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TMI Blog2018 (5) TMI 1668X X X X Extracts X X X X X X X X Extracts X X X X ..... d impose redemption fine and penalty on the distributors. d) M/s Ashish Textiles, Dealers of the Respondent, a firm who allegedly had stocks of fabric on which no excise duty was paid. It was proposed to seize the goods and impose redemption fine and penalty on the distributors. e) The owner of vehicle No: AP 9T 8688 in which goods were being carried out without payment of excise duty. It was proposed to confiscate his truck and impose a redemption fine in lieu thereof. 2. The case was originally adjudicated by Order-in-Original No. 07/2001- ADJN. CEX, dated 27.11.2001, confirming the demands, confiscating the goods and imposing of fines and penalties as proposed in the show cause notice. Aggrieved, the Respondent (in this case) had filed an appeal before CESTAT Bangalore Bench who, vide Final Order No: 1503-1508/2003, datedc14.11.2003 and Miscellaneous Order No. 417/2003, remanded the matter back to the Commissioner to adjudicate the matter, after following the principles of natural justice. Thereafter, the Commissioner of Customs & Central Excise, Hyderabad-III vide Order-in-Original No. 31/2005-Commr. Dated 30.11.2005 passed denovo adjudication order, dropping the entire pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of textiles manufactured and cleared without payment of duty which were found in excess with two distributors, should not be charged. (c) An amount of Rs. 75,353/- on account of goods found short at the factory premises, should not be charged. (d) An amount of Rs. 3,995/- on account of excess goods found in the vehicle No. AP 9T 8688, should not be charged. (e) Why the cloth valued of 1175 linear mts of sarees found in excess in the vehicle as Rs. 19,975/- should not be confiscated. (f) Why the goods valued at Rs. 411065/- available in the factory should not be confiscated. 5. As far as (a) above is concerned, the appellant's plea is that no duty liability can be fastened on them stating that the goods were manufactured and cleared without payment of duty only on the basis of statement of the folding contractor and his reports without any supporting documents to prove that the goods were manufactured. During the personal hearing in the denovo adjudication proceedings before the Commissioner, the respondent argued that each fabric got folded twice, once in the grey stage and again after processing; whenever any fabric was found defective it was returned and after reprocess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that during cross examination, the labour contractor himself said that he gets paid twice for the fabric, once at the grey stage and once at finished stage further dilutes the evidence to substantiate the allegation of clandestine removal of fabric. I, therefore, find that the duty demanded on this account and the interest and penalty thereon are not sustainable and needs to be dropped and the Commissioner had done so in the impugned Order. 8. As far as the duty on the goods allegedly cleared to M/s Ashish Textiles and Rahul Textiles, without payment of duty is concerned [(b) in para 4 above], I find these are proposed to be charged on the ground that the distributors had stocks of goods without payment of excise duty. The show cause notice also proposed to confiscate the stocks of goods and impose penalties on the distributors. The charges of holding such stocks by the distributors, confiscation of the fabrics and imposition of penalty thereof were dropped by Ld. Commissioner in the Order-in-Original (denovo) and it was not appealed against by the department and has therefore reached finality. Once the charge that the fabric was cleared without payment of duty to the distri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at another. When the stocks were taken on the same day, at same time, it would be reasonable to assume that there was some inaccuracy in recording by the assessee with some stock being shown as issued for processing and not actually being put in the process resulting in excess stock in one stage and a shortage in the other. These need to be taken into account. Thus, I find in the 112 cm fabric, there were the following excesses and shortages as per mahazar as recorded in the show cause notice itself. Grey fabric (+) 7410 metres In process (-) 7294.65 " Finished goods (+) 3685.45 " Net excess 3800.80 " Of the net excess of 3800.80 metres, 3685.45 metres is the finished goods and 115.35 metres are the grey fabric. There was no net shortage of fabrics in the 112 cm width category once the grey fabric and the fabric in process are reckoned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess goods found in the truck and this along with recovery of duty, confiscation and redemption fine thereon be imposed. The quantity of excess fabric cleared without payment of duty is also liable to be confiscated. I find a redemption fine of Rs. 5,000/- is reasonable for the purpose. 11) Confiscation of excess goods found in the factory valued at Rs. 411065/- [(f) in para 4 above], it was proposed in the show cause notice to confiscate the excess stock found in the factory valued at Rs. 411065/-. Ld. Commissioner had in his O-I-O (denovo) dropped the demand on this ground on account of his finding that measurements were taken approximately based on a passing remark in the original O-I-O, ignoring the mahazar which recorded the stocks of the fabric and which found the evidence. The mahazar being a document drawn up at the time should be accepted along with the contention of the respondent that the excess and shortages of the fabrics need to be set off against each other in view of the fact that grey products supposed to have been issued for production were still lying in stock. As a result, I find the excess quantities of fabric as recorded above are liable for confiscation. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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