1. ' MAMOON KAZI, ACTG. C.J.---The petitioners are aggrieved because aerated drinks manufactured by them, which were found loaded on trucks, were ordered to be confiscated by the Deputy Collector, Central Excise and Land Customs, Karachi, respondent No,2, side order, dated 12-4-1987.
2. By the said order a redemption fine of Rs,20,000 and Rs,50,000 was respectively imposed against the petitioners together with a penalty of Rs,2,000 and Rs,15,000 respectively. An amount of Rs,36,46,800 was also ordered to be received which was found to be due against the petitioners on account of backlog of clearance together with a penalty of Rs,10,00,000. The order passed by respondent No,2 was partly upheld by the Collector of Central Excise and Land Customs (Appeals), the respondent No,1, as the amount of redemption fine and penalty in respect of a portion of the goods was reduced to Rs,25,000 and Rs,5,000 respectively.
3. ' It may be pointed out that the petitioners are engaged in the sale of various aerated drinks. On 13- 4-1983 the Intelligence Staff of respondents intercepted a truck (No,842-064) which was loaded with crates of beverage water, which was seen coming from the premises of the petitioners. The scrutiny of the Excise record revealed that 238 crates of aerated drinks filled in bottles were not supported by any legal document which could indicate payment of Excise Duty. Hence the goods of the petitioners were seized alongwith the said truck. The Intelligence staff of respondent No,2 also saw another Truck (No,840-060) loaded with crates of orange which also could not be supported by documents to indicate payment of any Excise Duty thereon. It was also found that although Friday was a closed holiday, but manufacturing process was in progress at the petitioner's factory without intimation to the Excise Department as required under law. The staff of the said respondent also found that another truck loaded with crates of salute orange also had no legal support of payment of excise duty before their removal from the factory. The detecting staff thereafter worked out the backlog during the period from 21-4-1983 to 31-3-1985 and it was found that 2,04,456 crates of foreign brand drinks had also been removed by the petitioners by evasion of payment of Central Excise Duty, amounting to Rs,37,46,890. Consequently a show-cause notice dated 15-7-1985 was issued to the petitioners.
4. ' The petitioners after submitting a written reply to the said notice subsequently appeared before the respondent No,2 who found that the case against the petitioners was fully established. He therefore, ordered the petitioners to pay Excise Duty amounting to Rs,37,46,689 x penalty of Rs,19,00,000 was also imposed upon the petitioners.
5. ' The petitioners being aggrieved by the said orders filed appeal before the respondent No,1 who although dismissed the appeal, but modified the order passed by the respondent No,2 as pointed out earlier. The respondent No,1 found that the petitioners had already admitted their case in respect of 239 crates of mango found on Truck No,842-064. However, the redemption fine and penalty was reduced in respect of 200 crates of orange and 351 crates of a similar product found within the premises of "Duty Paid Godown" of the petitioners. The rest of the order passed by respondent No,2 was kept in tact.
6. ' The main contention of Mr. Anwar Mansoor learned counsel for the petitioner before us has been that since presumption against the petitioners has been drawn by the respondent No,2 upon their failure to produce record in respect of the "Duty Paid Godown", which they were not bound under law to maintain, no adverse inference can be drawn against the petitioner. Learned counsel has invited our attention to Rules 53-A, 53-B, 54 and 55 of the Central Excise Rules which no doubt Renjoin upon the manufacturer of goods to maintain records in respect of the goods cleared from the factory after payment of the Central Excise Duty, but according to the learned counsel, no such obligation is imposed upon the manufacturer of goods to keep record in respect of any of its private godowns where the goods are stored after payment of the said duty.
7. ' Although Mr. Zaheeruddin Khan, learned counsel appearing on behalf of respondents has made no attempt to meet the proposition advanced by Mr. Anwar Mansoor, but his contention before us has been that the petitioners have themselves admitted the said allegations both before the respondent No,1 as well as the respondent No,2. Although the learned counsel is right, but the observations made in the order, dated 20-3-1989 passed by respondent No,1 in the case show that such concession was made by the representative of the petitioner only in respect of 239 crates.
8. Presumptions against the petitioners were drawn by is as follows:-- "(7) Apart from the above the following facts also lead to belief that clandestine removal of goods has taken place:--
(a) Difference between the quantities of Beverages cleared from the factory and despatches from the duty paid godown as per gate pass Come to 2, 04,682 bottles during the period from 10/83 to 10/84;
(b) Despatches made from duty paid godown on Friday (two holidays were also not shown), did not tally with the prescribed records whereas private gate passes are available in respect of such despatches;
(c) Private gate pass issued from duty paid godown showed such varieties of beverages whose entries did not tally with the entries made in the duty paid godown;
(d) Despatches had been made from duty paid godown in respect of such varieties of beverages whose balance do not tally with any transaction in duty paid godown;
(e) Raw material physically found in the factory was much more than accounted for in the Raw Material Register; and
(f) Raw Material Register was left blank w.e.f. 11-4-1985 to the date of seizure in order to adjust account of raw material according to their own choice."
9. ' We would like to point out that although presumption can be drawn against the petitioners in case of their failure to produce the record, which they were bound under the law to maintain, but no such presumption can be drawn in case of their failure to produce any record which they were not bound to maintain under the law. The orders passed by the respondents Nos.1 and 2 respectively fail to indicate whether any presumption against the petitioners was based on their failure to produce any record which they were bound under the law to have maintained. The petitioner's godown referred to in the impugned order as "duty paid godown" was the godown where the goods of the petitioners were kept after clearance by the staff of respondents, and consequently, the petitioners cannot be penalised on account of their failure to produce any record in respect of the removal of goods from the said godown or their return to the same unless the petitioners are shown to be bound to keep such record under the law.
10. ' Since that is not the case of the respondents, we are of the view that it is fit case for remand to respondent No,2 for a fresh disposal. No doubt the petitioners are shown to have made some concessions before the said respondents whereby part of the case was admitted by them, however, this aspect of the case has already been considered by the respondent No,1 in his order, dated 20-3-1989. So far as the rest of the case against the petitioners is concerned, the liability of the petitioner still needs to be determined, strictly in accordance with the law.
11. ' In this result, this petition is allowed to the extent as pointed above and the two orders of respondents Nos.1 and 2 respectively are set aside, and the case is remanded to respondent No,1 for a fresh disposal in accordance with law. The parties are left to bear their own expenses.