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TMI Blog2005 (6) TMI 385X X X X Extracts X X X X X X X X Extracts X X X X ..... arations along with cost sheet of gray fabrics. RK along with the merchant manufacturer were filing joint declaration about assessable value in terms of Notification No. 27/92-C.E. (N.T.) and Circular No. 39/93, dated 10-12-93 issued by the Department. RK also was availing the deemed Modvat credit in terms of Notification No. 29/96-C.E. (N.T.). 1.3It appears from the notice and the order, intelligence was received by the Central Excise officers that Appellants were indulging in evasion of duty by not declaring the correct weight of Gray fabrics per 100 Lmtrs. Intelligence further revealed that Appellants in connivance with major merchant manufacturers were declaring lower weight per 100 L. Mtr. Than the actual weight thereby under-valuing the processed man-made fabrics and evading duty. 1.4 Factory of RK was searched on 10-12-1998 which resulted in recovery of a Recipe Book and corresponding price declarations. On comparison of the weights of fabrics shown in the Recipe Book was found to be higher than that mentioned in the price declarations to the extent of 20 to 30%. 1.5Consequent to the investigations conducted and statements of the Excise Clerk, Senior Supervisor, P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cator, the main plea of the noticees was that the value of the cloth depend on quality of the yarn used in cloth and that when the purchase invoice of Gray fabrics was available on record, the weight of Gray fabrics per sq mtr is irrelevant for computation of value. It was also contended that the weight shown in the Recipe book was only an approximate weight. As regards the duty demand on processed fabrics which were alleged to have been cleared in the guise of Gray fabrics, it was argued that no evidence whatsoever was brought on record by the Department and that neither any statements of the merchant manufacturers nor the assessee was recorded or corroborating this aspect. 1.9The Commissioner ordered : (a) Confirmation of Central Excise duty of Rs. 21,688.86 under Section 11A(1) of the Act from M/s. R.K. Processors. (b) Confirmation of duty of Rs. 12,974.33 under Section 11A(1) of the Act from M/s. R.K. Processors. (c) Confirmed demand of deemed Modvat credit of Rs. 52,626.40 availed on seized man-made fabrics on M/s. R.K. Processors under Rule 57-I(1) read with Section 11A(1) of the Act. (d) Confirmed duty demand of Rs. 36,44,685.68 as duty short pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge weight of different lots and therefore the weights as shown in the Recipe book should not be given any undue weightage or importance and be made the principal ground to allege evasion of duty by under-valuation of processed fabrics. So far as clandestine removal of processed fabrics in the guise of Gray fabrics, their contention is that there is no iota of evidence to suggest any such clandestine removal. (c) Weight of yarn per sq mtr of fabrics is relevant for computation of assessable value of processed fabrics, not wherever and whenever such Gray fabrics are got manufactured on job work by the merchant manufacturers, it is only when actual purchase price is not known, this method could be resorted. However, when such fabric is purchased straightaway by the merchant manufacturers and the invoices evidencing the price thereof is available on record, the weight of Gray fabrics would be and is entirely irrelevant. In such cases assessable value of processed fabrics is to be computed by taking the price of Gray fabrics. Annexure l-A (B) of the Circular No. 39/93, issued by the Department referred to supra also stipulates accordingly and provided for adoption of price pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in the statement of Shri Deepak Dharne, Technical In-charge of the Appellants recorded on 6-5-1999, he has stated that in the processing operations composition of the Gray fabrics and weight of Gray fabrics are taken into consideration and that for weight, they consider weight mentioned in the job cards which were prepared by the Gray Department. Since the technical man relies on the weight shown in the job cards, and others whose statements were recorded, deposed the weight shown in the Recipe book as an actual average weight arriving at a conclusion based on such conflicting statement to conclude under-valuation by pointing out a difference in such weights shown in the price declaration and an average weight found mentioned in the recipe book cannot be ipso facto arrived at when it is on record that nowhere the weights are actually arrived at and whatever entry is made is only on estimation and belief and not on fact. Reliance on difference in weight arrived at and entered cannot be but an error to question the valuation as proposed. (g) Further, in the detention memo dated 11-12-98, the weight of few bolts (takas) as described as fabric of three different lots are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cturer i.e. RK, when traders could have received stocks from different processors and different lots. The evidence is only a conjectures and cannot be relied. (j) In the Annexures CI. CII, CIII to Show Cause Notice dated 15-6-99, it is observed that in certain cases, the declared weight of Gray fabric was more than the actual weight of the fabrics and consequently in all those cases, there was no differential duty demands made. This itself would give credence to the assessee s argument that the weight shown in the recipe book is not the reliable or and actual weight. Therefore it cannot be reliance for basing serious allegation on account of under-valuation and consequent evasion of duty. (k) Now coming to the second aspect, no evidence is mentioned in the notice, as to how the allegation of clandestine removal of processed fabrics in the guise of Gray fabrics returned is arrived/based. Commissioner records a finding that the Department s allegation is based on lot register, recipe book and job cards. Curiously there is neither any discussion on the evidence flowing from the job card nor there is any reference to job cards in the notice; job cards are not in the list ..... X X X X Extracts X X X X X X X X Extracts X X X X
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