9911796707
TMI Blog2015 (1) TMI 678X X X X Extracts X X X X X X X X Extracts X X X X ..... cleared to DTA by using 100% indigenous materials for availment of exemption under Notification No. 8/97-CE dated 01.03.1997. 2. The appellant has not satisfied the condition stipulated under Notification No. 15/2002-CE dated 01.03.2002 , that the inputs should have been procured on payment of duty. 3. Non-utilization of yarn received without payment of duty under CT-3 certificate, in the manufacture of Terry Towel during the period from 01.04.2000 to 31.03.2000, in violation of input output norms prescribed under SION. 4. Diversion of imported cotton to M/s. Sona Textiles, and consequent demand of customs duty. The adjudicating authority confirmed the demand of Rs. 56,05,439/-, in respect of demands covered under 1, 2, 3 above and imposed a penalty of Rs. 48,11,359/- under Section 11 AC of the CEA, 1944 read with Rule 25 of the CER, 2002 and also appropriated excise duty of Rs. 7,94,080/- and imposed a penalty of Rs. 1,00,000/- on Sri K. Jeyaraj, General Manage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He also submits that they have properly accounted the receipt of raw materials under CT3/Annexure. There is no allegation by the department that they have diverted the yarn to DTA units equivalent to the wastage quantity over and above the norms fixed under SION. 5. The Ld. Advocate submits that the department has not taken into account the facts that they were manufacturing Terry Towel by using PVA fibre (known as 'Water Soluble Fibres) in the ratio of 85:15 and calculated the norms as provided in SION for the manufacture of '100% Cotton Terry Towels'. There is no norms prescribed in SIOM for Terry Towels manufactured by using PVA. The PVA fibre is blended with cotton yarn in the above ratio to form the modal yarn and manufacture Terry Towels. The PVA fibre used is soluble in water and dissolves completely at a temperature of 85 deg C. If the weight of PVA is deducted the total wastage is well within the SION. He relied upon the Boards Circular F.No. 305/117/85-FTT dated 29.12.1986. He submits that as per the above circular, in respect of 100% EOUs, where the waste/scrape quantity exceeds 25% demand of duty could be made. He submits that the appellants have maintained details o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce for higher wastage. He also submits that invocation of extended period is justified as the department has detected only after the investigation. He relied upon the following decision in the case of M/s. Kalvert Foods India Pvt. Ltd. (SC) - 2011 (270) ELT 643. 9. We have carefully considered the submissions by both the sides and also perused the records. Out of the three issues covered in the impugned order, we find that in respect of wrong availment of Notification No. 8/1997-CE dated 01.03.1997 and Notification No. 15/2012-CE dated 01.03.2012, the appellants admitted the duty liability before the adjudicating authority and paid the duty before issue of show cause notice. They only contended the demand of interest in both the issues and penalty in respect of Notification No. 15/2012. The appellants are liable to pay the interest on demand confirmed and already paid by them on both the issues. However, the penalty imposed on the demand of Rs. 70,204/- is liable to be set aside, as there is no suppression of facts. 10. The appellants mainly disputed the demand in respect of 3rd issue, of alleged violation of standard input-output norms (SION). On perusal of the records and find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . % of prodn. Compared to consumption of yarn 1 1999-00 821577 764024 92.99 2 2000-01 907866 770011 84.81 3 2001-02 1201659 869086 72.32 4 2002-03 1573180 1128458 71.73 As seen from the above, the percentage of production of Cotton Terry Towel decreased from 92.99% to 71.73% from 1999 2000 to 2002-03. The appellants contention that in order to meet the higher quality of Terry Towels, as per the export market demand, they started using model yarn comprising of Cotton yarn and PVA at the ratio of 85:15 from April, 2001 onwards. We find that the Test Report dated 21.03.2006 issued by the South India Textile Research Association (SITRA) as relied by the appellants, confirms PVA fibre gets dissolved at 85%C. This fact has not been disputed by the department. It is seen that the Cotton yarn is blended with PVA before weaving Terry Towels, which is carried out through job work. After weaving, Terry Towels are dyed and bleached and during the process the PAV fibre blended with such cotton yarn gets dissolved. It is also seen from the records that the appellants have obtained permission from the department for movement o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sumable and gets washed off during the process. In the present case entire demand has been made out purely by adopting input-output norms prescribed by SION which is related to 100% Cotton Terry Towels (bleached/dyed), where the PVA has not been included in the norms. The department accepted the fact that the appellants have used PVA in the manufacture of Terry Towel. We are of the considered view that without producing adequate evidence on the excess utilization of cotton yarn or diversion of yarn, the duty cannot be demanded purely on the input-output norms without any corroborative evidence. We also find that the Boards circular referred above clearly supports that the appellants being 100% EOU, they are allowed wastage upto 25% and in the present case the percentage of waste is well below the prescribed limit after excluding PVA content. Therefore, we hold that the demand of Rs. 48,50,530/- confirmed by the adjudicating authority is set aside. Consequently, the penalty imposed on the appellants and Mr. K. Jayaraj is also liable to be set aside. 13. Accordingly, the impugned order is modified as under: Issue-1 i) Demand of Rs. 6,84,805/- and interest in the impugned order is ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
