9911796707
TMI Blog1997 (12) TMI 206X X X X Extracts X X X X X X X X Extracts X X X X ..... Chapter 52 of the Schedule to the Central Excise Tariff Act, 1985. Prior to 28-2-1986 the said goods were classifiable under erstwhile Tariff Item No. 18A. 3. By a Show Cause Notice dated 20-11-1987 the Collector of Central Excise, Ahmedabad called upon the appellants to show cause as to why a duty of excise amounting to Rs. 1,88,066.15 leviable on yarn manufactured and cleared by the appellants without payment of duty by resorting to fraud, wilful suppression and mis-statement of facts with intention to evade payment of duty, should not be recovered from them under Section 11A read with Rule 9(2) for clearances made by the appellants during the period 1982 to 1985. Appellants were also asked to show cause why penalty should also not be i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to inter alia, `sizing before the yarn was delivered to their customers. It was obvious that the weight of yarn would increase after `sizing in comparision to the yarn received by the appellants for sizing . Further, the yarn taken out for sizing and other processes were not always taken lot-wise. The alleged additional weight of yarn cleared during the period of 5 years was due to sizing and other processing involved. Apart from this, all the yarn cleared was duty paid with the requisite gate passes after complying with all the procedural formalities like that of filing D-3 within the requisite period of time. These were well within the knowledge of officials of the Department. As regards the alleged shortage found by the officers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Advocate submitted that accounting of single yarn is done at spindle point. Thereafter the yarn is subjected to the various processes during which considerable waste, both visible and invisible, arise. During the period in question such waste to the tune of 2,12,862 kg. had occurred. The appellants had, due to ignorance, failed to deduct the said hard and other waste from countwise yarn and the difference between physical stock and RG 1 stock had arisen only because the waste had not been reduced. Had this been done, the physical stock would have tallied and the question of paying duty on the shortage of yarn would not have arisen. He relied on the decision of the Tribunal in CCE v. Jenson and Nicholson India Ltd. reported in 1984 (16) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artmental Representative contended that the information given on 25th May, 1985 was incomplete information which had to be investigated and examined. The officers had to conduct inspection of the factory which they did in January, 1986. The SCN which was issued after completion of investigation and examination was, therefore, not time barred. He also drew attention to the fact that appellants had also taken 10 months to reply to the Show Cause Notice. 8. We have considered the submissions and have perused the record. The first point taken by the ld. Counsel for the appellants is about limitation. We find that the Show Cause Notice was issued in this case on 20-11-1987. The period for which the demand has been made is 1980-81 to 1984-85. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... %. Addl. Collector had held that though RT 12 had no doubt been finalised, demand of duty can be raised only when loss is reported or indicated in the records maintained. Therefore duty on cotton yarn and cellulosic spun yarn and non-cellulosic spun yarn removed illicitly in the guise of loss was required to be recovered. It was the scrutiny of Form V Register which revealed that the appellants had cleared yarn on GP 1 showing them as duty paid clearances. Verification of the Register further revealed that there was no stock of duty paid goods in Form V Register and the goods had been cleared without payment of duty in the guise of duty paid goods. The appellants had argued that if at all the Department wished to make any recovery the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod would be tantamount to suppression of facts. Moreover, it cannot also be denied that in matters of this sort scrutiny and investigation by the authorities would take some time. We, therefore, hold that in the facts and circumstances of the case the extended period has been rightly invoked. 9. As regards the merits of the case, the appellants have themselves admitted that on the question of shortages, out of the total quantity of 12,78,340 kgs. of yarn manufactured by them during 1980-81 to 1985-86 due to various processes, `hard waste of 2,12,862 kgs. had occurred. According to the appellants, these had been recorded in the monthly RT 12 returns and had been accounted for in RG 1 Register and cleared in GP 1, but the same had not b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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