TMI Blog2008 (10) TMI 531X X X X Extracts X X X X X X X X Extracts X X X X ..... sed on the above finding and re-quantification of the penalty to be imposed on the Appellants - appeal allowed by way of remand. - E/3503 & 3553/2006 - 749-750/2008-EX(PB) - Dated:- 13-10-2008 - S/Shri S.S. Kang, Rakesh Kumar, JJ. REPRESENTED BY : S/Shri Balbir Singh and Rupender Singh, Advocates, for the Appellant. Shri H.K. Thakur, DR, for the Respondent. [Order per : Rakesh Kumar, Member (T)]. The appellant in their factory at Banbirpur, Bhiwadi, Rajasthan, manufacture cotton yarn in cone and hank form falling under Chapter heading 52.05 of the Central Excise Tariff Act, 1985. The cotton yarn in plain reel hank form is fully exempt. Central Excise Duty under Notification No. 3/01-C.E., dated 1-03-01 and its predecessor notifications. The point of dispute is as to whether the cotton yarn manufactured by the appellants was in plain reel hank form and hence fully exempt from duty, as claimed by the Appellants or was in cross reel hank form and hence liable for duty, as held by the Revenue. On the basis of certain inquiries initiated by the Jurisdictional Central Excise officers in September, 2001, a show cause notice dated 1-1-2002 was issued to the appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant company was manufacturing cross reel hank yarn. Due to man handled, Shri Tiwari has received certain injuries which was reported to a doctor in City Nursing Home, Bhiwadi. All these statements have been retracted and, therefore, are of no evidence value. In fact, Shri G.S. Singhvi, M.D. of the appellant s company in his statement dated 8-10-01 has clearly stated that since inception, this plant was manufacturing cotton yarn in plain reel hank form only. (2) During the proceedings, the statement of machinery supplier Shri Salil Malhotra, authorized signatory of M/s. Metro Textile Traders, Ludhiana, the machinery supplier, was recorded, wherein he stated that the machinery supplied to the Appellant is capable of making plain reel hank yarn, but the same can also make cross reel hank yarn with some adjustment and addition of small parts, but he also clarified that their company had not supplied any such spare parts. Though, the officers have visited Appellant company s factory several times during the investigation, there is no Panchnama confirming that the machines was found to be fitted with the parts enabling the production of cross reel hank yarn. (3) The offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt being a manufacture of yarn in hank form was registered with Textile Commissioner. The registration is granted after inspection and verification of the process and machinery by the Textile Commissioner-officers. The Appellants also filed quarterly return with the Textile Commissioner informing the total quantity of plain reel hank yarn manufactured. 3. Shri H.K. Thakur, the learned Joint Departmental Representative made the following submissions :- (1) At the time of the officer s visited to the unit, certain samples from the yarn in stock had been drawn and the same were forwarded to the Central Revenue Control Laboratory (CRCL), New Delhi for the opinion as to whether the same is plain reel hank yarn or cross reel hank yarn and the CRCL vide report dated 8-10-01 reported the samples to be of cross reel hank yarn. This gives an indication that during that period of dispute, the Appellants were manufacturing cross reel hank yarn and were misdeclaring the same as plain reel hank in order to evade the duty. In this regard, statement dated 4-10-01 of Shri R.B. Tiwari, is quite revealing. In this statement, Shri Tiwari admitted that the machines in the factory are fitted wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and cleared only the cross reel hank yarn. 5. In our view, the above evidence is not sufficient to arrive at this conclusion in view of the following :- 5.1 The correspondence of the Appellant company with their customers regarding complaints about the quality of the plain reel hank yarn supplied by the Appellants indicates that the Appellants were producing plain reel hank yarn. For arriving at any definite conclusion on the point is as to whether the Appellant was manufacturing cross reel hank yarn or plain reel hank yarn extensively, inquiry should have been conducted with a large number of buyers. But the same has not been done. The Revenue has brought on record only the test report of the sample drawn from the business premises of M/s. Komal Synthetics a dealer who has purchased the yarn from the Appellant, but just on the basis of this test report it cannot be concluded that all the dealers had purchased only cross reel hank yarn. 5.2 The statement of Shri Salil Malhotra, the machinery supplier indicates that the machinery supplied by him and installed in the Appellant s unit is capable of manufacturing cross reel hank yarn after attaching some attachments. But Shri Mal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany produced only cross reel hank yarn. Therefore while, the stock of yarn found in the factory premises at the time of the officer s visit to the factory on 27-9-01 and the stock of yarn found in the premises of M/s. Komal Synthetics which on test by the CRCL was found to be cross reel hank yarn, can be treated as cross reel hank yarn, the findings of these tests cannot be applied to the other clearances. Tribunal in a series of judgment in cases of Kiran Spinning Mills, Bombay v. Collector of Central Excise, Bombay reported in 1988 (33) E.L.T. 137 (Tri. - Del.), Pattani Chemicals v. Collector of Central Excise reported in 1991 (56) E.L.T. 253 (Tri. - Del.) and Bee-Am Chemicals Ltd. v. Commissioner of Central Excise, Raigad reported in 2004 (167) E.L.T. 534 (Tri. - Bom.) has held that test report pertaining to a particular lot can be applied only in respect of the material of that lot and the same cannot be automatically applied in respect of the clearances made prior to such tests and the Tribunal judgment in case of M/s. Pattani Chemicals (supra) has been upheld by Hon ble Supreme Court vide judgment reported in 1998 (98) E.L.T. 582 (S.C.). In view or this, in respect of past c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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