TMI Blog1997 (7) TMI 273X X X X Extracts X X X X X X X X Extracts X X X X ..... ree following major allegations :- (1) Proforma credit facility under Rule 56A for texturised yarn made out of duty paid base yarn was withdrawn w.e.f. 16-7-1983 by virtue of Notification 182/83-C.E., dated 1-7-1983. The assessees cleared textured yarn. Simultaneously, Notification No. 178/83 was issued exempting texturised yarn when made out of duty paid base yarn; except where proforma credit was availed of. The SIC cleared yarn during the period 18-7-1983 to 25-7-1983 by utilising the accumulated credit in their R.G. 23 Part II register. The duty so paid from the accumulated credit amounted to Rs. 9,85,427.82. The show cause notice alleged that since the accumulated credit could not be used, duty leviable to that extent was short-paid and was demanded. (2) The assessees had removed a quantity of 678.970 kilos of texturised yarn from the BSR, but the quantity redeposited in the BSR, subsequently, amounted to 670.470 kilos. Duty on the shortage of 8.5 kilos was demanded. (3) On comparison of the figures of production, shown in the statutory accounts and the figures derived from certain inter office memoranda, a quantity of 30272 kilos of texturised yarn was found not to hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bar in re-processing the goods deposited in the BSR. He stated that this shortage represents the waste which was mixed with the general floor waste, but was accounted for as such in the statutory books. He further claimed that if the department felt that duty is leviable thereupon as good yarn, such yarn was exempt from payment of duty in terms of Notification 178/83. We accept the contentions and hold that the demand for duty on this quantity of yarn, which [incidently] has not been quantified anywhere, is not sustainable. 6. We now come to the 3rd allegation and that of the surreptious production and removal of yarn totalling 30,207 kilos. This figure is arrived at, on examination of the certain inter office memoranda detailed in the show cause notice. We have carefully perused these documents. The first is a Telex dated 18-9-1984 to the effect that 10 tones of split/rewound yarn on cops of 58/10 denier was lying unpacked in the godown. The second was the office note of the same day which deals with excessive generation of waste. The waste/short yarn, as a result of splitting/rewinding of 28 [tonnes] of yarn was reported to be between 7,700 kgs. and 7,900 kgs. The 3rd is an off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut 4,500 kilos. This quantity is shown at 4,866 kilos in Dr. Shah s note. This gives support to the submission of the advocate that the two communications are complimentary. The office note dated 25-4-1985, which talks of number of workers engaged on various machines in different areas of manufacture seems to be referred to in Dr. Shah s note, since Dr. Shah s note speaks of average production and machine efficiency. 11. This internal correspondence has been made the basis of the calculation of the quantity of yarn texturised and cleared surreptiously. The Collector, in his order, makes this clear, as under : The show cause notice has arrived at the quantity of 30,207 kgs. based on the following: (i) as per office note dated 21-9-1984 of Dr. Shah, addressed to Sh. Sanjiv Shaia, production from rewinder was 15,467 kgs. Similarly, production from split was 7,160 kgs. As per office note dated 18-9-1984 and also telex dated 18-9-1984, they had a quantity of 7,700 kgs. of waste on 18-9-1984. Thus, as on 21-9-1984, they had 15,347 kgs. rewinder production, 7160 kgs. split yarn and 7,700 kgs. of waste totalling to 30,207 kgs." 12. As we have observed above, the value, of the inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed at this stage I have to point out that vain attempt has been made by the party in preparing and producing these statements.... . On pages 30 and 31 of his order, he has justified the demand by doing a complicated statistical exercise. Shri Santhanam, during his submissions, attempted further correlation with these findings also. To our mind, the mistake made by the Collector was in having placed reliance on the memoranda which did not show the time frame and, further, by not attempting to get the situation clarified by interrogating the persons concerned. 16. The allegation here is that the assessees surreptiously manufactured and cleared very substantial quantity of texturised yarn. The POY, which was the starting material was manufactured and cleared from the sister unit namely, UIP situated in the adjacent premises. Logically therefore, it was the other unit which had cleared POY clandestinely for texturising. The ld. Advocate was at pains to point out that during the relevant period, not only was the waste exempt in terms of Notification 239/83, but that textured yarn itself was wholly exempt under Notification 178/83-C.E. if the base yarn was duty paid. The show ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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