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TMI Blog2002 (10) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... rer namely Reliance Industries Ltd. Penalties of various amounts have been imposed under Rule 209A under the said order on various other appellants like Murbad Packaging P. Ltd., Goyal Synthetics, etc. The other appellants, we mean the purchasers of the waste from Reliance Industries Ltd. By the other order dated 23 of 2001, duty amounting to Rs. 73,35,065/-has been demanded and a penalty of equal amount has been imposed on the manufacturer Terene Fibres (I) P. Ltd. In the said order, penalties have been imposed on the purchasers of the waste, namely Murbad Packaging P. Ltd. and others. 3.The facts of the case are in short that the manufacturers namely Reliance Industries Ltd. and Terene Fibres (I) P. Ltd. are manufacturing Polyester Staple Fibre. Pure Terepthalic Acid (PTA) and Mono Ethylene Glycol (MEG) are reacted at three different stages into a polymer. The object of such polymerisation is to achieve the desired viscosity in the polymer which viscosity is absolutely imperative for the manufacture of PSF as technologically required. The technology as well as the consequent viscosity may differ in accordance with the process description of the authors of such technologies such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... okarpada and a factory at Murbad, Thane. The appellant sold the waste to MPPL at a price less than Rs. 35/- per kg. It is claimed by the appellant that it was under physical control upto October 1993. In case of Reliance Industries matter, MPPL which purchased the said waste sold only 5% of the said waste purchased by it to L.D. Textiles (hereinafter referred to as LDT) either directly or through intermediaries such as Venus Enterprises, Goyal International, Arihant Enterprises, etc. Rest of the 95% was sold by MPPL to other buyers. All sales by MPPL whether to the intermediaries or through other buyers were at the price of Rs. 35/- per kg. 4.It transpires that in December 1994, the department started investigating into the purchases of waste by LDT from MPPL and the other said intermediaries. The department drew samples from stock of waste lying with the appellant as also with MPPL and subjected the samples to test. Samples were also drawn from the premises of LDT. Statements of various persons from Reliance Industries, MPPL, the said intermediaries and LDT were recorded. Show cause notice dated 4-9-1996 was issued charging the appellant that the entire clearances of the said cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore us that the show cause notice and the proceedings do not produce any evidence to show that what was cleared by the appellant was not crimped or fibre waste but was PSF. It is submitted by the counsel that test reports of samples drawn in February 1994 prior to the commencement of investigation as well as those drawn on commencement of investigation in December 1994 confirmed the same to be of waste. He refers to page 66 of the appeal. The test results read inter alia - "Crimp waste : The sample is in the form of white out pieces of tow of variable length. Crimped - uncrimped (less than 2 m in length) and is composed of all polyester. Sample used up. Based on the sample as received it may be considered as waste of synthetic staple fibres of polyester." 8.They also invited our attention to test reports at pages 76 and 77 as follows : "CLR/SC-126/424 : Identification Mark 38598 : The sample consists of white filaments of varying lengths and of uniform diameter. It is free from extraneous matter and fused filaments. The fibres are composed of polyester, do not have any defect or deformity. CLR/SC-126/426 Identification mark Bag No. 29741 : The sample consists of cut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ector of MPPL at pages 131 and 133 of the appeal to the effect that at Bhokarpada godown they used to get the waste processed by contract labour and they also used to process the waste at Murbad factory. This fact has also been mentioned by one of the appellants namely Suresh Goyal of Goyal Synthetics. 12.The fact that LDT paid a higher price to the intermediary from whom it purchased the waste when compared to the price at which the appellant sold to MPPL and the price at which MPPL sold to intermediaries cannot lead to the conclusion that what was cleared by the appellant was not waste. LDT may have paid a higher price for various reasons such as to increase cost of raw material to show lesser profit etc. The fact remains that all sales by MPPL whenever to LDT or to the intermediary or, other buyers are uniform, i.e. Rs. 35/- per kg. 13.Last but not least, it is emphasised by the learned Senior Counsel that the mere fact that the test report of samples drawn at LDT showed PSF cannot establish that what the appellant cleared was not waste. The fact that samples drawn at the appellant's factory and at MPPL were found to be waste would show that it is not established that the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Q. No. 14, as follows : "Q.14.Please peruse Invoice No. 1014 dated 17-8-94 of M/s. India Polyfibres Limited available at page 105 of the seized record No. 33 for the supply of Polyester Staple Fibre @ Rs. 79.212 per kg. excluding the C. Ex. duty and Invoice No. 001025 dated 17-8-94 of M/s. Arihant Industries Ltd. available at page 185 of the seized record No. 9, for the supply of Polyester Crimped Waste @ Rs.81.50 per kg. (Rs. 75.50 per kg. without C. Ex. duty). These documents also indicate the value of the goods. These documents indicate, contrary to your answer to Q. 13 above, that the price of Polyester Staple Fibre and that of Polyester Waste on or about the same time are identical or marginally different. Please clarify. A.It is to be noted here that the prices of Polyester Staple Fibre have been on the continuous rise since April, 94. A commitment to purchase Polyester Staple Fibre till completed the ...... is bound to supply the fibre till the commitment is completed. In this case our payment terms with the two suppliers also differ substantially. In that the payment to India Polyester is made on an immediate basis, where as the Polyester Waste purchased from Reliance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Industries Ltd. and that in fact the goods were not waste but good quality fibres. The purchasers of the goods, namely waste, could not have converted it into a good quality fibre within such a short time. He also stated that practically the goods were sent directly by Reliance Industries from Murbad to LDT as is evidenced by transport documents to show the consignor and consignee as LDT. The processing by the so called Goyal International etc. is not a believable story. One more fact which he emphasises is that during the relevant period MPPL did not have facility of processing the waste. They had their facility, no doubt that was anterior to the occurrence in this case. 18.We have considered the rival submissions. The first point which we deal with here is the waste. Are the goods sold by Reliance Industries to MPPL waste or the fibre? If we look into the tenor of the argument of the learned Consultant for the Respondent from the facts narrated in the earlier portion of the order, it would mean that no waste has emerged in the manufacture of staple fibre. It is technically not possible to manufacture fibre without the emergence of any waste. To treat the figures of clearance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isture content checking. After this, waste was also subjected to heat setting to set the undrawn content in the waste. The entire process has been described by the deponent regarding the waste. When this piece of evidence is there, the department has not produced any evidence to controvert the same. When direct evidence is emerging in this case, the department has failed miserably to prove that what is sold was only staple fibre. Once we come to that conclusion, the very foundation of the department's case is removed. 21.The point relating to limitation etc. (except what is stated in the later portion of this paragraph) is unnecessary for us to consider because what is contained in the evidence of Yogesh Mehra really clinches the issue in favour of the appellants. It is true that the learned Consultant in his usual thorough way brought to our notice various instances or the circumstances and argued that there has been a surreptitious act committed by the manufacturer to remove the staple fibre in the guise of waste and he pointed out the several paragraphs which we have referred to in the earlier portion of our order. However the said paragraphs of the show cause notice do not le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts which are emergent spinnerettes, is subjected to crimping. The waste consists of that part of the tow which is not crimped to the required degree on account of mechanical failures. The other is fibre waste consisting of uneven length of fibre resulting at the stage of cutting of fibre to uniform length and its baling. It is not disputed by either side that such waste can be processed in order to obtain fibre. Notification 44/80 exempts from duty synthetic and artificial staple fibres manufactured exclusively out of waste of such fibre on which duty has been paid by processes like garnetting, combing etc. which do not involve recycling of such waste. This notification therefore recognises the fact that fibre can be obtained from waste by fairly simple mechanical processes which do not involve recycling. The decision in Swadeshi Polytex Ltd. v. CCE - 1999 (109) E.L.T. 998 has already been referred to in the order of the Member (Judicial). 25.This order has also dealt with the issue that, if the department's case were to be accepted, it would mean that no waste of the two kinds under consideration would not at all arise in the manufacture of fibre. The representative of the depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he factory at Murbad of MPPL in which the waste was processed was closed from July 1994 onwards (as stated in the statement of Ramchandra Saini, its Director) does not appear to conclusively prove that MPPL could not have carried out the process. In the same statement, Ramchandra Saini says that "sometimes it happened that the buyers have requested us to get it sorted, cleaned and cut (manually) and hence such process was done at this premises by the contract labours on behalf of buyers." Most of the buyers of the goods from MPPL have in their statements said that such manual sorting was done by one Ramlal Makhan. The record does not indicate that any serious attempts were made to locate Ramlal Makhan and question him as to whether he carried out the process in question. The claim made by the appellants that the fibre was recovered from waste mainly would have been reverted if it could be done that no such process is carried out or that, even if waste is subjected to any process, no fibre was recovered from him. This could have been done locating and interrogating Ramlal Makhan. This has not been done. The claims made in this regard by the appellants therefore must be considered to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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