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TMI Blog2013 (8) TMI 645X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacturer during the financial year exceed the prescribed threshold limit. Unaccounted Processing of Goods - Processing of cotton fabrics without accounted on the records - Held that:- There was no reason to disbelieve the records of the other contractors - the department's allegation that in addition to the quantity of 43,31,361 L. Mtrs. of fabrics as shown in Central Excise records of the appellant firm another quantity of 3,63,213.55 L. Mtrs of fabrics was also been processed and cleared - For determination of duty on the quantity of fabrics processed and cleared in excess, the matter would had to be remanded. Goods Cleared Without Payment of Duty - Held that:- No duty was chargeable on fabrics - There was gain in the quantity due to elongation of the fabrics during stentering - Since the increase in the length of fabrics had taken place during stentering which was fully exempted process. Limitation Period u/s 11A(1) - Held that:- The fabric was processed without aid of power or steam and clearance was not reflected in the Central Excise records and was cleared without payment of duty the same had to be treated as clandestine removal and accordingly the longer limitati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ph taken together, shall not exceed 75 lakh Sq. mtrs. Provided further aggregate quantity of clearances of the said goods from any factory by one or more manufacturers shall not exceed 75 lakh Sq, mtrs. in terms of clause (a) and 50 lakh Sq. mtrs. in terms of clause (b) of this paragraph, respectively. Provided also that the aggregate quantity of clearances of the said goods from any factory by one or more manufactures in terms of Clause (a) (b) of this paragraph taken together shall not exceed 75 lakh Sq. mtrs.". 1.2 According to the appellant, their clearances of cotton fabrics processed without aid of power or steam for home consumption during 1987-88 was within 50 lakh Sq. mtrs. and accordingly they had made clearances without payment of duty. 1.3 The factory of the appellant was visited by the Jurisdictional Central Excise Officers on 11.02.88 in course of which they took over certain documents relating to the processing of the fabrics. From the Scrutiny of the records and enquiry made with certain persons, it appeared that total quantity of cotton fabrics processed by the appellant during 1987-88 was 47,29,685.65 L. mtrs. equivalent to 54,11,404 Sq. mtrs as ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors and no enquiry was made with others, that even the statements of two contractors do not support the department's allegation, that no enquiry was made with the customers, who had sent the grey fabrics for processing, though information about their address was available with the investigating officers, that the Tribunal in the case of Commissioner of Central Excise Vs. Lords Chemicals Ltd. reported in 2009(245) E.L.T. 695 has held that entries made in the private note books maintained by the labour contractors without any corroborating evidence can not be the basis to support the allegation of clandestine removal, that above judgment of Tribunal has been upheld by Hon'ble Calcutta High Court vide judgment reported in 2010(258) E.L.T. 48 (Cal.), that the same view has been expressed by the Tribunal in the case of Kumar Cotton Mills Pvt. Ltd. Vs. Commissioner of Central Excise, reported in 2008 (229) E.L.T. 273 (T), that the department seeks to add 35,111.00 L, mtrs. of cotton fabrics to the total quantity of cotton fabrics processed on the basis that this was the gain in quantity on account of elongation during stentering, that when stentering is fully exempted from duty and is u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant had under reported the quantity of the processed fabrics with intent to evade the duty and that in view of this, the duty demand has been correctly confirmed and penalty has been correctly imposed on the appellant firm as well as on its partner Sh. Vinod Kedia and there is no infirmity in the impugned order. 5. Sh. J. M. Sharma, Consultant, Ld. Counsel for the Appellant in rejoinder, pleaded that in terms of Trade Note No 22/1987, issued by Central Excise Commissioner, Mumbai-III, which was based on the Board's Clarification, exemption under Notification No.111/87-CE was available to the first clearance up to the 50 lakhs Sq. mtrs. in a financial year and duty was chargeable only on the quantity of clearances for home consumption which are in excess of 50 lakh Sq. mtrs. 6. We have considered the submissions from both the sides and peruse the records. 7. The first point of dispute in this case is as to whether the exemption Notification No. 111/87-CE would be available to assessee whose clearances for home consumption of the cotton fabrics processed without aid of power or steam in a financial year exceed 50 lakh Sq. mtr. While according to the department, this exempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factory by one or more manufacturers shall not exceed 75 lakh Sq. mtrs in terms of Clause (a) and 50 lakh Sq. mtrs. in terms of Clause (b) of this paragraph respectively: Provided also that the aggregate quantity of clearances of the said goods from any factory by one or more manufacturers in terms of clauses (a) and (b) of this paragraph taken together shall not exceed 75 lakh Sq. mtrs. Notification No. 54/87-CE dtd. 01.03.87 Exemption to cotton fabrics processed without the aid of power:- In exercise of the powers conferred by sub-rule(1) of rule 8 of the Central Excise Rules, 1944, read with sub-section (3) of Section 3 of the Additional Duties of Excise(Goods of Special Importance) Act, 1957 (58 of 1957), the central Government hereby exempts cotton fabrics, falling within Chapter 52 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) and processed without the aid of power or steam, from the whole of the duty of excise leviable thereon under the said Schedule and the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957): Provided that nothing contained in this notification shall apply in respect of clearances of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egard to their records recovered from the factory, inquiry was made with two contractors Sh. B. M. Khymbhavat and Sh. Raghunath R. Yadav and both of them have confirmed that the entries of production in the registers maintained by them pertain to the processing activity carried out in the appellant's factory. Besides this, we also find that the statements of these two contractors are corroborated by Sh. Jayantilal L. Mehta, administrative manager of the appellant firm. In view of this factual position we are of the view that there is no reason to disbelieve the records of the other contractors. Accordingly we uphold the department's allegation that in addition to the quantity of 43,31,361 L. Mtrs. of fabrics as shown in Central Excise records of the appellant firm, another quantity of 3,63,213.55 L. Mtrs of fabrics was also been processed and cleared. If this quantity is included in the total quantity of the processed fabrics cleared, the same would exceed 50 lakhs Sq. mtrs and the quantity of processed fabrics in excess of 50 lakh Sq. mtrs. would be chargeable to duty. However for determination of duty on the quantity of fabrics processed and cleared in excess of 50 lakh Sq. mtrs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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