TMI Blog2002 (1) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... ed higher counts against the declared ones. Therefore, the officers took out samples of one cone each from the bags said to contain 60s and 90s count of cotton yarn combed cone yarn kept ready for clearance in their godown. The cones so drawn were the samples of each bag and the serial number of the packing of the bag was affixed on the samples. They were tested for the count of yarn in the laboratory of the mills and the test results revealed that 144 bags of 60s combed yarn and 24 bags of 90s combed yarn showed higher counts which were even more than the tolerance limit prescribed by the department. Thus, there were 144 bags of 60s combed yarn and 24 bags of 90s cone which were found to exceed the tolerance limit and hence they were seized under a mahazar. 2. Representative samples drawn from the lot segregated as (i) higher counts exceeding the tolerance limit of 60s count (ii) higher counts exceeding the tolerance limit of 90s (ii) counts within the tolerance limit of 90s and (iv) counts within the tolerance limit of 90s, were sent to the Chemical Examiner, Madras as per Central Excise Procedures for verification of count. The test results revealed the manufacture of hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalties under various rules should not be imposed and 144 bags of combed yarn declared as 60s and 24 bags of combed yarn declared as 90s, which were released provisionally, should not be confiscated. 5. The Appellant's factory filed their interim reply dated 2-12-94 and further reply vide letter dated 28-4-97 and relied on several judgments to deny the allegation of manufacture of higher counts. They contended that they were filing classification list from time to time of different counts and the same were approved by the department. The department were drawing samples periodically and testing the same and the test memos were accepted by the department. They denied mis-declaration of any count. They contended that although the show cause notice referred to seizure of 7920 kgs of cotton yarn, but no demand was raised on this amount. They also submitted that the Wrapping Register showed the correct size of the cotton yarn produced by them. All the registers maintained were pre-production registers which were there to monitor the size in the machines. The correct details of the final counts was found in the wrapping register and the said details were entered in the RG 1 regist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the test results which were obtained from time to time were in favour of the party. None of the details with regard to drawal of sample of on 1-3-91, 23-3-93 and 25-6-93 showed any adverse finding. He pointed out that the test result of samples taken on 17-2-94 also was not disclosed to the party and those samples and the results were not relied in the show cause notice for the reasons known to the department. He contended that when there was no adverse reports on any of the test samples which were drawn from time to time and when the final invoice of sale and the evidence in the form of customers' affidavits was produced, then it cannot be rejected without giving reasons. He submitted that it clearly demonstrated that department had not proved their case with regard to higher production and sale of goods by receiving higher amounts. There is no evidence produced by the department to show that they bad sold higher counts by declaring lesser counts in the invoices and that they had received higher amounts. He contended that none of the customers had been examined or goods seized from the market or from the customers which showed higher counts of cotton yarn. He submitted that all th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utory registers like that of RG 1, which are also verified by the Central Excise Officers from time to time and the same may be examined. In fact the count mentioned in the Wrapping Register would tally to that of RG 1, Gate Pass Clearance and Sales Invoice. Therefore the allegation of 'misdeclaration' is not tenable in the facts and circumstances of the case." 9. It was also pointed out that they had maintained Idle and Waste register which related to utilization of spindles. The word "Idle" denotes stoppage of spindles, due to power failure, maintenance and cleaning stoppages, for want of manpower, for want of preparatory bobbins. The word 'Waste' denotes waste of material that it collected from each department to ascertain the waste and therefore the differential duty based on 'idle and waste register' is not justifiable. He also contended that demands are barred by time as there was no intention to evade duty. There was no clandestine removal of any goods at anytime during the course of manufacture and hence merely depending on certain statements which were not incriminating at all cannot be the basis for confirming duty. He relied on the following judgments :- (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... final analysis made by the ld. Commissioner in the finding portion of the order, it is seen that the Commissioner was satisfied with several pleas raised by the appellants and has granted benefit of doubt and scaled down the duty from Rs. 76 lakhs to Rs. 26 lakhs. It is not denied by the department that for this very period, for which the demands have been raised from time to time, deptt. had been drawing test samples and the results of said samples for those periods were in party's favour and there was no charge of mis-declaration or evidence of clearance for those periods after the test results were taken on the ground of higher counts. It is only after a period of time, when the officers visited and found that the bags had cones with higher counts and the cones in the machinery also showed higher count, then they doubted the correctness of those clearances. On the basis of statements and the test results of samples drawn from the in-processed material, the department has proceeded to charge and raised demands for previous periods also on a premise that they might have cleared the goods of higher counts; despite the fact that during those periods the test results taken from the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... higher count have not been seized after clearance nor the appellants have received money for the said higher counts. The private registers maintained is explained at length and appellants contend that those were not incriminating. Therefore for proper appreciation, of the matter, it requires re-examination on de novo consideration. The Appellants should be given an opportunity to cross examine any of the witnesses, whom they chose to do so. The Commissioner should follow the terms of principles of natural justice. The most important aspect of the case is that the department has to establish and discharge its burden that what was cleared during the relevant period was cotton yarn of higher counts. However, the Commissioner has noted that during the relevant period, the test results drawn by the department were in favour of the parties and therefore there is a room for granting benefit but this can be done only after thorough examination of the wrapping registers, RG 1 registers, invoices and affidavits of the customers which has not been examined at all by the Commissioner, thereby the order being not a speaking order, it calls for a remand insofar as the demands which are confirme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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