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2001 (8) TMI 360 - AT - Central Excise
Issues: Duty demand and penalty for removal of yarn without payment of duty.
Analysis: 1. The appellant, a manufacturer of mono-filament yarn, faced duty demand and penalty due to a shortage of 5637 kgs. of yarn found in their factory during a visit by Central Excise Officers. The appellant claimed that the yarn had deteriorated over time and become waste, with part of it converted into dana. However, this explanation was not accepted by the lower authorities, leading to the duty demand and penalty. 2. The appellant's counsel argued that the quantity of yarn in question had been shown as outstanding stock in their records for years, and they had informed the authorities about its deteriorated state in a letter dated January 1992, well before the visit by the Central Excise Officers in February 1993. The appellant's partner also explained to the officers that the yarn had turned into waste and was being used to manufacture dana. The appellant maintained that there was no clandestine activity as the yarn was mentioned in their records and returns submitted regularly. 3. On the contrary, the Departmental Representative contended that there was no evidence to prove that the missing yarn was available as waste in the appellant's stock. Additionally, there was an excess of 220 kgs. of dana in the factory, indicating discrepancies in the appellant's explanation. The authorities rejected the appellant's explanation based on the records of production and the alleged shortage of yarn, without verifying its deteriorated condition. 4. The case was primarily based on the appellant's production records, where the quantity of yarn had been shown as outstanding stock for years. Despite the appellant's consistent explanation about the deterioration of the yarn over time, the authorities failed to verify the condition of the allegedly missing yarn. The Tribunal found that the appellant's explanation was more plausible, supported by records and circumstances. Consequently, the impugned orders demanding duty and imposing a penalty were set aside, granting relief to the appellant.
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