1999 (5) TMI 520 - AT - Central Excise

Summary

Issues:
- Duty demand confirmation against the appellants
- Exemption claim under Notification No. 297/79 for fabrics processing
- Allegations of improper accounting and evasion of duty
- Classification of calendering machine used by the appellants
- Reliance on statements of suppliers and documents by the Department
- Existence of mens rea and evasion of duty
- Examination of fabrics received and processes undertaken
- Denial of existence of stentering book by the appellants
- Impact of factory flooding on fabric processing
- Consideration of evidence and submissions made

Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi stemmed from an Order-in-Original confirming a duty demand against the appellants, who were engaged in dyeing, bleaching, and printing of fabrics falling under Item 22 of the Tariff. The appellants claimed exemption under Notification No. 297/79 for calendering fabrics, subject to specific conditions. The Department alleged improper accounting and evasion of duty, citing that fabrics underwent processes beyond calendering. The appellants defended, stating that only calendering was conducted, not warranting duty payment. They disputed the classification of the calendering machine and highlighted inconsistencies in the Department's reliance on statements and documents.

The Department contended that the machine used was a felt calendering machine, contrary to the appellants' claim of a plain roller calendering machine. They argued that fabrics received were not solely for calendering, supported by statements and documents. The Tribunal assessed the evidence and submissions, emphasizing the need to prove charges of evasion and mens rea. The Department's failure to substantiate allegations led the Tribunal to grant the appellants the benefit of doubt, ultimately allowing the appeal and setting aside the impugned order with consequential benefits.

The Tribunal's decision rested on the lack of concrete evidence supporting the Department's claims, emphasizing that suspicion alone cannot replace proof. The appellants' reliance on approved classification lists and previous orders, coupled with the Department's inability to establish wrongdoing, led to the Tribunal's ruling in favor of the appellants. The judgment highlighted the importance of substantiated allegations and the burden of proof on the Department in cases of duty evasion, ultimately granting relief to the appellants based on the principle of doubt in their favor.