1990 (2) TMI 211 - AT - Central Excise

Issues Involved:
1. Dutiability of Mother Yarn or Multi Filament Yarn.
2. Demand of Duty on Mother Yarn Accounted as Waste.
3. Demand of Duty on Non-Workable Mother Yarn.
4. Demand of Duty on Samples Sent for Test.
5. Demand of Duty on Textured Yarn.
6. Demand of Duty on Goods Short Accounted for in Central Excise Records.
7. Jurisdiction and Limitation in Issuing Show Cause Notice.
8. Imposition of Penalty.

Summary:

1. Dutiability of Mother Yarn or Multi Filament Yarn:
The primary issue was whether the mother yarn or multi-filament yarn was dutiable. The appellants argued that mother yarn was not marketable and thus not excisable. However, the Tribunal found that mother yarn was indeed dutiable under Item 18-II (i) (a) of the Central Excise Tariff. The Tribunal noted that the mother yarn was specified in the exemption Notification 47/85 and that it was capable of being marketed, as evidenced by the fact that the appellants had cleared some quantities of mother yarn on payment of duty. The Tribunal also referred to the ISI Glossary of Terms, which listed both mono-filament and multi-filament yarn, indicating that these were known in the trade.

2. Demand of Duty on Mother Yarn Accounted as Waste:
The demand for duty on mother yarn accounted as waste was found to be time-barred. The Tribunal noted that the unit was under Physical Control, and the Show Cause Notice issued on 19-5-1986 for the period 31-1-1985 to 30-9-1985 was beyond the six-month period under Section 11-A of the Central Excises & Salt Act, 1944.

3. Demand of Duty on Non-Workable Mother Yarn:
The Tribunal directed that the demand on the quantity of 979.900 Kgs. of non-workable mother yarn should be re-determined after verifying the appellants' claim with reference to the statutory records. The appellants argued that this quantity had already been accounted for and duty paid.

4. Demand of Duty on Samples Sent for Test:
The Tribunal held that the appellants' claim for exemption under Notification 26/76 should be considered. The appellants argued that the quantity of samples sent for testing was within the permissible limit prescribed in the notification.

5. Demand of Duty on Textured Yarn:
The Tribunal set aside the demand for duty on textured yarn, noting that the Allahabad High Court in the appellants' own case had held that duty was payable only on non-textured yarn before removal, and no duty on textured yarn was payable by virtue of exemption Notification 178/83.

6. Demand of Duty on Goods Short Accounted for in Central Excise Records:
The Tribunal set aside the demand for duty on goods short accounted for in Central Excise records, noting that the demand was based on an erroneous principle and lacked adequate evidence.

7. Jurisdiction and Limitation in Issuing Show Cause Notice:
The Tribunal found that the demand for duty for the period beyond six months in the Show Cause Notice issued by the Superintendent was without jurisdiction and must be set aside as invalid. The Tribunal noted that the longer period for demanding duty could only be invoked by the Collector after the amendment to Section 11-A in December 1985.

8. Imposition of Penalty:
The Tribunal set aside the penalty of Rs. 5 lakhs imposed on the appellants, finding that there was no evidence of deliberate violation of the law or clandestine removal of excisable goods. The Tribunal referred to the Supreme Court decision in Hindustan Steels Limited v. State of Orissa, which laid down that no penalty should be imposed for a technical or venial breach of legal provisions.

Conclusion:
The Tribunal disposed of the appeals by addressing each issue comprehensively, setting aside certain demands and penalties, and directing re-determination of others based on verification of statutory records and adherence to legal provisions.

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