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Kay Gee Spinners Pvt. Ltd. And Shri Vivek Kumar, Director Versus CCE, Rohtak

2016 (2) TMI 212 - CESTAT NEW DELHI

Clandestine removal of cotton yarn in cones/cheese by mis-declaring the same as in PR Hanks - Wrong availment of benefit of exemption notification no.8/96-CE dated 27.03.1996 - the appellant mis-declared yarn produced by them as in the form of PR Hanks though they had manufactured and cleared the yarn in cone/cheese - also failure to maintain the record of manufacture of excisable goods - Held that:- The case for demand of duty based on the allegations of mis-declared clandestine clearance has n .....

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e appellant have made out a case against the demand. They have been filing classification list declaration under Rule 173 B mentioning the nature of the product, rate of duty and the concessional notifications claimed by them. Investigation in the case started with the search on 25.03.2000. A show cause notice to confiscate the seized goods and to demand duty on the same was issued on 17.11.2000. Another show cause notice resulting in the impugned order was issued on 28.04.2003. This notice was .....

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the above findings, we set aside the impugned order and allow the appeals. - Decided in favour of assessee. - Excise Appeals Nos.3271 and 3272/2006-EX(DB) - Final Order Nos.53144-53145/2015 - Dated:- 16-9-2015 - SHRI ASHOK JINDAL, MEMBER (JUDICIAL) AND SHRI B. RAVICHANDRAN, MEMBER (TECHNICAL) For the Petitioner : Shri L.P. Asthana, Advocate For the Respondent : Shri S. Nanthuk, Joint CDR ORDER Per B. Ravichandran: These two appeals filed against the same order-in-original are taken up together f .....

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ave failed to maintain the record of manufacture of excisable goods. The proceedings concluded with an order-in-original dated 1.8.2006. The Original Authority confirmed the demand and imposed equal penalty on the main appellant. Penalty was also imposed on the Director of the appellant company. Aggrieved by this order, the main appellant -company and the Director filed these appeals. 2. In the grounds of appeal, the appellant pleaded that the cotton yarn on open end machine comes out in bobbin/ .....

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in converting into PR Hanks, they are not maintaining accounts for this yarn. Only those yarn, which are ready for clearance out of factory are accounted for. (b) They have six reeling machines of which four were sent for repair and were not available on the date of visit of the officers. They have been regularly clearing PR Hanks and the claim of the department, that they are clearing dutiable yarn in cones and cheese by mis-declaring them as PR Hanks, is not supported by any evidence. (c) They .....

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ime to time. (e) As first show cause notice was issued on 17.11.2000 covering a part of the impugned period dealing with proposed confiscation of seized goods, issue of another show cause notice invoking extended period of time on 28.4.2003 is legally untenable. 3. During the arguments, ld. Counsel for the appellant reiterated the grounds of appeal. He stated that the Department proceeded against the appellant only on the basis of certain presumptions without any corroborative evidence of any mi .....

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ng availability of 6 reeling machines with the appellant, procured on various dates and shown in their books of accounts, no verification to establish the correctness of such claim was made by the Revenue. 4. Ld. Counsel for the appellant strongly argued on the question of time bar. He stated that the first proceeding initiated for part of the period to demand duty and to confiscate the seized goods concluded in the order-in-original dated 13.09.2002. The said order was set aside by the Commissi .....

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t there is no corroborative evidence about mis-declaration of cotton yarn in cones and cotton yarn in PR Hanks. 5. Considering the above proceedings, another proceeding vide show cause notice dated 28.4.2003 for extending period of demand, which resulted in the impugned order, is legally unsustainable. Ld. Counsel for the appellant relied on the Hon ble Supreme Court s decision in the case of Nizam Sugar Factory reported in 2006 (197) ELT 465 (SC). 6. Ld. AR, on the other hand, reiterated the fi .....

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n the production of yarn in PR Hanks, has to be shown in the statutory registers. The appellant s stand that the captively consumed items are exempted and non-maintenance of records can at best be a procedural lapse cannot be accepted. 7. Heard both the sides and perused the appeal records. 8. The point for decision is whether or not there is a case for clandestine removal of cotton yarn in cones/cheese by the appellant mis-declaring the same as in PR Hanks. The case of the Revenue is mainly bas .....

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six reeling machines and also capitalization of the said machines in their books of accounts. They also produced certain evidence regarding movement of machines for repair and payment of repair charges. These aspects have not been inquired into or commented upon by the adjudicating authority. The case against the appellant was mainly on the ground of seizure of yarn in cones/cheese, which were not entered in the RG-1 register at the time of visit of officers and non-availability of full machine .....

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nd machines for making yarn in PR Hanks during the relevant period. The departments case of mis-declaration was not corroborated by any evidence regarding transport, purchase or other money transactions to show that the appellants were all along clearing cotton yarns in cones/cheese mis-declaring them as yarns in PR Hanks. In this connection, we find in para-46 of the impugned order regarding the ld. Commissioner s observation that the case is to be decided taking into consideration the evidenc .....

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ing appellants claim of owning 6 reeling machines with evidence of their purchase, accounting in their records and removal for repair etc has not been dealt with. The non-availability of physical stock of yarn in PRH form or availability of yarn in cones by itself cannot be the reason for demanding duty on all clearances during the impugned period treating them only as dutiable clearances of yarn in cones. Such projection is at best can be considered as presumption. This requires to be corrobor .....

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the one side, he mentions about party s declarations to the Textile Commissioner as having 6 reeling machines. On the other side, he concludes that the availability of machine during 1998-99 cannot be based on certificates of May, 2004. No inquiry appears to have been made regarding purchase of reeling machine, repair of reeling machines as claimed by the appellant. Regarding seizure of yarn in the dealer s premises, the Original Authority in a separate proceedings, dropped the case vide order .....

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g him to the only possible conclusion that there has been misdemeanour committed by the party by surreptitious removal of dutiable cone yarn in the guise of exempted PR Hanks /yarns/ . 11. The production and clearance of PRH yarns has been recorded in the statutory records of the appellant. The allegation of mis-declaration and clandestine removal of dutiable items instead of / in the name of yarn in PRH form has to be established by the tangible evidences of clandestine manufacture and clearanc .....

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