TMI Blog2004 (11) TMI 376X X X X Extracts X X X X X X X X Extracts X X X X ..... e Directorate of Anti Evasion (Central Excise) officers, on the basis of intelligence, visited the factory premises of the appellants on 20-7-2000 and verified the stocks and records. At that time, it was found that the cotton yarn in the form of cross reel hank weighing 4504 Kgs was accounted as plain reel hank yarn in the RG1 Register. The goods were seized for misdeclaration and the statements of S/Shri A.S. Kotrappa, Executive Director; H.B. Mallikarjuna, SQC Assistant and N. Ethindran, Factory Manager were recorded. Based on the statements of the above persons and also further investigations, a show cause notice dated 17-1-2001 was issued demanding Central Excise duty amounting to Rs. 63,20,859/- on the cross reel hank yarn manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s imposed under Rule 209A of the Central Excise Rules, 1944. 3. S/Shri M.S. Nagaraja and T.R. Sastry, learned Advocates appeared on behalf of the appellants. Shri L. Narasimha Murthy, learned SDR appeared on behalf of the Department. 4. Ld. Advocate challenged the finding of the Adjudicating Authority on the following grounds :- (i) The Department s case is that the appellants cleared dutiable cross reel hank yarn in the guise of duty free plain reel hank yarn, thereby evading duty. Though the Department carried out investigations at the factory premises and at the customers end, not even a single buyer stated that he had received the cross reel hank yarn instead of plain reel hank yarn mentioned in the invoices during the relev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure D1 to Show Cause Notice is entirely based on the diary maintained by Sri B. Surendranath and therefore, deserves to be set aside. Ld. Advocate relied on decision of Hon ble Supreme Court in case of M. Parikh Co, v. Income Tax Commissioner - AIR 1956 SC 554 wherein it was held that - Where Affidavits are filed before an officer, normally speaking, if he desires to challenge the correctness of the averments in the Affidavit, he should call the deponents for obtaining cross-examination or test the correctness of the averments by any other means open to him and it would not be proper for the officer to reject the Affidavit as incorrect. (v) The Department has gone on the assumption that the symbol XX used in the diary of Sri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is settled that the retracted statement cannot be relied upon unless corroborated in material facts. Even though, the Department conducted verifications in respect of 20 Invoices, there is no evidence regarding any misdeclaration and evasion of duty. The sale of yarn under the said 20 invoices was to M/s. Murarka Textiles Pvt. Ltd., Kanpur (7 invoices) and M/s. R.K. Rayon Ltd., Panipat (10 invoices). There is no evidence that M/s. Murarka Textiles Ltd., Kanpur has received cross reel hank yarn under the 7 invoices. There is no evidence that M/s. R.K. Rayon Ltd., Panipat has received yarn which is different from the description given in the invoices. (vii) The clearance of plain reel hank yarn under 20 invoices is fully corroborated by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riting, crossing and rewriting of the description of the goods occurred in the RG1 Register. (x) The findings of the Commissioner solely based on the type of goods seized inside the factory before their clearance and extrapolating it to the past clearances over a period of 5 years is wholly presumptuous and therefore, erroneous, especially when there is no corroborative evidence from the buyers. (xi) Shri Kotrappa was not looking after the day to-day administration of the factory for several years and he was looking after only labour related matters. These facts have not been taken into account by ld. Commissioner since his statement was not voluntary. There is no ground for imposition of penalty as Shri Kotrappa had neither dealt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellants for a period of nearly four years. However, the Department tries to build up the case on the basis of the statements recorded from S/Shri Kotrappa and Ethindran. Even immediately after the statements were recorded, they have been retracted. When the statements have been retracted immediately, it is clear that they are not voluntary. On the basis of the statements which are not voluntary, we cannot hold that the conclusion of the adjudicating authority is sustainable. The Department s case is that the symbols SPL and XX in the private diaries of Sri Surendranath and Sri Ethindran indicate the production of cross reel hank yarn only. On the above assumption, duty evasion has been alleged. If the Department s case is that the app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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