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TMI Blog2000 (5) TMI 724X X X X Extracts X X X X X X X X Extracts X X X X ..... the Defence Ordnance Clothing Factory (OCF), it was alleged that dutiable woollen worsted yarn (WWY) had been removed clandestinely without payment of central excise duty and without issuing central excise gate passes. Duty evaded was worked out at Rs. 2972791.67 for the period Feb., 1983 to July, 1988. The matter was adjudicated by the Commissioner of Central Excise, Chandigarh, who under order-in-original dated 7-4-99 confirmed the demand of Rs. 29,72,791.67. A penalty of Rs. 30 lakhs was imposed. 2. The matter was heard on 10-4-2000 when Shri J.P. Kaushik, Advocate made the following submissions :- 1. In the erstwhile Central Excise Tariff, only woollen yarn was mentioned under Item No. 18B, and it was only in the exemption Notification No. 280/77-C.E., dated 12-8-77 that a distinction was made between woollen yarn and Worsted Woollen Yarn. 2. In the purchase invoice while the description given was woollen yarn, what has actually been purchased was WWY. He referred to the higher price paid for the yarn as per invoices. He referred to the invoices at page 40 of the paper book. 3. &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taining more than one sixth by weight of non-cellulosic fibre (other than acrylic fibre) calculated on the total fibre content. Under exemption Notification No. 280/77-C.E., dated 12-8-77, woollen and acrylic spun yarn failing under sub-item (ii) of the Item No. 18B and containing non-cellulosic fibre in the form of wastes or in the form of fibre produced out of such wastes, were exempt from the whole of the duty of excise leviable thereon. No such exemption was however available to the worsted woollen and acrylic spun yarn. 4. The allegations in these proceedings are that the appellant's mill had manufactured worsted woollen yarn and had supplied such yarn to the OCF, Shahjanpur without payment of central excise duty, without accountal and without issuing central excise documents evidencing the payment of duty. The allegation is sought to be substantiated on the basis of various discrepancies in the accounts of the mill and their suppliers. 5. The mill's tenders for supply of WWY to the OCF were accepted by the Directorate General of Supplies and Disposal (DGS & D), and the mill supplied 137016.500 Kgs. of WWY with composition 70% wool and 30% nylon to the OCF during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted out from the seized records to show that the goods had been manufactured clandestinely. 7. The major discrepancy had been highlighted with reference to the records and correspondence in respect of the tenders by DGS & D for supply of certain quantities of WWY of composition 70% wool and 30% nylon to OCF as per the terms and conditions and the specifications agreed upon. The yarn was to be supplied as per the terms of the tenders. The tenders contained maker's name and brand name. The information was to be answered by the suppliers correctly and faithfully. The inspection was to be done by the officers of DGS & D at firm's premises to satisfy themselves that the yarn was being supplied as per the terms of the tenders. The claim of the appellants that the WWY of the specifications laid down by DGS & D had been purchased from outside, had not been rebutted on the basis of any evidence relating to its being their own manufacture but mainly on the ground that there were discrepancies in the evidence produced in support of the claim. 8. While it was admitted by the adjudicating authority that woollen yarn had been purchased by the appellants from outside, there is no men ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s case because it is an admitted fact that the noticee had supplied WWY to the OCF through DGS & D." 11. In this case the discrepancies in the records of the appellants and the suppliers from whom they purchased the yarn had been largely made the basis for proving the allegations of clandestine manufacture. We consider that if the mill contravened any condition of the tender, then it was a matter between DGS&D and the mill. The allegation of clandestine manufacture without support of any document relating to raw materials, process of manufacture, intermediate stages of production, packing, power consumption, record of the labour, etc., could not be established. While noting that "there is a very strong case of the Department that the noticee had the worsted system in their factory premises situated at 186, Industrial Area A, Ludhiana from where they had issued the bills to the DGS & D", there is no discussion of the manufacturing facilities and the fact of manufacture. The conclusion drawn in para-35 of the order is as under- "35. While it may be true as a general proposition that the goods purchased from the open market may have to be treated as duty paid, the allegation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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