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2010 (12) TMI 673 - AT - Central ExciseDemand - clandestine removal - Commissioner found that the daily production reports(DPR) gave complete details of the jute converted into yarn and would not miss information relating to reprocessing and rewinding - all the clearances upto 11-5-01 in respect of which the Commissioner has confirmed the demand fall under two broad categories, i.e. finished goods allowed to be sold in India by the Development Commissioner and not so allowed - the impugned clearances were held to be without permission by the concerned authorities - Commissioner dropped the proposal also for the reason that the show-cause notice had not alleged that 14 lbs recorded in the RG-1 had represented production of jute yarn of 20 lbs - Held that appeal is not based on proper and reliable evidence - Appeal is allowed by way of remand
Issues Involved:
1. Demand of duties on clandestine removal of 501.175 MT of jute yarn during 1999-2000. 2. Demand of duties on 209.095 MT jute yarn diverted from EOU to DTA unit without payment of duty during June-September 2000. 3. Demand of duties on 489 MT jute yarn diverted from EOU to DTA unit without payment of duty during July-August 2001 and January 2002. 4. Demand of duties on 160.612 MT of yarn manufactured in EOU out of imported raw jute and cleared to specified customers without payment of duty. Detailed Analysis: Issue I: Clandestine Removal of 501.175 MT of Jute Yarn (1999-2000) The Commissioner confirmed the clandestine removal of 501.175 MT of jute yarn based on discrepancies between the Daily Production Reports (DPRs) and the RG-1 Account. The assessee argued that DPRs were private records for monitoring efficiency and included reprocessed and rewound yarn, which were not recorded in RG-1. The Commissioner rejected these claims, finding no record of rewound or reprocessed yarn in the DPRs or monthly summaries. The Commissioner allowed a 1% abatement for weighment variation and packing loss but did not accept the plea for excess clearance of 1.5 kg per 50 kg. The Commissioner concluded that the unaccounted clearances were marked as 'SL' in the records and confirmed a duty of Rs. 8,25,091/- on 444.248 MTs of jute yarn. Issue II: Diversion of 209.095 MT Jute Yarn (June-September 2000) The Commissioner found that part of the jute yarn produced in the EOU was removed to the DTA unit and accounted for in the DTA's RG-1. The findings were based on group consumption reports and statements from personnel indicating that the DTA unit could not produce certain counts of yarn, which were recorded in the DTA's RG-1. The Commissioner confirmed a duty of Rs. 6,97,583/- on 196.21 MTs of jute yarn. The assessee's argument that the Commissioner wrongly relied on private records was rejected, but the quantification of yarn produced using imported jute mix was remanded for fresh determination. Issue III: Diversion of 489 MT Jute Yarn (July-August 2001 & January 2002) The Commissioner found that the yarn supplied to the Alleppey market was a specialty yarn made from a mix of indigenous and imported raw materials, which could not be manufactured in the DTA unit. The findings were based on spinning frame allocations, correspondence with customers, and statements from production staff. The Commissioner confirmed the demand for 222.294 MTs of yarn but dropped the demand for 234.66 MTs that were eventually exported. The direction to the Assistant Commissioner to demand duty on 11.74 MTs of imported raw jute was found to be in violation of natural justice. Issue IV: Clearance of 160.612 MT Jute Yarn (April-December 2002) The Commissioner found that 122.479 MTs of jute yarn were sold to two EOUs and were entitled to deemed export status, exempting them from duty. However, the Commissioner confirmed a demand of Rs. 11,77,200/- for 38.133 MTs of yarn manufactured using imported raw jute. The Commissioner relied on the statutory Raw Material Register and statements from customers to establish that the yarn sold in the Alleppey market was made from imported jute mix. Additional Arguments and Findings: - The assessee argued that the jute yarn was made from indigenous raw materials and was exempt under Notification No. 8/97-C.E. The Commissioner found that jute yarn was subject to cess, which was a duty of excise, making the clearances eligible for exemption. - The Commissioner denied the benefit of Notification No. 125/84 for clearances made without permission, following the Tribunal's decision in Himalaya International Ltd. - The Tribunal remanded the quantification of duty and penal liability for fresh determination, considering the findings and arguments presented. Appeal by Revenue: - The Revenue appealed against the abatement of duty on 56.927 MTs of jute yarn and 13.695 MTs of 14 lbs yarn. The Tribunal upheld the Commissioner's decision, finding it based on reliable evidence. - The Revenue's appeal on the non-demand of duty on clearances to a sister unit, which were eventually exported, was rejected. - The issue of applicable rates of duty and Special Additional Duty (SAD) for 1999-2000 was remanded for fresh determination. Conclusion: The Tribunal allowed all appeals by way of remand for fresh determination of duty quantification and penal liability, considering the findings and arguments presented. The operative portion of the order was pronounced in open court on the conclusion of the hearing.
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