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TMI Blog2005 (9) TMI 197X X X X Extracts X X X X X X X X Extracts X X X X ..... me waste if it got entangled or messed up or if the tubes of less weight were cut. It was for the assessee to show categorically that this had happened. The log sheets deal with tubes. But without question the weight shown in the log sheets is of yarn. This prima facie indicates that tubes having yarn of less than 1 Kg. are also being logged. Thus the Collector was right that the log sheets show presence of yarn on tubes, even of 1 Kg. or less. The Collector had specifically noted that, if the assessee had destroyed the tubes of 1 Kg. or less of POY, the reason why production was shown in the daily log sheets was not explained. Thus fresh hearing of the appeal by the CEGAT would be the appropriate course. The relevant aspects like presence of the articles in the finishing room, effect of mention in the log sheets and effect of non-maintenance of required records and the allegations contained in the show cause notice to apply extended period of limitation must be considered in proper perspective. At the same time, if the assessee wants to place reliance on any material on record the CEGAT should also consider it." 2.In order to facilitate discussion of the issue in dispute, we may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of all varieties of waste would be the same. We may read Paras 14 15 of that order :- "In the light of the reasons stated above, I conclude that the wastes arising in the manufacture of man-made yarn in M/s. Reliance Textile Industries Ltd. are classifiable under T.I.18(IV) and would be liable to be charged Central Excise duty as provided thereunder". Order "In order that wastes arising in or in relation to the manufacture of man-made filament yarn by M/s. Reliance Textile Industries Ltd., should be classified under T.I. 18(IV) and the classification list in question are approved accordingly." 7.The contention of the ld. Counsel is that it is clear from this order that both sides were fully aware as to how waste is to be dealt with by the appellant. Reference is also made to several other correspondences to show that the appellant's practice was to treat yarn waste also as waste and to account them together with other waste. During the hearing, the RG-IV for the month of April, 1983 was produced before us. That RG-1 has the heading waste yarn (Polyester filament yarn waste). It is also seen from the RG-1 register that on 31-12-83 the stock was 2334017.426. This quantity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue to hold that 1 Kg. or less yarn wound on bobbins had been removed in any manner other than as waste. The counsel has emphasized that the accounting of such bobbins separately in the log sheets is no reason to hold that such yarn was cleared as yarn and not as waste, when subsequent accounting (RG-1 etc.) and disposal is seen to be as waste only. The ld. Counsel has also submitted that accounting at the machine stage in the log sheet as yarn, is no reason to hold that whatever is accounted in the log sheet got subsequently disposed of as yarn itself and no part was treated as waste. It is his explanation that after the winding of the yarn on bobbins on the machines, the bobbins are transferred to finishing room, yarn which is capable of being disposed of as yarn would be packed so and less than 1 Kg. bobbins taken out, the yarn cut and released from the paper tubes and added to waste and disposed of as such. The contention of the ld. Counsel is that all goods produced on machines necessarily do not get accepted, on quality control, as marketable products and for some reason or other part of the production goes as waste. 10.The Id. Counsel has also pointed out that all thro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arn on bobbins of less than 1 Kg. remains accounted in log sheets. During inspection, the Central Excise officers also found such bobbins in the finishing area. Therefore, the production of yarn on bobbins is not in dispute. The only dispute is how the appellant disposed of such yarn and whether such disposal was on payment of appropriate Central Excise duty. The first question that would arise is how such yarn was accounted by the appellant after the log sheet (machine) stage. The other question is whether such yarn was released from the tubes by cutting it and it was added to the waste arising at other stages. There is no account kept or produced before any authority about such cutting or adding to the waste arising at other stages. Therefore, the findings on these have to be based on the collateral evidence available. As already noted, there has been considerable contemporaneous correspondence between the appellant and the jurisdictional excise authorities about waste arising at the yarn stage. The aforesaid adjudication order of the Commissioner dated 3-3-84 specifically took note of the waste arising at on the "tubes" and held that such waste is also classifiable along with ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise Rules invoked in the show cause notice also does not appear to be a reasonable finding. 14.While the appellant's explanation is that yarn on less than 1 Kg. bobbins formed part of the overall clearance of waste from the appellant's factory, it is also to be noted that there is no evidence on record pointing in the direction of clearance of less than 1 Kg. yarn in any other manner, whether as yarn itself or as some other goods. There is no evidence about removal of these items as yarn or the appellant having ever sold such yarn or any other party selling the appellant's yarn of less than 1 Kg. bobbins as yarn. Thus, the materials on record support only the appellant's explanation. In these circumstances, we are of the opinion that the highest probability is that the appellant disposed of the yarn on 1 Kg. or less bobbins as waste only. 15.Revenue's case is dependent entirely on the gap in the accounting followed by the appellant, inasmuch as various varieties of waste arising in the appellant's unit at various stages of manufacture are not accounted categorywise separately and stored separately. Needless to say, commercial accounting would depend upon the commercial signific ..... X X X X Extracts X X X X X X X X Extracts X X X X
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