TMI Blog2017 (12) TMI 606X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that allegation based mainly on statements and some records recovered from the third party cannot be basis for the demand alleging clandestine removal. Demand set aside - appeal allowed - decided in favor of appellant. - E/540 - 543/2007 - Final Order No.43015-43018/2017 - Dated:- 27-11-2017 - Ms. Sulekha Beevi, Member ( Judicial ) Shri M. Karthikeyan, Advocate for the appellant Shri K.P. Muralidharan, AC (AR) for the respondent ORDER Per Bench The appellants are manufacturers of cotton yarn and are registered with the Central Excise Department. On intelligence gathered that the appellants who were indulging in evasion of Central Excise duty by accounting cone yarn manufactured by them in their books of accounts as hank yarn and clearing the same without payment of duty in the guise of hank yarn, the officers searched the factory premises of the appellant as well as the residential premises of Shri R. Thangavel, yarn broker and recovered documents. Records were recovered and collected from M/s. Sri Vinayaga Sizing Mills (hereinafter referred to SVSM) who were undertaking sizing of yarn for Devi Group of Companies, to whom the appellant supplied yarn. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a few days is factually incorrect. The appellant had furnished the documents for purchase of reeling machines. Moreover, the department does not dispute the installation of such machines in the appellant's factory. Another document relied upon by the department is the Revised Test Report of TNEB. The appellant had applied for additional load and the same was approved in November 2001. Adverting to this Revised Test Report, the Ld. Counsel pointed out that the test report gives the load details existing as well as the proposed additional load details. The total additional load requested by the appellant was 338.86. Out of this, the load of the reeling machines would be only 5 HP (1 HP each machine) and the remaining is with respect to other machineries. Since the approval for additional load was given in November, 2001, the department has arrived at the conclusion that the appellant has started commencing production using the reeling machines only in November,2001. That, out of 338.86 additional load requested by the appellant, the reeling machines pertains to only 5 HP and it is clear that the appellant could operate the reeling machines with earlier load itself. That the deta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the month of July, 2001 and three more reeling machines were installed in the month of November, 2001. If all the seven machines were put into operation, 14 workers should have been engaged during the period from 07/2001 to 10/2001 and 20 workers should have been engaged after that period. But, the Muster Role Register shows only four to six workers were engaged and that too during the period after 11/2001. If all the machines were operative as contended by the appellant, they would have engaged more labourers and payment of wages and attendance would also be reflected in the register. Engagement of few workers only indicates that the reeling work was not done at all during the disputed period. He also argued supporting the discussions made in para-31.6 of the Order-in-Original. That the Bag Stock Register seized from SVSM showed that supplies were received by SVSM from Devi Group of Companies. From the table discussed in the said para of the order, it can be seen that during the period from July, 2001 to October 2001, 31304 kgs of cone yarn was received by SVSM on behalf of Devi Group of Companies. The appellants have raised invoices on Devi Group of Companies only for 7384 kgs. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory premises was only the stock obtained from trial run of the machines. For this, they have relied upon the daily stock register. Whereas on perusal of this document, it is seen that the opening balance of hank yarn as on 15.07.2001 is 276 - 134 and on 19.07.2001 is 1288 - 58. The said register also shows clearances during these dates. As per this document the total production for the month of July, 2001 is 5092 kgs. and the clearances of hank yarn made during this month is 4048 kgs. Thus, as per this admitted document, the allegation of the department that 649 kgs. of hank yarn found in the premises during the visit is only the stock found after trial run of the reeling machines is not acceptable. It is very much clear that the appellant have been operating and running the reeling machines in July, 2001 itself. The other document relied upon by the department as discussed above is the Revised Test Report issued by the Electricity Board. As correctly pointed out by the Ld. Counsel for the appellant, the load factor of the five reeling machines would be only 5 HP with each machine having a load factor of 1 HP. The appellant has requested for additional load of 338.86 HP. They alrea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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