TMI Blog2019 (12) TMI 936X X X X Extracts X X X X X X X X Extracts X X X X ..... he tariff entries till 2004-05 are concerned, the assessee s contention of classification under 5404.90 cannot be accepted. From 2005-06 also, the heading remains of synthetic monofilament yarn of 67 decitex or more. Therefore, from 2005-06 the Heading is not applicable to the appellants on the basis of the Chemical Examiners report. The impugned goods cannot be classified under 5404. Coming to the claim of the department that the impugned goods fall under 5402.39 / 540259.10, we find that whereas 5404 has no place for multifilament yarn, 5402 has an inclusive definition. Till 2004-05, 5402 covered synthetic filament yarn (other than sewing thread), including synthetic monofilament yarn of less than 60 d. The Heading has three single dash ( _ ) i.e., high tenacity yarn of nylon or other polyamides, high tenacity yarn of polyesters and textured yarn. Revenue wishes to classify the impugned goods under 5402.39 till 2005. However, for the goods to fall under 5402.39, they should be textured yarn. However, we find that from 2005-06, the scope of 5402 has been expanded to contain 5 single dash ( _ ) i.e., high tenacity yarn of nylon or other polyamides, high tenacity of polyesters, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... galore, the Appellants (Proprietor Shri Abdul Wajid) is a small scale unit established in 2003, are engaged in the manufacture and clearance of Synthetic Filament Yarn of a denier of 600 and above falling under the Chapter Heading 5404 of CETA, 1985. It was alleged, on the basis of an investigation, conducted by DGCEI, that the Appellants have manufactured only Polypropylene Multi-Filament Yarn at their factory and cleared the same as PPMF Yarn classifying the same under Chapter Heading 5404 of CETA, 1985, instead of 5402; they have wrongly availed exemption available under Notification No 7/2003 CE and 30/2004 CE during the relevant period 2003-04 to 2006-07 (up to 8.8.2006); they have evaded payment of Central Excise duty of ₹ 21,68,365. A Show Cause Notice, No. 89/06-07 dated 5.2.2007, was issued; the same was confirmed by Order-in-Original No. 7/2007 dated 30.8.2007. Goods seized at Bangalore and Madurai, totally valued at ₹ 4, 97,711, were confiscated while option to redeem the goods on payment of a fine of ₹ 30,000; Central Excise duty of ₹ 21, 68,365 was confirmed along with interest and equal penalty under Section 11 AC of CEA, 1944; penalty of & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Chemical Assistant, Mr. J. Mohan Kumar under his supervision; Customs House Laboratory is not equipped to test all the parameters for yarns especially physical parameters such as twist of the yarn, tenacity of the yarn etc.; Custom House Laboratory is not equipped to test synthetic filament yarns like the Textile Committee of the Government of India or SASMIRA (Bombay), ATIRA (Ahmedabad); initial test that was carried out on the sample was 'Visual' to determine whether it is monofilament yarn or multi-filament yarn; Denier was determined as 610.4; only two tests, as above, were conducted and that the twist of the yarn was not determined since the laboratory is not equipped for the same. Learned Counsel submits that it can be seen that except for carrying out superficial tests, the Custom House Laboratory is not equipped to test synthetic filament yarns like the Textile Committee of the Government of India or SASMIRA (Bombay) or ATIRA (Ahmedabad). The tests were not carried out by the Chemical Examiner, viz., V. Suresh but by the Chemical Assistant, J. Mohan Kumar. In the light of the evidence given during the course of the cross-examination, no weight or reliance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igad - 2004 (167) ELT 534 (T) I.C.I. (I) Ltd. vs. CCE, Mumbai -VI -2003 (160) E.L.T. 405 (T) Essma Woolen Mills(P)Ltd Vs. CCE, Chandigarh - 2001 (134) ELT 262 (T) Agarwal Metal Works, Rewari - 1982 (10) ELT 689 GOl He submits that in the light of the above decisions, the demand for duty, if any, can be made only from the date on which the Department drew samples and forwarded to the Chemical Examiner, i.e., 9.8.2006 and not for the earlier period. 4. Learned Counsel further submits that the appellants were regularly filing E.R.-3 Returns; there was no suppression of facts on their part; they were availing the duty exemption only after the impugned goods were got tested by the Department; they also kept the Department informed about their intention to claim exemption from duty in terms of the said Notification vide their letters dated 12.11.2003 and 15.3.2005; on the basis of the directions given by the Investigating Agency, they applied and obtained Central Excise Registration on 16.10.2006 and from that date they have been paying duty on the impugned goods manufactured by them; no willful suppression of facts can be attributed to them in terms of the follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 600 deniers, was ignored; statement of Abdul Wajid dated 27.12.2006 is not correct as is contrary to the test reports, cannot be relied upon. 5. Learned, AR, appearing for the department reiterated the findings of OIO and OIA and has submitted a note, stating that it is a case involving suppression of fact, mis-declaration and wrong availment of notification, unearthed by an investigation. Sample drawn from seized goods on 09.08.2006 were tested by chemical examiner certified the goods to be multi filament yarn; proprietor Shri Abdul Wajid has stated, vide statement dated 27.12.2006, that they have been manufacturing the same item with different denierage since the factory came into existence in 2003; he admitted to pay the duty liability; Shri. Sameer Pasha of M/s. Horizon Trading Company, client of appellants, accepted that they are purchasing polypropylene multi filament yarn and that M/s. Deccan Trading Company, Bangalore (proprietress being his mother) were also buying polypropylene multi filament from the appellants since 2003. 5.1. Ld. AR submits that the appellants had taken Central Excise Registration during the year 2003; were filing returns declaring the item as PP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods were sold to M/s. Usha traders on paper chits only; searches conducted at M/s. A.R .Trading Company, Madurai- revealed that the goods in stock were in excess of the goods accounted for in the stock transfer documents; clandestine clearance of goods was further corroborated from the searches conducted at Usha Trading Company, Madurai and the statement of Shri Vijayan, proprietor. Shri Ebenezer, in charge of Madurai unit, stated that they were involved in the trade of PPMF yarn; they do not sell goods as mono filament yarn; he accepted the receipt of excess quantity than mentioned in stock transfer bills and such excess quantity was sold to M/s. Usha traders without bills. He submits that the fact of suppression by the appellant was proved beyond doubt during investigation; hence, the plea of limitation of demand does not sustain. 6. Heard both sides and perused the records of the case. Brief issues that requires to be considered in this case are as to whether the synthetic filament yarn manufactured by the appellant falls under 5402 of CETA as contended by the department or under 5404 as contended by the appellants and as to whether the test result would be applicable prospe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5402.31 Of nylon or other polyamides 16% 5402.32 Of polyesters 16% 5402.39 Other 16% Heading No. Sub-heading No. Description of goods Rate of duty Basic Additional (1) (2) (3) (4) (5) 54.04 Synthetic monofilaments of 60 Deniers or more and of which no cross sectional dimension exceeds 1 mm; strip and the like (for example, Artificial Straw) of synthetic textile materials of an apparent width not exceeding 5 mm. 5404.10 Monofilament 16% 5404.90 Other 16% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods under 5404. The Heading 5404 refers to synthetic monofilament of 60 d or more and of which, no cross sectional dimensions exceeds 1 mm; strips and like (For Example, artificial straw) of synthetic textile material of an apparent width not exceeding 5 mm. This heading had two single -'. One refers to monofilament yarn and the second others . Chemical Examiner has given a report that it is a multifilament yarn. The moment the yarn is of multifilament nature, it goes out of Heading 5402. Therefore, as far as the tariff entries till 2004-05 are concerned, the assessee s contention of classification under 5404.90 cannot be accepted. From 2005-06 also, the heading remains of synthetic monofilament yarn of 67 decitex or more. Therefore, from 2005-06 the Heading is not applicable to the appellants on the basis of the Chemical Examiners report. However, the learned counsel for the appellant contended that the Chemical Examiner has concluded that the yarn manufactured by the appellants is multifilament yarn on the basis of visual examination. The Chemical Examiner, during the course of cross-examination, has reiterated that multifilament nature of the yarn can be ascertained on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld have only prospective application. We find that this contention is acceptable. The appellants have registered themselves with the department before 2003 itself and have surrendered the registration on the basis of the test report given by Textile Committee at the behest of the department itself. That being a case, we find that the results of the test reports are to be applied prospectively only. Further, we find that learned counsel for the appellants has submits that as the department is totally aware of the activities of the appellants. The appellants have kept the department informed about their intention to claim exemption under the above said Notification vide their letters dated 12.11.2003 and 15.3.2005. The test conducted in 2003 was in favour of the appellants. It was free for the department to get another test conducted in 2005 also. This having not done, extended period cannot be invoked. Suppression of fact cannot be alleged on the basis of statements of dealers to conclude that the goods cleared in the past are also similar to the goods tested. Unless such goods are available and tested, nature of the goods cannot be established on the basis of oral submissions. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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