9911796707
TMI Blog2008 (10) TMI 531X X X X Extracts X X X X X X X X Extracts X X X X ..... 1, a show cause notice dated 1-1-2002 was issued to the appellants alleging that throughout during the period from 1996 to 2001, the Appellant had manufactured only cross reel hank yarn and cleared by misdeclaring the same as plain reel hank yarn and on this basis demanding duty amounting to Rs. 2,70,25,962/- along with interest, and proposing imposition of penalty on the Appellant company under Section 11AC of Central Excise Act, 1944 as well as under Rule 173Q (1) of Central Excise Rules, 1944/Rule 25(1) of Central Excise Rules, 2001 and also imposition of penalty on Shri G.S. Singhvi, Managing Director of appellant's company under Rule 26 of Central Excise Rules, 2001. This matter was adjudicated by the then Commissioner, Central Excise, Jaipur-I vide order-in-original dated 30th April, 2003 by which the duty demand of Rs. 2,70,25,962/- along with interest was confirmed against the Appellant, a penalty of equal amount was imposed on Appellant company under Section 11AC and beside this, a penalty of Rs. 5,00,000/- was imposed on Shri G.S. Singhvi, M.D. of the appellant company. However, on appeal to the appellant Tribunal, the Tribunal vide order-in-appeal Nos. 639-640/05, dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... machines was found to be fitted with the parts enabling the production of cross reel hank yarn. (3) The officers during investigation conducted inquiries with several yarn dealers of Kishangarh, Beawar and Bhilwara who had been purchasing yarn from the Appellant company. But the except for the statement of Shri Rajesh Toshniwal of M/s. Komal Synthetics, the statements of the other dealers have not been supplied or disclosed by the department. Even Shri Rajesh Toshniwal in his statement has stated that he had purchased only the plain reel hank yarn but the department on the basis of the test reports of the sample of yarn in the business premises of M/s. Komal Synthetics has alleged that M/s. Komal Synthetics had purchased cross reel hank yarn from the Appellant company. The test report of the sample is unreliable as the sample drawn had not been stored in a tight packing. (4) The Investigating Officer at the time of their visit to the factory on 27-09-01 had also drawn sample and the test report of those samples is being relied upon as evidence that the Appellants were manufacturing cross reel hank yarn. However, these samples had b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declaring the same as plain reel hank in order to evade the duty. In this regard, statement dated 4-10-01 of Shri R.B. Tiwari, is quite revealing. In this statement, Shri Tiwari admitted that the machines in the factory are fitted with some attachments by which cross reel hank yarn can be produced whenever the Appellant want and ever since he is working in this unit, the machines produced only cross reel hank yarn. Though Shri Tiwari retracted his statement, his retraction is only an afterthought. (2) The test reports of the samples drawn from the premises of M/s. Komal Synthetics also indicated that the same was cross reel hank yarn which shows that the Appellant had supplied the cross reel hank yarn to M/s. Komal Synthetics by misdeclaring the same as plain reel hank yarn. (3) Since the machinery in the Appellants factory was capable of producing cross reel hank yarn, the Revenue has correctly demanded duty by treating the entire production from 1996 to 2001 as cross reel hank yarn. 4. We have carefully considered the submissions from the both the sides. The point of dispute in this case is as to whether the Appellant's fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port it cannot be concluded that all the dealers had purchased only cross reel hank yarn. 5.2 The statement of Shri Salil Malhotra, the machinery supplier indicates that the machinery supplied by him and installed in the Appellant's unit is capable of manufacturing cross reel hank yarn after attaching some attachments. But Shri Malhotra in his statement has also stated that he has not supplied those attachments. There is no Panchnama or technical expert's opinion on the point as to whether the machines installed in the Appellant's factory were fitted with the attachment for manufacture of cross reel hank yarn. 5.3 The revenue relies upon the statement dated 4-10-01 of Shri R.B. Tiwari, the Technical Supervisor of the appellant's factory, wherein he has stated that the machinery installed in the Appellant's factory was capable of manufacturing cross reel hank yarn and that the factory was indeed manufacturing cross reel hank yarn but this statement was immediately retracted by him vide telegram dated 5-10-01 addressed to the Commissioner. A retracted statement can be relied upon as evidence if only it is corroborated by other independent evidence. But in this case, excep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed only in respect of the material of that lot and the same cannot be automatically applied in respect of the clearances made prior to such tests and the Tribunal judgment in case of M/s. Pattani Chemicals (supra) has been upheld by Hon'ble Supreme Court vide judgment reported in 1998 (98) E.L.T. 582 (S.C.). In view or this, in respect of past clearances, other than the retracted statement of an employee - Shri B.P. Singh there is no other evidence that the yarn manufactured and clearance was cross reel hank yarn. It is well-settled law that allegation of duty evasion cannot be based merely on assumptions - Hon'ble Supreme Court judgment in the case of Oudh Sugar Mills Ltd. v. Union of India reported in 1978 (2) E.L.T. J172 (S.C.) which has been followed by this Tribunal in a series of judgments. 6. In view of the above, we hold that the duty can be charged only in respect of those goods, which on tests were found to be cross reel hank. We, therefore, set aside the impugned order and remand the matter to the Commissioner for re-determination of the Appellant's duty liability based on the above finding and re-quantification of the penalty to be imposed on the Appellants, in vi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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