2006 (3) TMI 383 - AT - Central Excise

Summary

Issues:
Demand of duty on polyester synthetic yarn under the guise of shoddy yarn; Confiscation of seized yarn; Imposition of penalty.

Analysis:

1. Demand of Duty and Confiscation of Seized Yarn:
The judgment addresses the issue of demand of duty amounting to Rs. 5,19,130 against the appellants for clearing polyester synthetic yarn under the guise of shoddy yarn. Central Excise Officers visited the appellant's factory and found evidence of manufacturing polyester yarn without proper declaration, leading to the seizure of 2100 Kgs of polyester yarn suspected for clandestine removal. The Director of the company admitted to manufacturing and clearing polyester yarn as shoddy yarn without proper documentation. The authorities confirmed the demand and upheld the confiscation of the seized yarn based on evidence like production records and chemical testing, concluding against the appellants.

2. Imposition of Penalty:
Regarding the imposition of penalties, the judgment notes that the appellant's plea lacked sufficient evidence to dispute the nature of the yarn manufactured. The chemical testing confirmed the yarn as polyester, supported by the Director's unchallenged statement. The appellant's request for cross-examination of the chemical examiner was rejected as the testing method's correctness was not in doubt. The appellant's argument that the yarn could be considered shoddy yarn under a specific notification was dismissed due to the absence of evidence showing the yarn was made from used or new rags. The statement by the Director, along with other evidence, led to the confirmation of the duty demand and the confiscation of seized yarn. The penalty imposed under Section 11A was reduced from Rs. 5,19,130 to Rs. 2.50 lakhs, while the penalty under Rule 173Q was set aside, considering the overall circumstances of the case.

In conclusion, the judgment upheld the demand of duty, confirmed the confiscation of seized yarn, and adjusted the penalty imposed on the appellants. The decision was based on substantial evidence, including the Director's statement, production records, chemical testing results, and the absence of proof for the yarn being classified as shoddy yarn under a specific notification. The penalties were modified considering the facts and circumstances of the case, leading to the disposal of the appeal.