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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 ..... declarations 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 Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -II vide a common Order No. 12/2, dated 22-3-2000. Before the Adjudicator, 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. Process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; The Notices allege that the actual weight of fabrics is indicated in the 'Recipe book' however the weight of the corresponding lot declared in the price declaration is lower than the same mentioned in 'Recipe book'. Appellants contention is that the weight shown in the 'Recipe book' is not of consequence, as on actual weight but it is the actual estimate average 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the copies of the 'Recipe book' in the Appeal compilation. Upon perusal of the few pages of the 'Recipe book', it is seen that more than one lot number (in few cases 6 or 7) are mentioned in the same page, but only one weight is shown at the right-side top corner of that page. In the statement recorded during the investigation, it is mentioned that the figure mentioned on the right-hand top corner of the pages in 'Recipe book' represents 'actual average weight' of Gray fabrics. As against this, 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 declarati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chant manufacturers premises was more than the weight shown in the respective price declaration. It is a matter of common knowledge that after processing there is bound to be weight difference, as the weight of various dyes, chemicals and other materials get fixed to the fabrics and contribute to an increment in weight of the fabrics. The weight of Gray and processed fabrics cannot be compared and it is, surprisingly to note, how this aspect could be found and discovered only in the shop premises of a trader and not in the stocks available with the manufacturer 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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