2015 (4) TMI 242 - AT - Central Excise

Denial of SSI exemption - registration was issued before the SSI exemption was extended to the cotton yarn - Two registrations taken with different initials - Clandestine removal of goods - Misdeclaration of goods - clearance of cheese yarn in the guise of PRH yarn - Held that - old unit was registered with Central Excise in the name of G.M. Vyas and the second unit viz. Vyas Textiles B unit was registered in the name of M.G. Vyas s/o G.M. Vyas. Therefore we find that the department s allegation that the proprietor has deliberately obtained two registrations by changing the initials of G.M. Vyas and M.G. Vyas appears to be factually incorrect. - Unit I was registered in the name of G.M. Vyas whereas the second unit was held by M.G. Vyas who is s/o of G.M. Vyas. As evident from the registration certificates the department has not adduced any evidence to prove that M.G. Vyas is not the son of G.M. Vyas and both relates to same individual. Therefore we do not find any merit in the Revenue s allegation that proprietor has obtained registration by falsely declaring the name by changing the initials. Both the units have obtained central excise registration certificates much prior to the SSI exemption extended to cotton yarn vide Notification No. 90/94 dt. 25.4.94. We find from the documents submitted by the respondents in their cross objections the respondents had adduced two letters vide No. 311/VT/94 and No. 312/VT/94 both dt. 12.5.94 to the Collector of Central Excise Coimbatore requesting for allowing SSI exemption upto to the limit of Rs. 30 lakhs as per Notification No. 1/93 dt. 1.3.93 as amended by Notification No. 90/94 dt. 25.4.94. - once the return is scrutinized and accepted by the jurisdictional Superintendent the adjudicating authority has rightly held that there is no suppression of facts. Therefore we are of the considered view that the respondents are eligible for SSI exemption of Rs. 30 lakhs for both the units in the year 1994-95. We find that there is no merit in the revenue contention and the adjudicating authority has rightly dropped the proceedings both on merits and on limitation. There is not even a single evidence either statutory document or private documents or even payment details or any other corroboratory statements of customers that they have received cheese yarn under the invoices which is described as Hank Yarn. The burden of proof is entirely on the department to establish that there was clearance of cheese yarn either from the respondents premises particularly when the demand of excise duty on cheese yarn of Rs. 22 lakhs covering the period of 5 years. The department has to establish mis-declaration and evasion of duty there should be statutory proof beyond doubt other than the statements. Even if preponderance is to be applied in the case of clandestine removal the department has to establish through corroborative documentary evidence and not merely relying on a general statement from the customers. Department has demanded excise duty on cheese yarn on the ground that respondents have clandestinely removed in the guise of PRH purely on oral statements without any corroborative evidence either from the respondent s premises or from the buyer s documents etc. Therefore we find that the adjudicating authority has discussed the issues at length and has given a detailed order while dropping the demand proposed in SCN. By respectfully following the decision of the Hon ble high court (2008 (9) TMI 603 - PATNA HIGH COURT) we do not find any infirmity in the impugned order passed by the adjudicating authority. - Decided against Revenue.

Summary

Issues Involved:
1. Clubbing of value of clearances of two units and denial of Small Scale Industry (SSI) exemption.
2. Demand of excise duty on cotton yarn in Cheese form cleared in the guise of Plain Reel Hank (PRH).

Detailed Analysis:

1. Clubbing of Value of Clearances and Denial of SSI Exemption:

The Revenue filed an appeal against the Order-in-Original, which dropped the proceedings against M/s. Vyas Textiles and its "B" unit. The Revenue contended that the respondents registered two units within the same premises to evade duty by exploiting the SSI exemption. They argued that the registrations were obtained using different initials (G.M. Vyas and M.G. Vyas) but were owned by the same person. The department believed that these were separate proprietors, but later discovered the suppression of facts.

The respondents countered that the registrations were obtained before the SSI exemption was extended to cotton yarn. They argued that there was no intention to evade duty as they had filed periodical returns and sought SSI exemption for the period 1994-95. The adjudicating authority found no merit in the Revenue's allegations, noting that the units were registered under different names (G.M. Vyas and M.G. Vyas, son of G.M. Vyas) and that there was no evidence to prove they were the same individual. The adjudicating authority also noted that the respondents had informed the authorities about their SSI exemption claims and had their returns scrutinized and accepted, thus ruling out suppression of facts.

2. Demand of Excise Duty on Cheese Yarn Cleared in the Guise of PRH:

The Revenue argued that the respondents cleared cheese yarn disguised as PRH, based on statements from customers, workers, and transporters. They claimed that these statements were sufficient to establish clandestine removal. The respondents rebutted that the statements were general and lacked corroborative evidence. They pointed out that no physical stock of cheese yarn was found at the customers' premises, and no records or stock books were recovered to support the department's claims.

The adjudicating authority found that the statements alone were not enough to prove clandestine removal. They noted that the department failed to conduct a physical verification of stock or provide documentary evidence of the alleged misdeclaration. The adjudicating authority emphasized that the burden of proof lies with the department, which must provide statutory proof beyond mere statements. The adjudicating authority also highlighted that the respondents had cleared goods to a public sector undertaking and filed returns with the Textile Commissioner, indicating no intent to suppress facts.

Conclusion:

The Tribunal upheld the adjudicating authority's decision to drop the proceedings on both issues. They found no merit in the Revenue's allegations regarding the denial of SSI exemption and the alleged misdeclaration of cheese yarn. The Tribunal emphasized the need for corroborative evidence in cases of clandestine removal and ruled that the statements provided by the department were insufficient. The appeal filed by the Revenue was rejected, and the adjudicating authority's order was upheld.