TMI Blog2019 (12) TMI 950X X X X Extracts X X X X X X X X Extracts X X X X ..... is neither any allegation nor evidence regarding the clandestine clearance of such short-found material in the domestic market. That being the position, demanding of duty on mere shortages cannot be acceptable. Alleged import and clearance of fabrics in DTA - the department alleges that the appellants have imported fabrics whereas as per the license they were entitled to import only raw silk and that, they have cleared the imported fabrics under the guise of defects/waste - HELD THAT:- The fact that a Bill of Entry was filed at the time of import and the goods were warehoused under the supervision of an officer, the appellants cannot be found fault with. It was an act which was performed under the glare of the light and customs cannot allege that the appellants have wrongly imported the fabrics. It was open to the officers to disallow the clearance and warehousing. In case, it was a mistake on the part of the department, show-cause notice could have been issued within normal period and not invoking extended period. Even if it is held that the appellants have not received waste back from their job workers or the subcontractors of job workers, the applicable duty payable would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was conducted on actual as well as estimated basis; stock of some sections was taken by Excise officers and some by CSTRI officers; report was given after a month; CSTRI officials have confirmed during cross examination that they have taken stock of preparatory and weaving sections only and stock of other sections was taken by excise officers; the report cannot be termed to be by experts. He submits that shortage cannot be alleged on presumptions and assumptions; department did not produce any evidence for diversion of goods found short. He relied upon the following cases. Oudh Sugar Mills Ltd. vs. Union of India: 1978 (2) ELT (J172) SC CCE, Faridabad-II vs. Equipment Conductors and Cables Ltd.: 2019 (367) ELT 247 (P H) ITC Limited vs. CCE, Bangalore: 2002 (149) ELT 1116 (Tri.-Bang.) Laxmi Exports vs. CCE ST, Indore: 2018 (364) ELT 509 (Tri.-Del.) CCE, Surat-II vs. Special Project Finance (I) P. Ltd.: 2008 (225) ELT 533 (Tri-Ahmed.) affirmed by Supreme Court [2016 (341) ELT A220 (SC)]. 3.1. He further submits that there are factual errors in the report; (i). The report considered only 22 of 42 arms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant has taken advantage of the lacunae in policy during the period; it was held in Kiran Syntex Limited vs. CCE, Surat-I 2009 (238) ELT 481 (Tri.-Ahmd.) that duty equivalent to import duty cannot be demanded even if wastage exceeded the prescribed limit given in Hand Book of Procedures; Public Notice cannot be effective retrospectively. He relies upon the following: S.J. Fabrics Pvt. Ltd. vs. Union of India: 2015 (325) ELT 713 (Cal.) Uni Colloids Impex Pvt. Ltd. vs. Commissioner of Customs, Ahmedabad: 2014 (310) ELT 583 (Tri.-Ahmd.) Arviva Industries (I) Ltd. vs. Union of India: 2004 (167) ELT 135 (Bom.) affirmed by Supreme Court reported in 2008 (10) STR 534 (Supreme Court) 7. On the allegation of non-receipt of wastage from job workers, Ld. Counsel submits that out of the 3 job workers, one job worker has state on 23-7-2003 that processed fabrics along with visible shrinkage has been returned to the appellants; the documents, Annexure-II challans and delivery challans, in respect of another Job worker, Veda Silks were produced after personal hearing; it was alleged that job workers had no requisite machinery to process th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not the case of the appellants that the rejects were generated during the manufacture of the finished goods; fabric was imported and the same was cleared under the guise that they are defective. 11. On the issue of shortage of raw materials as indicated in the godown register, learned counsel submits that it is not possible for the investigation to prove with mathematical precision; the very existence of katcha register is unexplained; Shri Balachandran Potti, who maintain registers could not explain the difference in book stock and physical stock; Shri U. B. Venkatesh, Managing Director accepted the shortage of 3112 kg. with reference to the stock katcha register vide his statement dated 22.5.2003. 12. On the issue of allegation of excess wastage percentage utilized by the appellant, learned AR submits that the issue has been considered by the adjudicating authority; the permissible wastage on raw silk prior to 1.4.2001 was 35%; EXIM Policy with effect from 1.4.2001 has erroneously mentioned this percentage as 53% which was corrected public notice dated19.10.2001 to read as 35% again. Appellant has taken advantage of this mistake and shown high wastage of 49%. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We find that these aspects have also not been considered in the impugned order. Therefore, we find that the shortage has been arrived at on the basis of assumption or presumption or on the basis of calculations. Moreover, going by the case laws submitted by the appellants, we find that finding of shortage cannot in itself be a conclusive proof of raw material being sold clandestinely or being used for manufacture of fabric which has been sold clandestinely. We find that there is neither any allegation nor evidence regarding the clandestine clearance of such short-found material in the domestic market. That being the position, demanding of duty on mere shortages cannot be acceptable. We find that the apex court in the case of Oudh Sugar Mills Ltd . (supra) has held that allegations based only on calculation of raw material fed into the process or on working of the machinery is not a basis for demanding duty. 15. With regards to the alleged import and clearance of fabrics in DTA, we find that the department alleges that the appellants have imported fabrics whereas as per the license they were entitled to import only raw silk and that, they have cleared the imported fabr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to one job worker i.e., Veda Silks, however, the same was not considered. We find that the appellants have not submitted any such evidence in respect of other two job workers. Therefore, the appellants are required to pay duty on the wastage not returned by the other two job workers. However, we find that in case such wastage is not returned, the department is in its right to collect the duty applicable on such waste and not certainly on the raw material that has gone into the generation of such waste. Such a conclusion does not seem to be the intention of the provisions of law. The appellant submits that in view of para 9.30, Clause C of EXIM Policy, EOUs make clear scrap or waste/reminisce arising out of subcontracting of production from the job workers premises, on payment of applicable duties or bring it back to its own premises. Clause-D of the same para states that sale of waste / scrap / reminisce shall be subject to payment of applicable duties. The appellant submits that silk waste (including cocoons unsuitable for reeling, yarn waste and generated stock) falls under heading 50.03 of Central Excise Tariff Act, 1985 attracting Nil rate of duty. Under such circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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