excise/police barriers for which there is no record or explanation by the respondent-company, and (ii) in the records of the barriers, all these trucks are shown to be carrying LPG cylinders, empty cylinders and/or scrap. The department has also proved that about 70 metric tonnes of LPG sheets used for the manufacture of cylinders were imported without payment of excise duty. All these fact indicate that illegal activities were going on in the premises of the respondent-company. Keeping in view the aforesaid discussion, we are of the view that the Tribunal should re-examine the case by drawing adverse inference against the assessee.

11. We, therefore, answer the question in favour of the department, set aside the order of the Tribunal and remand the case to the Tribunal to decide it afresh in light of the above observations.