2000 (3) TMI 97 - AT - Central Excise

Summary

Issues:
1. Duty demand and penalty imposition challenge based on mis-declaration of yarn composition to evade Central Excise duty.
2. Allegation of mis-declaration in Central Excise gate passes for availing exemption under Notification No. 224/79.
3. Appellants' defense of not having sufficient capacity to manufacture the quantity of yarn alleged.
4. Question of whether yarn supplied to DGS&D was manufactured by the appellants or procured from outside sources.
5. Consideration of time bar issue and suppression of facts allegation.
6. Interpretation of contract terms with DGS&D regarding yarn supply.

Analysis:
1. The appeal challenged the Order-in-Original confirming duty demand and penalty imposition for mis-declaration of yarn composition. The Department alleged mis-declaration in Central Excise gate passes to evade duty, invoking the extended period of limitation.

2. The appellants argued that they were eligible for exemption under Notification No. 224/79 as the yarn composition was compliant. They contended that yarn was supplied after purchasing from the market, not necessarily manufactured in their own factory.

3. Appellants defended against the allegation of sufficient capacity for clandestine production, presenting expert opinions and emphasizing compliance with Central Excise Rules in maintaining records.

4. The basic issue was determining if the yarn supplied to DGS&D was manufactured by the appellants or procured from outside sources. The Collector dismissed the claim of insufficient capacity based on expert evidence and contract terms with DGS&D.

5. The Collector found evidence of mis-statement and suppression of facts regarding the yarn composition, rejecting the appellants' arguments against the time bar issue and reliance on inspection reports.

6. The Tribunal upheld the Collector's decision, emphasizing the contract terms requiring the yarn to be of "own make" and the specific tariff item applicable for exemption. The conclusion affirmed the mis-declaration allegations and dismissed the appeal.

This detailed analysis covers the key issues raised in the legal judgment, outlining the arguments presented by the appellants and the decision rendered by the Tribunal based on the evidence and legal interpretations provided.