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TMI Blog1998 (4) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... nd acrylic staple fibre was also their final product falling under the same sub-heading. The Central Excise Preventive officers visited the appellants' factory on 27-10-1993 and studied the manufacturing process. It was found that acrylonitrile and methyle acrylate were polymerised and thereafter the polymer forced under high pressure through pack filter media and extruded through spinnerate, and the thread lines emerging from spinnorates pass over the finish rolls and then collected in the form spun rope, which is pulled by rollers and taken to draw machines, where it is first drawn and then crimped, and the crimped tow is collected and finally sent to cutter for producing staple fibre which is finally packed in bales. The department was o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alleging mis-declaration on the part of the appellants of the product as waste thereby leading to short payment of duty amounting to Rs. 7,20,37,378/- through wilful mis-statement and suppression of facts during the period 1-8-1989 to 31-1-1994; Rs. 1,27,34,356/- for the period February 1994 to July 1994; Rs. 45,23,856/- for the period August, 1994 to October, 1994. After considering their reply to the show cause notice, the Commissioner of Central Excise, Vadodara passed the impugned order confirming the demands under the show cause notices as above under Section 11A of the Central Excises Act. He also imposed a penalty of Rs. 10 lakhs on the appellants. 2. Shri Lakshmikumaran, the ld. Counsel for the appellants submitted that the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 55/11/89-CX. I, dated 18-12-1989 on the subject of classification of waste of synthetic staple fibre and nature of waste. The Board has clarified that waste arising during crimping/texturising or drawing could be considered as waste and this could be identified by visual observation or by drawing samples and testing. It was also stated therein that tow, not conforming to the definition in Chapter Note 1 to Chapter 55 has to be treated as waste of synthetic or artificial tow as the case may be. The ld. Counsel submitted that no test was conducted by the department from this angle in this case. No samples were drawn from the waste to say that it is fibre or waste to apply the criterion given by the Board. The ld. Counsel also relied upon th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... waste. The ld. DR then referred to certain test reports of the samples drawn from the appellants' factory to say that the samples tested according to the report were of uniform length. Therefore, going by these test results, there is no indication that the material is waste. The ld. DR thereafter referred to the various customers statements in the show cause notice which indicate that the material purchased from the appellant as waste has been directly used for manufacture of yarn. This is an indication that it was fibre of prime quality and not waste. 4. We have carefully considered the submissions. The question is, whether the goods cleared as waste by the appellants could be considered as tow at which higher duty has to be paid. Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l before or during the filaments are crimped/texturised and then cut into staple fibres. The Board clarified that during these processes waste may arise which are also covered under Central Excise Tariff Heading 55.03, and any fibre damaged during crimping/texturising or drawing could be a waste, according to this clarification. The Board further stated in the clarification that these can be identified either by visual observation or by drawing samples and testing. In the present case, there is no material to show that such samples were drawn and tested during the period relevant to this case. No test reports are on record. The department's case is based on the statements of customers who purchased the product as waste cleared by the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such fibres and tops are manufactured from such waste by process like garnetting, combing, carding and gilling which do not involve any recyling of any such waste. As we have seen above, in the present case, from the waste materials sold, the customers have after process of carding, cleaning, garnetting and gilling, produced fibres. But that will not support the department's case that the goods as cleared were staple fibre or tow covered under Heading 55.02 in view of the above circumstances. Moreover, the Commissioner's reliance for supporting the charge that tow has been cleared in the garb of waste, is based only on the customers' statement and when we have seen that the customers' statement does not bring out the fact of the nature of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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