1981 (5) TMI 120 - Board - Central Excise

Summary

Issues: Alleged clandestine manufacture and removal of acrylic yarn, improper maintenance of raw material account in Form IV, applicability of Rule 9 of Central Excise Rules, documentary evidence authenticity

Analysis:
1. The case involved an appeal remanded by the Government of India to investigate the alleged clandestine manufacture of acrylic yarn by the appellants. The directive was to determine if the petitioners could have spun yarn wholly made of acrylic fiber based on documentary evidence.

2. The appellants were represented during the appeal hearing where discrepancies in the raw material account were highlighted. The appellants had initially shown the receipt of 4500 Kg of "Acrylic Fibre" but later could not produce the goods or related accounts during inspection.

3. The appellants presented "Acrylic Fibre Waste" during the investigation, which raised suspicions of illicit activities. The Managing Director confirmed purchasing the waste but failed to produce purchase vouchers. The appellants' inability to provide supporting documents was a recurring issue throughout the proceedings.

4. The Assistant Collector's report indicated the presence of sister concerns with different spinning systems, casting doubt on the appellants' claims. The appellants' submission of documentary evidence at the appeal stage was questioned for its authenticity and timing.

5. The Board scrutinized the evidence presented by the appellants, noting discrepancies in weight, sales records, and storage locations. The Board raised concerns about the conversion of "Acrylic Fibre" into yarn and the presence of goods in unapproved premises.

6. The appellants argued against the application of Rule 9 of the Central Excise Rules, claiming they lacked the machinery to manufacture acrylic yarn. They contended that the entry of "Acrylic Fibre" in the raw material account was inadvertent and not subject to penal action.

7. The Board reviewed previous judgments cited by the appellants but ultimately focused on the lack of concrete evidence supporting the allegations of clandestine manufacture and removal of acrylic yarn. The Collector's inability to establish these claims led the Board to dismiss the charges.

8. The Board concluded that the appellants could only be penalized for improper maintenance of the raw material account under Rule 226 of the Central Excise Rules. However, since this rule was not invoked by the Collector, the Board allowed the appeal in full, emphasizing the lack of evidence supporting the allegations.

This detailed analysis outlines the key issues, evidence presented, legal arguments, and the Board's decision in the case involving alleged clandestine activities related to acrylic yarn production.