2007 (9) TMI 467 - AT - Central Excise

Issues:
1. Interpretation of remand order by the Tribunal regarding duty on viscose yarn.
2. Confirmation of duty demand and imposition of interest on Art Silk Embroidery thread.
3. Consideration of balance sheet figures in determining duty liability.

Analysis:

Issue 1: Interpretation of remand order regarding duty on viscose yarn
The appeal challenged the order-in-original dated 24-3-2005, remanded by the CESTAT. The Tribunal's remand order clarified that duty revision was required based on the total viscose yarn manufactured during the relevant period. The appellant argued for duty exemption on dyed viscose yarn in hank form, contending that duty was payable only after reeling the yarn onto cones. However, the Tribunal disagreed, stating that dyeing constitutes manufacturing, attracting duty. The judgment partially allowed the appeal, setting aside duty on polyester yarn but confirming duty on viscose yarn. The penalty under Section 11AC was set aside, and the penalty under Rule 173Q was reduced to Rs. 2.00 lakhs. The appellant was directed to pay duty on viscose yarn upon departmental calculation.

Issue 2: Confirmation of duty demand and imposition of interest on Art Silk Embroidery thread
The adjudicating authority confirmed duty demand and imposed interest on Art Silk Embroidery thread based on the appellant's financial statements for the year ended 31-3-1996. The authority noted sales of 167.73 MT of sewing thread, indicating the possibility of the entire 14.54 MT of Art Silk Embroidery thread being sold. The appellant failed to provide an alternative methodology for quantification, challenging the absence of records. The authority found the quantification in compliance with the CESTAT's order and the appellant's audited balance sheet. The appellant argued that the authority overlooked the closing balance of the product in the balance sheet, questioning the duty demand for clandestine clearance during 1995-96.

Issue 3: Consideration of balance sheet figures in determining duty liability
The appellant contended that the duty demand relied on the balance sheet without considering the closing balance of the product. The adjudicating authority's confirmation of duty demand was based on the balance sheet figures for the year ending 31-3-1996, indicating clandestine clearance of Art Silk Embroidery thread. However, the appellant highlighted the closing balance of 24.16 MT of the same product in the balance sheet, suggesting no clandestine removal during the period in question. The Tribunal found the authority's failure to consider the available stock in the balance sheet problematic and set aside the order confirming duty demand and interest on the Art Silk Embroidery thread. The appeal was allowed with consequential relief.

This detailed analysis of the judgment addresses the issues of duty interpretation, duty demand confirmation, and balance sheet consideration, providing a comprehensive understanding of the legal proceedings and outcomes.

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