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TMI Blog2018 (3) TMI 623X X X X Extracts X X X X X X X X Extracts X X X X ..... ER Per Bench M/s.Radha Textiles Ltd. is a manufacturer of cotton yarn falling under Chapter 52 of CETA, 1985. Department officers intercepted a van carrying a consignment of cotton yarn of appellant. As the quantity and description of goods found in the van were different from that of indicated in the invoices, the goods were placed under seizure. Investigations were extended to the factory premises, documents and records recovered and statements of various persons recorded. From the investigations appeared to the department that:- i. Appellants had indulged un- accounted purchase of cotton ii. They had indulged in unaccounted manufacture of cotton yarn iii. Excess stock of cotton yarn was found in search of the premises on 5.3.2004 iv. The appellant cleared cotton to job work units without cover of invoices / job work challans without accounting. v. Cotton yarn was sent for further processing without cover of central excise documents. The appellant received sale proceeds in cash in respect of unaccounted clearances for cotton yarn. vi. Department took the view that appellants had contravened the following provisions of Central Excise Act, 1944 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ores under Rule 26 of the Rules. (ii) 1060 kgs of cotton yarn valued at ₹ 1,63,600/- seized from the premises of appellant were confiscated under Rule 25 of the Rules with option to redeem the same on payment of fine of ₹ 15,000/-. (iii) In respect of the demand of duty, the adjudicating authority observed that cotton hank yarn for which duty is demanded has been manufactured at job worker's end and received back by appellant who subsequently cleared it without accounting. (iv) That the said job worker becomes the principal manufacturer of such excisable goods and accordingly the liability to discharge central excise duty of such excisable goods vests on the said job worker. However, the adjudicating authority held that as the appellant had supplied cotton cone yarn to manufacture a like quantity of cotton hank yarn at the premises of the job workers, without cover of central excise documents, appellant had effected payment of duty on the cotton cone yarn sent by them to their job workers. Accordingly, based on these grounds, the adjudicating authority confirmed duty liability on unaccounted clearance of cotton cone yarn by appellant for the year 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the adjudicating authority in para 104 of the impugned order held that demand of duty is to be restricted only to the cotton cone yarn actually manufactured by appellant in their factory, even when it is conclusive proof on they received back the cotton hank yarn from the job workers and cleared the same. 3.5 The ld. counsel takes us to the summary of the allegations made in the show cause notice in para 101 to contend that the proposed demand of duty liability was proposed only in respect of alleged clearance of hank yarn manufactured by the appellant and not cone yarn. Moreover, there has been reference to Rule 12B anywhere in the allegations or charges laid down in the show cause notice. 3.6 With regard to the reliance of computer print outs made in respect of alleged differential duty liability, for the period 2003 04, ld. counsel draws our attention to para 227 to 231 of the appeal filed, which is part of the reply to the show cause notice made by them, wherein the defense in respect of reliance on computer print outs has been brought out. As contended therein, the conditions prescribed in section 36B of the Central Excise Act, 1944 was not specified in respect of the da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hank yarn received back by appellant from job workers is liable to be paid by appellant as quantified in the show cause notice. Ld. AR also submits that the method of quantification of duty demand adopted by the adjudicating authority is now contested by the department in the appeal filed by them. Ld. AR also reiterated the grounds of appeal filed in respect of the department appeal. 5. Heard both sides and have gone through the facts. 6. Discernably, we find that the show cause notice has been issued proposing differential duty liability only in respect of hank yarn allegedly cleared without accounting by the appellant to their job workers. On this ground, differential duty of ₹ 17,61,395/- was proposed for the year 2002 03 and ₹ 30,09,040/- was proposed for the year 2003 04 as evidenced from the Annexure E5 of the show cause notice. 6.1 However, we find that the adjudicating authority has chosen not to demand any duty liability on such clearances of hank yarn but instead has ordered demand of duty in respect of cone yarn clearances by the appellant. The reasoning of the adjudicating authority as brought out in paras 103 and 104 of the adjudication order are r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PL have supplied cotton cone yarn to their job workers for conversion and after completion of conversion work, RTPL received back the cotton hank yarn without cover of Central Excise Documents. Thus it is seen that RTPL have evaded payment of duty on the cotton cone yarn sent by them to their job workers. Even when it is conclusively proved in the Show-Cause-Notice that RTPL have received back the cotton hank yarn and cleared the same without accounting and without payment of Central Excise duty, I propose to restrict the demand of duty from RTPL to the quantity of cotton cone yarn manufactured and cleared by them to their job workers without payment of duty. Hence I find that RTPL are liable to pay duty on 148967.50 kg of cotton cone yarn that was supplied by them to their job workers for the purpose of doubling and reeling. The actual price of 100% cotton single yarn in cones prevailing during the year 2002-03 as recorded in the invoices of RTPL is taken as the Cum-duty price to arrive at the total value of clearance. The total duty payable on the above unaccounted clearances of cotton cone yarn by RTPL during the year 2002-03 works out to ₹ 9,79,987/- (BED : ₹ 8,52,1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is paid at the instance of the department. 6.6 It is thus seen that in the grounds of the appeal, the department has only contended that Rule 12B of the Central Excise Rules would be applicable in respect of the clearances of cone yarn made by the appellant and for which reason the liability to discharge central excise duty on the resultant hank yarn produced at the job worker s end is on the appellant. 6.7 These propositions of the department does not appeal to our legal sensibilities. Rule 12B was inserted by the Central Excise Amendment Rules, 2003 by notification No. 24/2003-CE (NT) dated 25.3.2003. Sub-rule (1) of the Rule 12B when inserted read as follows:- Notwithstanding anything contained in these rules, every person (not being an export-oriented unit or a unit located in special economic zone) who gets yarns or fabrics falling under Chapter 50, 51, 52, 53, 54, 55, 58 or 60 or readymade garments falling under Chapter 61 or 62 of First Schedule to the Tariff Act, produced or manufactured on his account, on job work (herein after referred to as ' the said person ) shall obtain registration, maintain accounts, pay duty leviable on such goods and comply with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice treated the appellant as a manufacturer who is liable to discharge the duty liability in respect of hank yarn converted from the cone yarn sent by them to job workers received back in their factory and cleared to their customer allegedly without accounting or documentation. This being so, the department cannot now bring out an entirely new allegation which was not there or seek demand of the duty liability on an entirely new premise which was not featured in the show cause notice issued. 7. In the circumstances, we order as follows:- (i) In respect of the demands of ₹ 9,79,987/- for the year 2002 03 and ₹ 11,62,435/- for the year 2003 04 with interest by the adjudicating authority in the impugned order cannot sustain and is therefore set aside. The appeal filed by M/s. Radha Textiles Pvt. Ltd. therefore succeeds in respect of these demands. (ii) In Appeal No. E/509/2007 filed in respect of duty of ₹ 3,37,037/- on the goods found short on 7.1.2004, we find from Annexure E2 of the show cause notice that the shortage was spread out in respect of not only hank yarn but also cone yarn and that too of different types and counts. The contention of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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