2003 (10) TMI 337 - AT - Central Excise

Summary

Issues Involved:
1. Whether the appellants were carrying out dyeing and bleaching with the aid of power since April 1995.
2. The validity of the retracted confessional statements of the proprietor.
3. The applicability of Notification No. 5/99-C.E. and the duty demand for the period April 1995 to May 1999.
4. The correctness of the adjudicating authority's order on duty demand and penalties.
5. The Revenue's appeal regarding the processes of drawing, scouring, and padding.

Issue-wise Detailed Analysis:

1. Dyeing and Bleaching with Power Since April 1995:
The adjudicating authority confirmed the duty demand for the period April 1995 to May 1999 based on the presence of power-operated jiggers in the factory on 21-5-99, two confessional statements of the proprietor, increased electricity load, and a statement from a supplier. However, the Tribunal found that the presence of power-operated jiggers on 21-5-99 did not conclusively prove their installation and use since April 1995. The proprietor's statements were retracted and lacked corroboration from independent sources. No employee or other suppliers confirmed the use of power-operated jiggers since April 1995. The Tribunal concluded that the Department failed to provide substantial evidence to support the claim.

2. Validity of Retracted Confessional Statements:
The Tribunal emphasized that retracted statements require corroboration from independent evidence to be considered substantial. The proprietor's retracted statements about the use of power-operated jiggers since 1988 were not corroborated by any other oral or documentary evidence. The Tribunal cited precedents from the Hon'ble Calcutta High Court and other cases to support this view, ultimately rejecting the retracted statements as insufficient evidence.

3. Applicability of Notification No. 5/99-C.E. and Duty Demand:
The Tribunal noted that Notification No. 5/99-C.E. exempted processes undertaken without the aid of power, provided the manufacturer did not have the facility for dyeing and bleaching with power. The Tribunal found that the Department did not prove the use of power-operated jiggers since April 1995, and thus, the duty demand for that period was not justified. The appellants had paid duty from 21-5-99, the date of the officers' visit, to 31-5-99, which was deemed sufficient.

4. Correctness of Adjudicating Authority's Order:
The Tribunal set aside the adjudicating authority's order confirming the duty demand and penalties against the appellants, as the evidence provided by the Department was deemed insufficient. The Tribunal emphasized that assumptions and presumptions from stray pieces of evidence were not enough to prove clandestine manufacture and clearances.

5. Revenue's Appeal on Drawing, Scouring, and Padding:
The Revenue contended that the appellants were liable to pay duty on these processes as they were not entitled to the exemption due to the alleged use of power for bleaching and dyeing. However, the Tribunal noted that no duty demand for these processes was raised in the show cause notice, and the adjudicating authority rightly dropped the duty demand on these grounds. The Tribunal dismissed the Revenue's appeal, upholding the adjudicating authority's decision.

Conclusion:
The Tribunal set aside the duty demand and penalties against the appellants, accepting their appeals with consequential relief. The Revenue's appeal was dismissed, affirming that the appellants were not liable for duty on the processes of drawing, scouring, and padding as no such demand was raised in the show cause notice.