AI Drafter 
TaxTMI 
TaxTMI 
1999 (9) TMI 569
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....C.E., dated 24-11-1979 and 344/86-C.E., dated 19-6-1986 on the ground that the woollen shawls and fabrics were being subjected to the process of calendering with plain rollers in the premises of M/s. Vipan & Co. where the goods are claimed to be hand washed, whereas M/s. Essma Woollen Mills were carrying out the process of machine washing, stentering and calendering in their premises. It was alleged by the Revenue that M/s. Vipan & Co. was dummy unit floated by M/s. Essma Woollen Mills. Central Excise Officers visited the factory premises of M/s. Essma Woollen Mills on 25-10-1990. On perusal of the CL effective from 6-3-1986, it was observed that the appellants claimed exemption on woollen fabrics and shawls under Heading 51.07 and 62.02 of the CETA, 1985. It was claimed by them that these goods were received by them for calendering with plain rollers and were not subjected to any other process in the same factory under Notification Nos. 295/79 and 344/86-C.E. 3. The visiting officers conducted physical verification of the stock available in the factory premises of appellants. It was found that the goods stated to have been received from M/s. Vipan & Co. bore uniform pin ho....
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....ing in some places which was not possible if the piece of fabric had been put on a stentering machine. As the goods lying in the premises of M/s. Essma Woollen Mills appeared to have been processed on stentering machine and calendered but were shown to have undergone the process of "Calendering on plain rollers" were seized as they were considered liable to confiscation. 7. Shri M.L. Suri in his statement dated 29-10-1990 stated that M/s. Essma Woollen Mills was an independent processing house engaged in the processing of woollen shawls and fabrics, shoddy shawls, fabrics and blankets, man-made shawls, fabrics and blankets; that grey goods were being received from a number of merchants/manufacturers for processing, that no grey goods were owned by them; that two parties namely, M/s. Essma Woollen Textile (P) Limited and M/s. Ess Emm Family Trust were major suppliers of grey fabrics to them. Shri M.L. Suri stated that he was Karta of HUF who were owner of M/s. Vipan & Co.; that they were engaged in the washing of woollen fabrics and shawIs; that 60% of their business was from M/s. Ess Emm Family Trust; that after hand washing, they were sending goods in toto to M/s. Essma Wo....
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....iscation. 10. Shri K.L. Rekhi, ld. Consultant submits that the shawls were specific items under chapter 62 relating to cloth accessories with nil rate of duty; that the Commissioner misapplied chapter 51 relating to woollen fabrics and its Notification Nos. 295/79-C.E. and 344/86-C.E.; that the correct Notifications are 108/86-C.E. and 65/87-C.E.; that the chapter 62 unlike chapters 51, 52, 54 and 55 relating to fabrics, did not have any deemed manufacture Note relating to processing; that there was only one stage duty on shawls; that this duty is chargeable as soon as a marketable shawl emerged; that this stage is off-the-loom stage; that in the vast rural market as well as poor urban consumers, shawls, lohis, blankets etc. are purchased and used without processing. Ld. Consultant submits that the processing like dyeing, printing, embroidery etc. are undertaken on some shawls to cater the tastes of a different strata of well-to-do consumers. Ld. Consultant submits that the very fact that it is the department's own case that M/s. Essma Woollen Mills received the shawls from merchants like Dev Textiles proves that the shawls were sold by weavers to merchants; that it clearly....
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....s that the use of power operated stenter is only Department's assumption seen by no one and based on no evidence. He submits that it is well settled law that test reports on samples drawn from current lots cannot apply retrospectively to 4½ years back period. He submits that the customer merchants have given affidavits and certificates that they had sent their goods for calendering only and that on verification their current lots were found to be without pin holes and released, yet the adjudicating authority has included their past liability (for 1986-87 and 1987-88 etc.) in the quantification for demand on mere assumption. 12. Ld. Consultant submits that the small quantity of woollen fabrics were grey, unprocessed i.e. calendered and therefore chargeable to nil rate of duty under chapter 51 or under Heading 51.07 read with Notification No. 295/79-C.E. and 344/86-C.E. He submits that there was no evidence placed on record about financial involvement between M/s. Essma and M/s. Vipan & Co. nor there was any flow back of profit from M/s. Vipan & Co. to M/s. Essma. He, therefore submits that the allegation that M/s. Vipan was a dummy unit of M/s. Essma remains unsubstan....
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....we find that the samples were taken on the date of visit of the officers and the demand has been raised subsequently for the last 4½ years. Results and the samples taken on particular date or time cannot legitimately be applied to all cases of clearances during the last 4½ years. In that some more evidence was needed which was not collected and placed on record. As against this the appellants got evidence from the field that the shawls were being sent for hand washing and sun drying. Stenter frames were being used only to ensure that the shawls did not shrink in the course of drying. Having regard to the above discussion, we hold that the sufficient material has not been collected to apply the contentious test result of samples drawn in the month of October, 1990 to clearance starting from 1986 onwards. 16. In regard to classification of the product, we find that the appellants have been claiming that they had been declaring the goods as shawls and had filed CLs classifying them under Chapter 62. Shawls were not manufactured by the appellants. There is ample evidence to show that the merchants and other customers were sending the shawls to the appellants under....