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TMI Blog2001 (10) TMI 867X X X X Extracts X X X X X X X X Extracts X X X X ..... without the aid of power/steam. Under Notification No. 40/95-C.E., dated 16-3-95, woven fabrics of cotton when subjected to the processes specified in the table annexed to that Notification (hereinafter referred to as the minor processes ), even when undertaken with the aid of power, enjoyed exemption from the payment of central excise duty. This exemption was however, not available to a factory having facilities for carrying out bleaching, dyeing or printing (hereinafter referred to as the major processes ), with the aid of power/steam. The Commissioner of Central Excise, who adjudicated the matter in his Order-in-Original dated 5-3-2001 held that the assessee was using power while undertaking the process of dyeing and therefore, the benefit of Notification No. 40/95-C.E. was not available to them. He also concluded that the relevant facts with regard to the use of power while undertaking major processes have been suppressed by the assessee from the Department. He confirmed the demand of Rs. 1,74,53,871/- for the period 1-4-95 to 9-2-98 and imposed a penalty of Rs. 1,74,53,871/-. A penalty of Rs. 5,00,000/- was imposed on Shri Pankaj Aggarwal, Director. 3. The matter was hear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. The ld. SDR referred to the amending Notification No. 83/95-C.E., dated 24-4-95, under which the proviso as contained in Notification No. 40/95-C.E. had been substituted and the benefit of exemption available under Notification No. 40/95-C.E. had been denied to a factory in which any process, other than those specified in the table annexed to that notification (non-dutiable minor processes) had been undertaken. The ld. SDR submitted that there was a clear case of suppression of the facts by the appellants. They had the existing facilities for undertaking dutiable processes but stopped paying Central Excise duty. She pleaded that in the facts and circumstances of the case, the duty has been correctly demanded and the penalties imposed were also justified in the facts and circumstances of the case. In rejoinder, the ld. Advocate submitted that the reference to the amending Notification No. 83/95-C.E., dated 24-4-95 has been made by the ld. SDR for the first time and this amending notification neither found any mention in the show cause notice nor it found any discussion in the impugned order-in-original. He pleaded that the application of this amending notification has to be ig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if a unit was undertaking any one or more of the above specified minor processes alone, even if with the aid of power no Central Excise duty was leviable on the processed fabrics i.e. the fabrics subjected to the above named minor processes. If such a unit had been undertaking the processes of bleaching, dyeing or printing, the major processes, without the aid of power then also the benefit of Notification No. 40/95-C.E. remained available to such a unit in respect of the cotton fabrics processed. However, if the processes of bleaching, dyeing or printing, the major processes, were undertaken with the aid of power, in any factory then the exemption even in favour of the minor processes under the aforesaid Notification No. 40/95-C.E. was not available to the cotton fabrics so processed. By amending Notification No. 83/95-C.E., dated 24-4-95, it was provided that the exemption contained in Notification No. 40/95-C.E. shall not apply if woven fabrics of cotton were subjected to any process or processes specified in the table annexed to that Notification No. 40/95-C.E. within the same factory in which they had been subjected to any process whether major process or minor process, othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n favour of minor processes even when undertaken with the aid of power continued during these years. The appellants installed a boiler in Jan. 1998 and thereafter, again obtained a registration certificate from the Central Excise Deptt. to manufacture excisable goods on 11-2-98. It appears that after the appellants obtained again the registration certificate from the central excise deptt. on 11-2-98, the Central Excise officers visited the premises of the appellants on 5-3-98. There is no mention of any visit, enquiry or investigation between the period 1-4-95 to 5-3-98. 8. The show cause notice in the present proceedings was issued on 22-4-99 demanding central excise duty for the period 1-4-95 to 9-2-98 after invoking the extended period of limitation. The allegations of suppression to justify the demand for extended period is mainly based on the reports of the Kanpur Electricity Supply Authority (KESA). The KESA had made out a case of over-utilisation of the power by the appellants in excess of their sanctioned load. As summarised in para-7 of the show cause notice, the KESA officials had found on 14-11-96 that the dyeing jiggers were installed and connected to the power sour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted or not and/or if they were in working condition or obsolete and junked. So it is not possible to accept or reject the stand of either side. Your representation being time-barred according to Consumers Regulations, 1984 is rejected. So far as the amount of assessment is concerned the Executive Engineer is being directed to act in accordance with Board s Order No. 1419-CU-2, dated 19-9-90 and 297-CU-2, dated 30-1-95, as already directed vide this office letter No. 1393-Com. Wing (Elec. Board) dated 30-11-99. 9. These reports made for the purposes of the State Electricity Deptt. do not establish that the cotton fabrics had been processed with the aid of power in so far as the dutiable processes - mainly dyeing were concerned. The reports prepared at different levels are couched in different terms. With such reports and communications, it does not appear justifiable to take view that the appellants had been using power for the processes which they had declared to have been undertaken without the aid of power. No independent investigations appear to have been undertaken by the central excise officers to meet the requirements or the various rules or procedures as prescribed for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notice relied upon surmises and conjectures based on hypothetical situations which are in the real of imagination. The Department has although imagined and insinuated things which can be at best be termed wishful thinking only on the part of the Department because the Department has not based its case on any solid evidence but has just gone on to draw inferences and conclusions that suit its purpose. We do not find such evidence on record that could stand the test of scrutiny independently for substantiating the allegations insofar as the period in dispute is concerned. 11. It is also difficult to agree with the contention that once there was a facility for using power it was not material whether the power was actually used or not. The excise duty is on the manufacture and unless, the facility is used for the manufacture of excisable goods, and excisable goods are actually produced/removed, no excise duty could be levied and collected. The fact that the assessee had obtained the registration on 18-10-93 and had paid Central Excise duty during 1993-94 and 1994-95 prior to the period in dispute, could not be a ground for demanding duty for the subsequent period unless it is esta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spector, Customs and Central Excise, Range I, Division I, Kanpur under the legend Verified and found in order . (c) The third document is applicants letter Ref. No. STL/ EXCISE/95, dated 7-4-95 informing of the surrendering of the Excise licence No. 3/Textile/R.V/93. The letter was received by Shri R. Prasad, Inspector, who put his dated (7-4-95) signatures in token of having received the same. (d) The fourth document in this connection is letter C.No. 20-Misc./R.V/94/577, dated 23-5-95 of Shri Daya Shankar, Superintendent, Central Excise informing that the applicant s request for surrender of Registration Certificate hd been accepted w.e.f. 23-5-95. (e) The fifth document that virtually closes the Chapter of obtaining Central Excise Registration and getting it cancelled, is the Declaration filed by the applicants for seeking exemption from the provisions of Rule 174 in regard to taking out Excise Registration. This document is seen to have been received by Shri R. Prasad, Inspector who was the Sector Officer Incharge on 10-4-95. This is also relevant to note that visit by the central excise officers to the unit of the appellants was undertaken on 5-3-93 after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances with the act of evasion, in the present case, we find that no efforts were made to collect any evidence with regard to the fabrics cleared by the appellants. No investigations were made with reference to the orders obtained for processing and the disposal of the processed fabrics. The allegations related to the period 1995-98 and the show cause notice was issued in the year 1999. During the period in dispute, while the appellants have submitted information about their activities from time to time, no efforts were made to conduct any verification as regards the veracity of such information filed. We have given our anxious consideration to all the relevant facts and circumstances of this case and we are not able to pursuade ourselves to agree with the conclusions drawn by the adjudicating authority for demanding duty of such a substantial amount and to levy such a huge penalties on the basis of the evidence brought on record and discussed. 15. In view of the above discussion, we do not find any justification for demanding duty and imposing penalty including imposition of penalty on the Director. 16. The implications of amending Notification No. 83/95-C.E., dated 24- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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