Home Case Index All Cases Central Excise Central Excise + AT Central Excise - 2019 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (6) TMI 68 - CESTAT MUMBAIClassification of goods - Covered yarn manufactured by the appellants - whether classified under 5605.10 or 5605.90 or 5605.00? - benefit of N/N. 45/1986 - Clandestine removal - undervaluation of metallized yarn - undervaluation of covered yarn - CENVAT Credit on inputs. Classification of goods - Covered yarn - Appellants submit that the obtain metallic yarn by micro-slitting lacquered metalised polyester film; Department has accepted its classification under heading 5605.10 - benefit of N/N. 45/1986 Central Excise dated 10.02.1986 - HELD THAT:- Heading 5605 covers metalised yarn, whether or not gimped, being textile yarn, or striped or light heading No.54.06 or 54.07, combined with metal in the form of thread, striped or powder or covered with metal. It is evident that the covered yarn manufactured by the Appellants contained metalised yarn (67%) and nylon/polyester/viscose yarn (33%) in terms of Chapter Note 1 to the Chapter 54 - there is no doubt that nylon/polyester/viscose are man-made filaments. Therefore, metalised yarn of man-made filaments falls under 5605.10. The classification requires to be arrived in terms of section notes and chapter notes and the references to the respective headings or sub-headings - the impugned goods are classifiable under 5605.10 and are covered by the exemption notification 45/1986 Central Excise dated 10.02.1986. Clandestine removal - covered yarn - period April 1990 to March 1991 - HELD THAT:- The averment that the total clearances of the Appellant to M/s. Hiro Industries tally with the invoices issued by M/s. Hiro Industries cannot be accepted. We find that the Appellants have not accounted for the clearance of 1776.75 kg of covered yarn - the Learned Commissioner had correctly confirmed the duty of ₹ 1,04,525 on the Appellants. Under-valuation - it has been alleged that the Appellants have under-valued the goods in as much as they have cleared 90% of the covered yarn to M/s. Hiro Industries @ ₹ 150 to ₹ 200/Kg and that M/s. Hiro Industries sold the same to other buyers at ₹ 425/kg - related party transaction - Extended period of limitation - HELD THAT:- The department has not made out any case to establish that the Appellants and M/s. Hiro Industries are related; no mutuality of interest is established; no proof of flow back of money has been brought out. The value adopted by M/s. Hiro Industries to their customers cannot be adopted just for the reason that M/s. Hiro Industries are purchasing 90% of the clearance of the Appellants and for the reason that they are selling at higher price to their customers - Other than mentioning the entries in the petty cash book the department could not establish that the entries pertained to the sale of goods and monies recovered back by the Appellants. Moreover, the impugned period was under the regime of filing an approval of classification and price lists - extended period of limitation also cannot be invoked - the allegation of under valuation is not sustained. Demand of duty of ₹ 1,12,321 by holding that exemption under notification No.175/86 is not applicable to the Appellants during the year 1991-92 - HELD THAT:- The exemption under notification 45/86 as claimed by the Appellants is applicable to them. Therefore, the exemption contained under 175/86 is also applicable to them. Confiscability of 777.175 kg of covered yarn - HELD THAT:- Out of 1546.21 kg of covered yarn lying in the factory only 769.035 kg was accounted in RG1 register. We find that the Appellants have not given any satisfactory explanation for the same - the Learned Commissioner was right in confiscating the 777.175 kg of covered yarn - quantum of redemption fine reduced. CENVAT credit - inputs - demand of ₹ 7, 21,507 on account of clearance of metalised polyester film without reversing the credit availed on such raw material - Scope of SCN - HELD THAT:- Though CESTAT has held that lacquering does not amount to manufacture, the fact that credit has been availed on the inputs used in the clearance of metalised yarn cleared as such or after lacquering. However, the Appellants submit that the issue raised by the Learned Commissioner is beyond the scope of the Show Cause Notice. On-going through the Show Cause Notice we find that the Appellants contention are correct - Learned Commissioner has travelled beyond the scope of the Show Cause Notice. Therefore, the demand is liable to be set aside. Penalties in terms of Rules 173 Q, 9(2), 52A, 210 & 226 - HELD THAT:- The sustainable demand is now limited to ₹ 1, 04,525 we find that the penalty be also restricted to ₹ 1,00,000 - other penalties also set aside. Appeal allowed in part.
|