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2014 (3) TMI 126 - AT - Central ExciseClandestine manufacture and clearance of cotton / manmade fabrics - Shortage in stock found during the course of stock verification - Held that - In respect of cotton fabrics the evidence like shortage of cotton fabrics of the main appellant found in the second unit and the statements of all those who were associated with the manufacturing activity of the main appellant create a very strong suspicion that the appellant is involved in clandestine manufacturing and removal of fabrics. Above evidence are sufficient to hold that main appellant has carried out manufacturing and clandestine removal of cotton fabrics - Demand of duty alongwith redemption fine confirmed. - Decided against the assessee. Demand in respect of man made fabrics (MMF) - Held that - Under the circumstances simply on the basis of few statements and private records of the appellants it cannot be held that the main appellant was carrying out the manufacture of man made fabrics which was agitated by the appellants throughout the proceedings before the Adjudicating Authority of the appellate authority. Confirmation of demands mentioned in Para 5(iii) by the lower authorities does not survive. - Decided in favor of assessee. Benefit of Notfn No. 253/82. - Held that - Lower authorities have confirmed demands of 5, 36, 670/90 as indicated in Para 5(iv) above on the ground that benefit of NIL rate of duty under Notfn No. 253/82 has been wrongly availed as these fabrics were presumably have been subjected to dutiable processes and not exempted processes. It has been rightly contested by the main appellant that addresses of those buyers who got the fabrics after undertaking exempted processes were exiting in the records of the main appellant. - that demands cannot be confirmed against a manufacturer simply on the basis of few confessional statements and some note books/private records maintained by the workers/employees of a manufacturer. - Demand set aside - Decided in favor of assessee. Demand on the basis of a sample registrar found in the premises of M/s Jindal Synthetics - Held that - It is strange that Revenue is conveniently considering a record available in the premises of M/s Jindal Synthetics to be the one pertaining to the main appellant but does not want to accept that those records found in factory premises of the main appellant could also contain the entries of M/s Jindal Synthetics. - Demand set aside. In conclusion demand in respect of shortage in stock and cotton fabrics confirmed - demand on other aspects set aside - Decided partly in favor of assessee.
Issues Involved:
1. Duty demand due to stock shortage. 2. Duty demand on seized cotton fabrics. 3. Duty demand on processing of man-made fabrics (MMF). 4. Denial of benefit under Notification No. 253/82. 5. Duty demand based on sample register from M/s Jindal Synthetics. Detailed Analysis: 1. Duty Demand Due to Stock Shortage: The main appellant, M/s Karnavati Synthetics Ltd., was found with a shortage of 96,509 L. Mtrs of dyed/printed cotton fabrics during a stock verification by Central Excise officers. The Director admitted the shortages and paid Rs 61,220/- through PLA. The Tribunal held that the evidence, including the shortage and the statements of those involved, was sufficient to confirm the duty demand of Rs 61,220/-. The confiscation of 7,740 L. Mtrs of fabrics and the imposition of a redemption fine of Rs 25,000/- were also justified. 2. Duty Demand on Seized Cotton Fabrics: A quantity of 7,740 L. Mtrs of cotton fabrics was found in the second unit of the appellant, which was admitted to be received without documents. The Tribunal upheld the duty demand of Rs 4,334.90 on these fabrics and confirmed their confiscation. 3. Duty Demand on Processing of Man-Made Fabrics (MMF): The Revenue alleged that the appellant processed man-made fabrics, resulting in duty demands of Rs 2,85,691.00, Rs 2,13,697.00, and Rs 37,644.25. The appellant argued that they did not have the machinery to process MMF and no such fabrics were found during the stock verification. The Tribunal observed that there was no evidence of MMF stock or additional raw material purchases. The demands based on MMF processing were not sustained due to lack of concrete evidence. 4. Denial of Benefit Under Notification No. 253/82: The Revenue denied the benefit of 'NIL' rate of duty under Notification No. 253/82, resulting in demands of Rs 28,042.00, Rs 1,40,364.00, Rs 75,240.50, Rs 2,90,734.40, and Rs 2,290.00. The appellant contended that the records showed the processes undertaken were exempted, and the addresses of buyers were available for verification. The Tribunal noted that the investigation did not verify with the buyers or test the fabrics. The demands based on denial of the notification benefit were not sustained. 5. Duty Demand Based on Sample Register from M/s Jindal Synthetics: A demand of Rs 93,942/- was based on a sample register found at M/s Jindal Synthetics. The Tribunal found it inconsistent that the Revenue accepted records from M/s Jindal Synthetics for the appellant but did not consider the possibility of entries pertaining to M/s Jindal Synthetics in the appellant's records. The demand was not sustained due to lack of investigation and verification. Conclusion: The Tribunal allowed the appeal concerning duty amounts related to MMF processing and denial of Notification No. 253/82, providing consequential relief. However, the appeals regarding the duty demands due to stock shortage and seized cotton fabrics were rejected. Penalties were imposed as follows: - M/s Karnavati Synthetics Ltd.: Rs 30,000/- - Director: Rs 10,000/- - Excise Incharge & Authorized Signatory: Rs 10,000/- - General Manager: Rs 10,000/- (Pronounced in the Court on 28.2.2014)
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