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2016 (2) TMI 212 - CESTAT NEW DELHI

2016 (2) TMI 212 - CESTAT NEW DELHI - 2016 (340) E.L.T. 252 (Tri. - Del.) - 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 .....

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d PR Hanks /yarns/. - On the question of time bar also, we find that the 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 notic .....

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gned order cannot be sustained on the question of time bar also. In view of 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 .....

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nks though they had manufactured and cleared the yarn in cone/cheese. They have 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 app .....

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as below:- (a) Since no duty was payable on the single yarn captivity used 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 b .....

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ng with applicable rate of duty as per various notifications in force from time 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 th .....

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of yarn in PR Hanks is available. When the appellant made submission regarding 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 orde .....

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claring the same as cotton yarn in PR Hanks. The Original Authority held that 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 .....

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s/cheese is liable to excise duty and the same, even if consumed captively in 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 .....

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e appellant have submitted documentary evidence regarding actual purchase of 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 re .....

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ssioner with reference to their obligation and also availability of labour and 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 obse .....

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tion has not been categorically dealt with by the original authority. Regarding 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 projecti .....

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y discusses regarding the requirement and operations of reeling machines. On 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, th .....

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onfirmed the demand based on the text of preponderance of probability leading 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 e .....

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