TMI Blog2002 (2) TMI 168X X X X Extracts X X X X X X X X Extracts X X X X ..... ibre/waste received by them from different suppliers and thereafter utilised in the manufacture of polyester blended yarn. But they cleared that yarn by declaring as cotton yarn and thereby paid short duty than what was required to be actually paid by them. They also allegedly did not enter correctly the polyester cut fibre/waste received by them, from the suppliers in their statutory records and they used that cut fibre in the manufacture of the polyester blended yarn without making any declaration and paying appropriate duty at the time of clearance of the same from the factory premises. The search of the two units of the appellants was also carried out on 29-8-97 and their records including registers were seized. While issuing the show cause notice, Annexures D. 3, 4, 5, 7, 8 and 9 were also prepared wherein quantity of the cut waste received by them from the suppliers, was mentioned. The samples of the blended yarn were also taken and results of two sample Nos. 3 and 7 went against them as composition of the yarn was not found to be in line with the composition declared by them. On the basis of those test reports and quantity of the receipt of the cut waste, from the suppliers, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s during the disputed period. The test reports of two samples had been wrongly relied upon as the same being contradictory were required to be ignored and test reports of other six samples which were in favour of the appellants have been illegally ignored and not referred by the learned Commissioner. He has also argued that the allegations that polyester fibre was saved by the appellants by showing higher use than it was actually used, are vague and general as no quantity of the saved polyester had been pointed out. There is also no evidence to show mixture of said saved polyester fibre with cut waste and clearance of blended yarn in the guise of cotton yarn. The duty demand had been also wrongly calculated as test reports of the samples taken in August, 1997 could not be stretched back for holding that in the years 1994, 1995, 1996 and upto August, 1997, such blended yarn was cleared in the guise of cotton yarn and short duty was paid by the appellants. Therefore, the impugned order of the Commissioner deserves to be set aside. 6.On the other hand, learned SDR has only reiterated the correctness of the impugned order of the Commissioner. 7.We have heard both the sides and gone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er samples, barring No. 3 and 7 referred to above, had not been even referred to or taken into account by the adjudicating authority without any sufficient cause. The plea of the appellants that the report of those samples were in their favour and tallied with their declaration, cannot be, therefore, ignored, rather deserves to be accepted. The record shows that on the request of the appellants, retest of both the above referred samples, was got conducted. On retest of sample No. 3, result was polyester 57.3% and cotton 42.7%. Similarly, on retest, sample No. 7 showed presence of polyester 65% and cotton 35%. The net result given was 100% cotton. The Director of Revenue Laboratory who submitted the report also opined in respect of sample No. 1, that sample was single ply grey yarn composed wholly of cotton. He also remarked in his report that quantity of sample required to be taken for analysis for determining percentage composition according to IS specification is one gram, but since quantity of sample sent by Central Excise department was very small, less than one gram sample was taken for conducting analysis. In the face of these remarks, it could safely be concluded that there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . v. Asstt. Collector of Central Excise, Coimbatore [2000 (126) E.L.T. 185 (Mad.)] and CCE v. Fibrotex [2000 (124) E.L.T. 702], wherein it has been so laid down. Therefore, the results of the above referred two samples No. 3 and 7 taken on 29-8-97 could not be stretched back and made applicable to the clearance of the yarn effected by the appellants during the earlier period, referred to above, legally. The adjudicating authority having acted contrary to the ratio of law laid down in the above referred cases, his impugned order, therefore, cannot be legally sustained. 11.The alleged saved polyester fibre by making wrong declaration about its blend with cotton is said to had been further utilised as per allegations in the show cause notice, by the appellants in the manufacture of polyester cut blended yarn after blending with cut fibre/waste bought by them from other parties during the disputed years. But, in our view, there is no cogent and reliable evidence to substantiate these allegations and to prove the clandestine removal of so mixed yarn in the guise of cotton yarn. The total quantity of cut fibre allegedly received by the appellants is said to be 408030 Kgs. This figure h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iption of the goods given by the supplier is cotton waste and that very description had been carried forward and mentioned in their record by the appellants. 13.Annexure D5 had been prepared on the basis of the Nisha register's entries to show that 18107 Kgs. of cut fibre polyester waste was received by the appellants from M/s. Gaurav Synthetic. But these goods were returned from the factory gate itself. While the balance quantity of 52745.6 Kgs. already stands entered in Annexures D3 and D4, referred to above. But the adjudicating authority had not bothered to go into overlapping entries in the record. Annexures D7 and D8 had been prepared as per College and New Monica registers entries. The quantity referred in both these annexures is in fact the quantity which the appellants received after getting sub-standard fibre cut to sizes. The sub-standard fibre was recorded by them in form IV register and that fibre being of uneven length, was cut to size as per requirement and then recorded in College and New Monica registers. In College and New Monica registers, all the entries stand duly reflected and on the basis of those entries, these two annexures have been prepared. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls Ltd. v. Union of India [1978 (2) E.L.T. (J 172)], the Apex Court has ruled that show cause notice and confirmation of duty in pursuance thereof for clandestine manufacture and removal of the goods, could not be based on assumptions and presumptions. The allegations of clandestine production and removal of the goods have to be proved by positive evidence. This very principle of law had been reiterated in Pepsico India Holdings Ltd. v. CCE, Mumbai-II [2000 (117) E.L.T. 659 (T) = 1999 (35) RLT 654]; Krishna Bottles, (Vijayawada) Pvt. Ltd. v. CCE, Guntur [1999 (84) ECR 245] and Phosphate Company Ltd. v. CCE [1995 (80) E.L.T. 579]. 17.Another piece of evidence, referred by the adjudicating authority and relied upon against the appellants, is invoice No. 482, dated 25-1-97 addressed to M/s. Vijay Anand Traders, Ludhiana to show that in fact polyester blended yarn attracting higher rate of duty was cleared in the garb of cotton yarn. But there is nothing on record to suggest if any statement of the partner or representative of M/s. Vijay Anand Traders, was recorded for seeking corroboration of that fact. This invoice was neither recovered from the possession of the appellants nor rec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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