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TMI Blog2019 (12) TMI 950X X X X Extracts X X X X X X X X Extracts X X X X ..... d silk fabric, in place of raw material, in 2002 and cleared in domestic market (Duty demanded Rs. 6,96,138) (iii). Shortage of raw material in godown register (Duty demanded Rs. 8, 65,739) (iv). The appellants availed wastage over and above permissible limits (Duty demanded Rs. 14, 84,941) (v). The appellants did not receive back the waste from job workers (Duty demanded Rs. 2,49,983) A show cause Notice dated 20.7.2004 was issued. Commissioner, vide impugned order No.34/2005 dated 15-3-2005, confirmed the duty demanded and imposed a penalty of Rs. 40,00,000/- on the appellant-company and Rs. 10,00,000/- penalty was imposed on Shri U. B. Venkatesh, Managing Director of the appellant-company. Hence, these appeals. 3. Learned counsel for the appellants submits that the stock taking was conducted on actual as well as estimated basis; stock of some sections was taken by Excise officers and some by CSTRI officers; report was given after a month; CSTRI officials have confirmed during cross examination that they have taken stock of preparatory and weaving sections only and stock of other sections was taken by excise officers; the report cannot be termed to be by experts. He submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e some times less or more than the warehoused quantity as per bill of entry; entries showing excess were not considered by the officers; when a shortage of 3112 kg of raw material was already noted, there was no basis for shortage of 2140 kg; to this extent demand is duplicated. 6. On the allegation of availment of excess wastage, Ld. Counsel submits that Exim Policy as on April 2001 permitted 53% of wastage; during that time they have accounted for shrinkage of 49%; Public Notice No. 43 (RE-01)/ 1007-2002 was issued, w.e.f. 19-10-2001, prescribing wastage of 35% and procedures to be adopted; the appellant followed the same; it was in correct to demand duty saying that the appellant has taken advantage of the lacunae in policy during the period; it was held in Kiran Syntex Limited vs. CCE, Surat-I 2009 (238) ELT 481 (Tri.-Ahmd.) that duty equivalent to import duty cannot be demanded even if wastage exceeded the prescribed limit given in Hand Book of Procedures; Public Notice cannot be effective retrospectively. He relies upon the following: * S.J. Fabrics Pvt. Ltd. vs. Union of India: 2015 (325) ELT 713 (Cal.) * Uni Colloids Impex Pvt. Ltd. vs. Commissioner of Customs, Ahmedab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... azar was taken from a Bill of Entry of May 2003; the submissions on degumming losses are not valid as per standard input-output norms wastage of 35% was allowed; the appellants could not substantiate the shortages in raw material during the visit. 10. The learned AR further submits that the submissions of the appellants on the clearance of imported fabrics has been considered by the adjudicating authority; in terms of the license issued under Section 58 of Customs Act, 1962, the appellants were permitted to manufacture such fabrics from the imported raw silk, that means, import of fabrics was not permitted; it is not the case of the appellants that the rejects were generated during the manufacture of the finished goods; fabric was imported and the same was cleared under the guise that they are defective. 11. On the issue of shortage of raw materials as indicated in the godown register, learned counsel submits that it is not possible for the investigation to prove with mathematical precision; the very existence of katcha register is unexplained; Shri Balachandran Potti, who maintain registers could not explain the difference in book stock and physical stock; Shri U. B. Venkatesh, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CSTRI; this being the case, it is not understood how additional shortage can be alleged on the basis of a katcha register; the officers did not consider the excess noticed in the katcha register wherever it was noted but were only interested in shortages. The appellant submits that the katcha register was maintained by the person who was in-charge of issuing bales for production. As the material is hydroscopic in nature, excess or shortage is bound to occur from the Bill of Entry quantity; therefore, the person was recording the actual weight of the material issued for production. We find that these aspects have also not been considered in the impugned order. Therefore, we find that the shortage has been arrived at on the basis of assumption or presumption or on the basis of calculations. Moreover, going by the case laws submitted by the appellants, we find that finding of shortage cannot in itself be a conclusive proof of raw material being sold clandestinely or being used for manufacture of fabric which has been sold clandestinely. We find that there is neither any allegation nor evidence regarding the clandestine clearance of such short-found material in the domestic market. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tively to the detriment of the appellants. In view of the same, we find that demand of duty on this count is not sustainable. The case law cited by the appellants supports this view. 17. It was also alleged that the appellant had sent goods to three job workers and that, the wastage was not returned from the job workers along with the processed fabrics. It was alleged that one job worker has accepted that they have not sent back the wastage. The appellants however submit that it was accepted in the OIO that they have submitted delivery challans pertaining to one job worker i.e., Veda Silks, however, the same was not considered. We find that the appellants have not submitted any such evidence in respect of other two job workers. Therefore, the appellants are required to pay duty on the wastage not returned by the other two job workers. However, we find that in case such wastage is not returned, the department is in its right to collect the duty applicable on such waste and not certainly on the raw material that has gone into the generation of such waste. Such a conclusion does not seem to be the intention of the provisions of law. The appellant submits that in view of para 9.30, Cl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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