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TMI Blog2005 (10) TMI 405X X X X Extracts X X X X X X X X Extracts X X X X ..... relating to purchase of raw materials and production and clearance of final products. It was found that the raw material (wood pulp) required for the manufacture of MCCP was entirely purchased from M/s. South India Viscose Ltd., Coimbatore (SIV) and that the raw materials (hosiery cuttings) required for the manufacture of CP were purchased from two other sources. The respondents were found to have received 870.622 MTs of wood pulp from SIV and manufactured 676.530 MTs of MCCP during the period of dispute [1989-90 to 1993-94]. They were also found to have purchased 607.95 MTs of hosiery cuttings and to have manufactured 177.65 MTs of CP during the same period. As against the production of 676.530 MTs of MCCP and 177.65 MTs of CP borne on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hearing both sides, I note that the demand of duty in the show cause notice was based on the input-output ratio adopted by the department on the basis of the records seized from the assessee s premises and the statements given by the Works Manager and the Managing Director of the company. In respect of the two final products viz. MCCP CP, the input-output ratios were taken as 100:85 and 100:50 respectively on the basis of the entries made by the Works Manager in his records maintained during a part of the period of dispute. The Works Manager s notings had indicated that, at some point of time, 17,800 Kgs. of wood pulp had been received in the factory and that, for this quantity of the raw material, the expected output (MCCP) was to the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of goods having been admitted by the party. It was also submitted that the demand of duty had been quantified on the basis of admitted input-output ratio only. Ld. Counsel for the respondents has heavily relied on the affidavits of the Works Manager and the Expert, in support of his contention that the demand of duty has no scientific or legal basis. In this connection, he has also relied on SIV s specification of wood pulp which indicated alpha cellulose content of 90.5 +/- 0.5% in the pulp, which was the active ingredient getting chemically converted to MCCP. If only the alpha cellulose content of wood pulp is taken into account, the MCCP production shown in the statutory record (RG - I) for the period of dispute will be found to be co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nation in relation to MCCP production. The figures shown as gross weights in the relevant invoices (issued by SIV during the period of dispute) seem to represent net weights of the goods, as these figures are lower than the corresponding figures of weights shown in the invoices. The original authority should have adopted this net weight of wood pulp for the purpose of input-output ratio determination of MCCP production for the period of dispute, as rightly contended by ld. Counsel for the respondents. Yet another valid submission made by ld. Counsel is that, only 90 to 92% of wood pulp is available for reaction yielding MCCP. It appears from the records that a submission to this effect was made by the assessee in their reply to the show c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in support of the assessee s contention that only 90 - 92% of the weight of wood pulp need be taken into account for input-output ratio determination in relation to MCCP production. The original authority took the entire weight of wood pulp for such determination, and this has resulted in gross error. 4. At the same time, I am unable to accept the respondents contention that there was no clandestine removal of goods. The Works Manager and the Managing Director of the company, in their respective statements, admitted clandestine removal of final products. This admission was never retracted. In the circumstances, as rightly pointed out by ld. SDR, it was not necessary for the Revenue to gather evidence of clandestine removal of goods. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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