Power-assisted manufacture defeats exemption where admissions and surrounding evidence show electric motors were used in tarpaulin stitching.

Power-assisted manufacture of tarpaulins was treated as sufficient to disqualify the respondents from the exemption, because admissions from the partner, staff and contractors showed that three sewing machines were fitted with electric motors and used in the stitching section. The Tribunal held that these statements, recorded during raid and investigation, constituted substantial evidence of power use, and the adjudicating authority erred in insisting on proof of the exact fabric stitched on the electrically operated machines. The respondents offered no plausible explanation to rebut the adverse inference. The order dropping the proceedings was set aside and the matter remanded for fresh adjudication with an opportunity to adduce further evidence.

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Issues: Whether the Revenue had adduced sufficient evidence to show that power was used in the manufacture of tarpaulins so as to disqualify the respondents from the exemption under the relevant notification and justify setting aside the adjudication order.

Analysis: The record contained admissions by the partner, storekeeper, security officer, helpers and contractors that three out of twelve sewing machines were fitted with electric motors and were being used in the tarpaulin stitching section. The Tribunal found that these statements, recorded during the raid and investigation, constituted substantial evidence that power was used in manufacture. It held that the adjudicating authority had failed to appreciate this evidence in its proper perspective and had wrongly insisted on identification of the exact fabric stitched on the electrically operated machines, despite the admissions and surrounding circumstances showing power-assisted manufacture. The Tribunal also noted that the respondents had not offered a plausible explanation to displace the adverse inference arising from the admitted use of electric motors.

Conclusion: The order dropping the proceedings could not be sustained and was set aside; the matter was remanded for fresh adjudication after giving both sides an opportunity to lead further evidence.

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