TMI Blog2008 (12) TMI 514X X X X Extracts X X X X X X X X Extracts X X X X ..... ule 26 of Central Excise Rules, 2002 (CER) read with Rule 209A of CER, 1944 on M/s. VSM Associates (VSM), Palani. 2. The brief facts are that following a visit to the premises of the appellants on 5-1-2000, the officers attached to the Central Excise division, Dindigal-II, detected irregularities committed by the appellants as regards maintenance of statutory records and payment of duty on excisable goods manufactured and cleared during 06/99 to 12/99. After completing investigation, a Show Cause Notice was issued to the appellants and one of its buyers VSM Traders on 16-12-03. Adjudicating the allegations of clandestine removal by KVT, the original authority demanded duty of Rs. 4,17,903/- and imposed equal amount of penalty under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yarn on cones in the guise of hank yarn under invoices addressed to fictitious buyers. He found that the entries of receipts as per bank account statement matched with the assessee s ledger. KVT had only one reeling machine when the departmental authorities visited the assessee s factory. Considering its capacity to produce 360 kgs of yarn in 3 shifts, during the material period KVT could not have produced and cleared the amount of hank yarn, 1,48,906 kgs recorded to have been manufactured and cleared. Shri J. Victor, employee of VSM had admitted to the departmental officers of having purchased cone yarn from KVT under invoices showing them as hank yarn in his statement dated 27-4-01. His account of transactions was genuine and acceptable. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s clearly indicated real transactions with these dealers. The department had not investigated and collected reliable evidence in this regard on the allegation that the dealers were fictitious. No detailed statement was obtained from Shri Gopinath. It was not hence clear whether the private file was maintained to show inflated figures of performance to the bank. 4. I have considered the rival submissions. The charge of clearances of cotton yarn on cones in the guise of hank yarn with a view to remain within the SSI exemption limit is found primarily on the basis of a private record maintained by one of the employees of KVT. The Managing Director of KVT had maintained consistently that the said record was not official and might have been ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of VSM were not examined by the departmental authorities also displays the weakness in the investigation. The statement of Shri. J. Victor would have been acceptable had the authorities verified their ledger when they called on Shri. J. Victor and had found that the goods purchased from KVT shown in the invoices as hank yarn was cotton yarn on account of the price rate. The authorities have not conclusively established that the assessee did not have machinery required to manufacture and clear the amount of cotton yarn on cone found to have been clandestinely cleared. Assessee had four reeling machines, two of them were not in working condition when the officers visited KVT premises; one was in just used condition to adopt the language use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rivate records was used in any statement given to the bank and if so for what purpose. These are not forthcoming from the orders of the lower authorities. The private record can be relied upon to the extent it matches the bank account statement. Demand has to be restricted to clandestine clearances including the admitted quantity of value Rs. 1,97,800/-. In the circumstances, the matter is remanded to the original authority to adjudicate the case afresh and to categorically find the quantity and value of the cotton yarn cleared in the guise of hank yarn and the clearances which attract duty liability being in excess of the exempted value of clearances under the SSI Notification. Needless to say that the appellants shall be allowed an effect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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