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2013 (9) TMI 311 - AT - Central ExciseNotification 5/98, Notification 5/99, Notification 6/2000, Notification 3/2001 and Notification 6/2002-C.E - Revenue enforced the bond executed at the time of provisional release of the said goods, and directed appropriation of the security deposit tendered against the same, and imposed penalty u/s11AC of the Act and under Rule 173Q of the Central Excise Rules, 1944 r.w. Rule 25 of the Central Excise Rules, 2002 - The dispute was related to the period October 1996 to December 2002 - During the period various Notifications granted exemption to cotton fabrics subjected to various processes were issued – Held that:- The allegations against the appellants, as levelled in the Show Cause Notice and confirmed by the Commissioner, to be bereft of substance - No case for clubbing the processes carried out at Bhagyalakshmi and Famous can be said to have been made out - They were evidence on record clearly independent units independently working for the grey fabric supplier on their own account - The allegation of usage of power in mercerizing and stentering was also on the basis of the material on record without substance - In any event, in view of the fact that (i) the processes carried out at Bhagyalakshmi and Famous nave been held to be independent and not liable to be clubbed, (ii) the fabric cleared by Bhagyalakshmi to Famous is admittedly not marketable, (iii) there was no demand confirmed against Famous and (iv) the processes of baling and packing cannot be regarded as amounting to “manufacture”, no case for enforcing any duty demand against Bhagyalakshmi can be said to exist. The demand, as confirmed by the Commissioner against Bhagyalakshmi, along with the penalties on Famous and Shri N.K. Gajera, were not sustainable and the Commissioner’s order does not survive. All the evidences, which were produced by the appellant before the Commissioner had not been contradicted or controverted during the course of hearing by the learned SDR - The invoice dated 16-12-2002, whereunder the motor found in the premises of Bhagyalakshmi was stated to have been purchased, as actually relating to such purchase - the Commissioner’s ground for rejecting the said invoice was only that it had not been produced during the course of investigation - In the backdrop of other evidence relied by the appellant, the said invoice appeared to have been believable and in any case no case for presuming that the appellant had, in the past, operated, apart from already existing motor of 10 HP and 3.5 HP, another 10 HP motor on the mercerizing machine, can be said to exist, especially in view of the certificate of the Gujarat Vidyut Board which, coming from a statutory governmental authority, necessarily had to be accepted, in the absence of any evidence to discredit its trustworthiness. As the usage of power in the process of stentering at Famous was concerned, as had already been noticed, even if stentering were assumed to have taken place with the aid of power, that would not make any difference, as no demand had been confirmed against Famous - That apart, the only evidence to support the allegation of usage of power in stentering was the statements of the personnel of Bhagyalakshmi and Famous which, for the reasons already stated cannot be relied upon as the sole evidence to sustain the charge levelled by the Revenue - As against this, the learned Counsel for the appellant had pointed out that the photographs taken at the time of search/visit indicated that LPG Cylinders were used in stentering process - no demand having been confirmed against Famous, this issue was not of any substantial significance. The mere fact that grey fabrics were initially procured and finally dispatched by Bhagyalakshmi, or that common account was maintained for the processes carried out at Bhagyalakshmi and Famous cannot justify clubbing the processes or arrogating duty liability on all the said processes to the final fabrics as cleared from Bhagyalakshmi after baling and packing - As regards the usage of power in the process of mercerizing carried out in Bhagyalakshmi, was woefully insufficient to sustain the case of the Revenue - The allegation of high level of electricity consumption, etc., can hardly be taken into account, as neither the Show Cause Notice nor the impugned Order-in-Original, indicated that any analysis was conducted to ascertain what the normally acceptable level of electricity consumption would be, or how the consumption by Bhagyalakshmi was disproportionate in this regard.
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