TMI Blog2013 (11) TMI 989X X X X Extracts X X X X X X X X Extracts X X X X ..... alance of 570.590 MT in the balance sheet without any basis - the duty demand on alleged clandestine clearances of 35.075 polyester chips during 1995-96 is not sustainable. Duty Demand on Clandestine Removal of P.P. chip waste – Held that:- In the ER-5 Returns the three types of wastes were being separately reflected and the letter dt. 21.09.04 of the Range Superintendent also mentions the yarn waste, polymer waste and chip waste separately – the quantities of P.P. waste are actually of polymer waste which have been duly accounted for in the Central Excise records - When the very basis for duty demand mentioned in the Show Cause Notice vanishes, the order upholding this duty demand, would not be sustainable – Decided in favour of Assessee. - Appeal No. E/1029/2005-EX[SM] - FINAL ORDER NO: 57769/2013 - Dated:- 27-9-2013 - Mr. Rakesh Kumar, J. For the Appellant : Sh. B.L. Narsimhan, Advocate, Sh. Hemant Bajaj, Advocate For the Respondent : Sh. Davinder Singh, Jt. CDR JUDGEMENT Per Rakesh Kumar:- The facts leading to this appeal are, in brief, as under:- 1.1 The appellant are engaged in manufacture of polyester filament yarn falling under Chapter 54 as wel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner vide order-in-original dt. 20.09.2000 by which the duty demand as made in the Show Cause Notice was confirmed under proviso of section 11A(1) of Central Excise Act, 1944 along with interest on it at the applicable rate under section 11AB and besides this, penalty of equal amount are also imposed on the Appellant under section 11AC of Central Excise Act, 1944. 1.4 On appeal being filed to the Commissioner (Appeals), this order of the Commissioner (Appeals) was upheld by order-in-appeal dt.01.10.2.004 against which this appeal has been filed. 2. Heard both the sides. 3. Sh. B.L. Narsimhan, Advocate, assisted by Sh. Hemant Bajaj, Advocate, learned counsel for the appellant, pleaded that the appellant manufacture polyester filament yarn from the starting raw-material, namely - DMT, PTA and MEG, that the manufacture polyester filament yarn is a two stage process -namely the process up to manufacture of the polyester chips and the manufacturing process beyond the chip manufacturing i.e. process of manufacture of polyester filament yarn, that during the course of manufacture of polymer from DMT/PTA and MEG, the polymer waste arises, that during the course of manufacture po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing balance of polyester chips as on 31.3.96 which was 605.665 MT with the closing balance of polyester chips as per the balance sheet for that year i.e. 570.590, that when the closing balance of 605.665 MT is reflected in the RG-1 Register and other Central Excise records and when in the balance sheet for 1995-96, the closing of polyester chips as on 31.3.96, is a lower figure of 570.590 MT, there is no question of clandestine removal of the un-accounted polyester chips, that this difference is on account of moisture, as in RG-1 Register and another records, the weight of chips recorded is of wet chips containing moisture which is slightly higher then the dry chip weight, and that in view of this, the duty demand of Rs.5,19,110/- on alleged clandestine removal of 35.075 MT of polyester chips during 1995-96 is not sustainable. 4. Sh. Davinder Singh, learned Jt. CDR defended the impugned order by reiterating findings of the Commissioner(Appeals) in it and emphasized that so far as the duty demand of Rs. 5,19,110/- on clandestine removal of 35.075 MT polyester chips during 1995-96 is concerned, the same has been correctly upheld in the impugned order as there are serious discrepan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing balances are for the wet chips and only the clearances for home consumptions have been recorded for moisture free chips. 2. Further, if the party s plea of 35.075 MT as moisture content i.e. 0.15% of the clearances figure recorded in Annexure-4 is correct, then such kind of difference had taken place in the account of P.P. of 1994-95 also and the difference of 29.382 MT of P.P. Chips would have existed in 1994-95 by taking into the consideration of 0.15% of moisture content. But the Annexure-IV figure reveal that no such difference has taken place, which is evident from the figures given below:- (a) O.B. of P.P. Chips as on 01.04.94 = 218.029 MT (b) Production of P.P.chips during 1994-95 = 21010.125 MT (c) Total (a+b) = 21228.254 MT (d) Clearances outside the factory = 1156.125 MT (e) Clearances for self-consumption in the manufacture of yarns = 19587.744 MT (f) Total (d+e) = 20743.869 MT (g) C.B. as per calculation as on 31.3.95 = 484.859 MT (h) C.B. as per Annexure-IV = 482.859 M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Excise records and the question of an un-account clearances would arises only if the figure of production of clearances, as mentioned in the balance sheet of a particular year, is more than that reflected in the Central Excise records. In this case the position is reverse as the closing balance of polyester chips as on 31.03.96 recorded in the Central Excise records on which the duty is supposed to have been paid, is more than the closing balance as on 31.03.96, recorded in the balance sheet. Therefore, in my view the duty demand on the difference between the balance of 605.665 MT in the Central Excise records and the balance of 570.590 MT in the balance sheet without any basis. Therefore the duty demand of Rs. 5,19,110/- on alleged clandestine clearances of 35.075 polyester chips during 1995-96 is not sustainable. 6. Coming to the second component of duty demand of Rs. 10,54,331/- on alleged clandestine clearances of 167.818 MT of P.P. chip waste during 1994-95 and 1995-96, the allegation in this regard as made in para 4 and 5 of the Show Cause Notice is as under:- Whereas on the basis of the investigations conducted by the team, it appears that the party h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chip waste is different from polymer waste, that polymer waste is known as hard yarn waste and is waste of polyester filament yarn classifiable under heading 5505.10, that polyester chip waste is a waste of polyester chips and is classified under chapter 39 and that, therefore, polyester chip waste and polymer wastes are different and hence the quantity mentioned in Annexure-IV against the production of polyester chip waste is undoubtedly of the chip waste manufactured during 1994-95 and 1995-96 and do not include the production figure of hard yarn waste i.e. polymer waste. However, the appellant s contention is that polymer waste though classified under Chapter 55, is not hard yarn waste, but is waste polymer and this waste arises prior to manufacture of polymer chips from the polymer and that the letter dt. 29.10.04 of the Range Superintendent also gives the figures for the year 1994-95 and 1995-96 of the production of yarn waste , polymer waste and chip waste and as per this letter during 1994-95 and 1995-96 the total polymer waste produced and accounted for the Central Excise records was 94.297 MT and 81.721 MT respectively. 7. Ongoing through the records, I find that fr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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