Archana Wadhwa, J.
1. Being aggrieved with the order passed by Commissioner (Appeals), revenue has preferred the present appeal. I have heard Shri B.B. Sharma, learned AR appearing for the revenue, and Shri H. Bajaj learned advocate appearing for the respondent.
2. As per facts on record the respondent is engaged in the manufacture of Premier Color Cartons. Their factory was visited by the officers on 23.08.2006 and verifications were made. It was found that another factory in the name of M/s. Pearl Pact, being proprietor unit of Smt. Ramesh Gupta, mother of the director of the respondent company was also engaged in the manufacture of identical goods. It turned out that M/s. Pearl Pack stopped their manufacturing operation in the year 2005-06.
3. Based upon the statements recorded during the course of investigation, proceedings were initiated against the respondent alleging that they were clearing their final product in the name of M/s. Pearl Pack. As such duty was proposed to be confirmed against them by taking into account the entire clearances made by the respondent as also by M/s. Pearl Pack during the period 2003-2006. The said proceedings resulted in confirmation of demand of duty of Rs. 29,63,173/- as also imposition of penalty of identical amount upon the respondent, apart from imposing penalties on the other induces.
4. On appeal Commissioner (Appeals) held that there are sufficient evidences on record that M/s. Pearl Pack was working as an individual unit prior to 31.03.05 and their factory was closed only with effect from 01.04.2005. The said fact was also accepted by the respondent. Accordingly he confirmed the duty of Rs. 6,46,515/- and imposed 25% penalty of Rs. 1,61,629/-.5. For better appreciation of the evidences taken into consideration by the Commissioner (Appeals), I reproduced para 5 of the said order:-
5. I find that entire case of the department is based on the presumptions that M/s. Pearl Pack were not having any machines and even if it is presumed that they had any machines, then the machines were never in operation as the enquiry conducted with the electricity authority i.e. M/s. NDPL revealed that there was no electricity connection in the name of M/s. Pearl Pack at A-64, Wazirpur Indl. Area, Delhi and the Bills of the diesel purchased by them did not indicate the name of M/s. Pearl Pack. On the basis of above, it was presumed that the appellant No. 1 created M/s. Pearl Pack under the proprietorship of a family member of one of the Directors, enrolled some labourers for some time and also showed purchase of raw materials and some junk machines and made clearances in the name of M/s. Pearl Pack with a view to camouflage their actual clearances from the concern of appellant No.1. I find that the allegation of the department that appellant No.1 cleared their goods on the invoices of M/s. Pearl Pack is established for the period w.e.f. 1.04.2005 as it has been accepted by the appellant No. 1 and M/s. Pearl Pack also that due to labour dispute the unit at A-64, Wazirpur Indl. Area, Delhi was closed and the goods manufactured by appellant No. 1 were cleared on the invoices of M/s. Pearl Pack without payment of duty amounting to Rs. 6,45,515/- and there is no dispute about the same. However, the appellants have challenged the impugned order on the ground that that said position was not true for the period prior to 31.03.2005 for the reasons mentioned by the appellants in the foregoing paragraphs. I find that the appellants have submitted various documentary evidence in support of the fact that M/s. Pearl Pack were in operation at A-64, Wazirpur Industrial Area, Delhi and engaged in the manufacturing of cartons during the period prior to 31.03.2005. I find that Letter dated 15.04.2005 written by Rastriya Mazdoor Vahini Union and Settlement/Receipts dated 9.05.2005 made before the Deputy Labour Commissioner, District North, Ashok Vihar, Phase-IV, Delhi in respect of seven labourers along with Settlement/Receipts dated 9.05.2005 duly signed by these workers engaged by M/s. Pearl Pack at the factory located at A-64 Wazirpur Industrial Area, Delhi, make it amply clear that M/s Pearl Pack apart from having various machines such as Pasting Machines, Board Cutter, Slotter Machine and stitching Machine, were having ample number of workers required for manufacturing cartons of paper board who were sacked due to labour dispute on 31.03.2005. The ground of the adjudicating authority that M/s. Pearl Pack were not manufacturing any goods as they were not having any electricity connection is ill-founded and does not hold ground in view of the fact that the appellants have produced the Bill for rent in respect of D.G. Set and Bills of diesel purchased by M/s Pearl Pack from various petrol stations located in the vicinity of the factory located at A-64, Wazirpur Industrial Area, Delhi. The fact of running the factory with the help of D.G. Set is further established by the fact that an amount of Rs. 2,46,103/- towards Power Generation and Rs. 83,500/- towards Generator Rent have been shown as expenses in the profit and loss account of the Balance Sheet for the year ending 31.03.2005. I find that the said Balance Sheet have been filed by M/s Pearl Pack along with Income Tax Return for the period ending 31.03.2005 filed on 27.10.2005 i.e. well before the search operation conducted 23.03.2006 and cannot be viewed with suspicion and therefore the evidence put for the by the appellants cannot be termed as an afterthought and brushed aside without giving any cognizance to the documentary evidence already on record. Various other manufacturing expenses such as, purchases, machinery repair and maintenance, salary and factory rent, conveyance, job charges, dies and design, wages etc. have duly been reflected in the Balance Sheet for the year ended 31.03.2005 filed on 25.10.2005 along with the Income Tax Return for the relevant period. Further, I find that Statements dated 25.09.2006 of Shri Dev Kumar Kucchal, Shri S.P. Sharma, Shri Vijay Kumar Mehta, all Supplier of materials to M/s. Pearl Pack and Shri Dheeraj Abhichandani, Job Worker which were in favour of the appellants and confirmed the fact of manufacturing activity at A-64, Wazirpur Indl. Area, Delhi, were placed before the adjudicating authority but the adjudicating authority did not consider the same as an evidence on the pretext that none of those statements bore the signature of the recording officer. I find that all the statements were recorded under Section 14 of the Central Excise Act, 1944 before the Superintendent (Anti Evasion) and it has not been denied by the department that said statements were not recorded during the course of investigation. In the absence of any such denial, those statements recorded during investigations cannot be rejected having no evidentiary value at all. All those statements establish that manufacturing activities were going on at M/s. Pearl Pack, A-64, Wazirpur Industrial Area, Delhi during the period prior to 31.03.2005. I find that the adjudicating authority has erred in not taking the cognizance of the evidence produced by the appellants in support of the fact that M/s. Pearl Pack was an independent manufacturing unit prior to 31.03.2005 and confirming the demand of duty against appellant No. 1 based upon the presumptions of the investigating officers without placing on record any direct and positive evidence in support of the allegations levelled against the appellant No.1. In view of the various evidence produced by the appellants, I hold that M/s. Pearl Pack was an independent manufacturing unit prior to 31.03.2005 and Central Excise duty on the clearances effected by M/s. Pearl Pack cannot be demanded from appellant No. 1 for the period prior to 31.03.2005 and demand of Rs. 23,16,658/- is set aside. Consequently, penalty of Rs. 23,16,658/- imposed under Rule 25 read with Section 11 AC ibid by the adjudicating authority is also set aside. However, I uphold the demand of Rs. 6,46,515/- for the period from 01.04.2005/- to 31.03.2006 and also uphold the penalty of an equivalent amount i.e. Rs. 6,46,515/- imposed under Rule 25 read with Section 11 AC ibid. Order of recovery of interest on the duty amount of Rs. 6,46,515/- is also upheld. However, in view of the submission of the appellants that they had deposited the entire amount of Central Excise duty along with interest and penalty within 30 days of the communication of the impugned order, the penalty amount of Rs. 6,46,515/- upheld above will get reduced to 25% as per the provisions of Section 11 AC. Accordingly, the penalty upheld would get reduced to Rs. 1,61,629/-.
6. As against the entire evidences taken into account by the appellant authority, the revenue has not rebutted the same with production of effective counter evidences. They have merely reiterated the stand that even prior 01.04.2005 the clearances of both have to be clubbed. Inasmuch as, the Commissioner (Appeals), has taken into account the various evidences as detailed above, I find no infirmity in the view adopted by him. Accordingly revenues appeal is rejected.