TaxTMI 
TaxTMI 
2001 (10) TMI 867
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.... power, while the processes of dyeing, bleaching and scouring will be done without the aid of power/steam. Under Notification No. 40/95-C.E., dated 16-3-95, woven fabrics of cotton when subjected to the processes specified in the table annexed to that Notification (hereinafter referred to as the 'minor processes'), even when undertaken with the aid of power, enjoyed exemption from the payment of central excise duty. This exemption was however, not available to a factory having facilities for carrying out bleaching, dyeing or printing (hereinafter referred to as the 'major processes'), with the aid of power/steam. The Commissioner of Central Excise, who adjudicated the matter in his Order-in-Original dated 5-3-2001 held that the assessee was using power while undertaking the process of dyeing and therefore, the benefit of Notification No. 40/95-C.E. was not available to them. He also concluded that the relevant facts with regard to the use of power while undertaking major processes have been suppressed by the assessee from the Department. He confirmed the demand of Rs. 1,74,53,871/- for the period 1-4-95 to 9-2-98 and imposed a penalty of Rs. 1,74,53,871/-. A penalty of Rs. 5,00,000....
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....horities. Their representation to the U.P. Power Corporation Ltd. had been rejected. The ld. SDR referred to the amending Notification No. 83/95-C.E., dated 24-4-95, under which the proviso as contained in Notification No. 40/95-C.E. had been substituted and the benefit of exemption available under Notification No. 40/95-C.E. had been denied to a factory in which any process, other than those specified in the table annexed to that notification (non-dutiable minor processes) had been undertaken. The ld. SDR submitted that there was a clear case of suppression of the facts by the appellants. They had the existing facilities for undertaking dutiable processes but stopped paying Central Excise duty. She pleaded that in the facts and circumstances of the case, the duty has been correctly demanded and the penalties imposed were also justified in the facts and circumstances of the case. In rejoinder, the ld. Advocate submitted that the reference to the amending Notification No. 83/95-C.E., dated 24-4-95 has been made by the ld. SDR for the first time and this amending notification neither found any mention in the show cause notice nor it found any discussion in the impugned order-in-or....
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....hat is to say, mechanically by extracting or mechanically squeezing out water from the fabric. In the proviso to that Notification No. 40/95-C.E., the exemption in favour of the above minor processes was however made non-applicable to a factory having facilities (including plant and equipment) for carrying out the bleaching, dyeing or printing or any one or more of these processes with the aid of power/steam on cotton fabrics. The implications of this exemption notification were that if a unit was undertaking any one or more of the above specified minor processes alone, even if with the aid of power no Central Excise duty was leviable on the processed fabrics i.e. the fabrics subjected to the above named minor processes. If such a unit had been undertaking the processes of bleaching, dyeing or printing, the major processes, without the aid of power then also the benefit of Notification No. 40/95-C.E. remained available to such a unit in respect of the cotton fabrics processed. However, if the processes of bleaching, dyeing or printing, the major processes, were undertaken with the aid of power, in any factory then the exemption even in favour of the minor processes under the afo....
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.... Process, bleaching, dyeing and scouring without the aid of power. (ii) Process of padding, squeezing and drying mechanically with the aid of power." 7. Thereafter from 1-4-95 onwards when the appellants had surrendered their licence/registration certificate, no objections appear to have been raised with regard to the working of the unit without the aid of power. All these years from 1995 to early 1998, no dispute appears to have arisen on the issue of non-use of power in any of the major processes. The exemption in favour of minor processes even when undertaken with the aid of power continued during these years. The appellants installed a boiler in Jan. 1998 and thereafter, again obtained a registration certificate from the Central Excise Deptt. to manufacture excisable goods on 11-2-98. It appears that after the appellants obtained again the registration certificate from the central excise deptt. on 11-2-98, the Central Excise officers visited the premises of the appellants on 5-3-98. There is no mention of any visit, enquiry or investigation between the period 1-4-95 to 5-3-98. 8. The show cause notice in the present proceedings was ....
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.... Board/Corporation Rules, during the course of checking Electric connected load of small and medium class consumers (upto 100 H.P.) only those machines which are connected to Electric circuit are taken into account but those which are not in working order though present in the premises will not be taken into account. With regard to the point raised by you in your representation relating to checking on 14-11-96, in respect of checking report and actual/connected load, it is difficult to conclude if the machines detailed in the said report were actually connected or not and/or if they were in working condition or obsolete and junked. So it is not possible to accept or reject the stand of either side. Your representation being time-barred according to Consumers Regulations, 1984 is rejected. So far as the amount of assessment is concerned the Executive Engineer is being directed to act in accordance with Board's Order No. 1419-CU-2, dated 19-9-90 and 297-CU-2, dated 30-1-95, as already directed vide this office letter No. 1393-Com. Wing (Elec. Board) dated 30-11-99. 9. These reports made for the purposes of the State Electricity Deptt. do not establish that the cotton fabrics ....
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.... that the applicants had the facility (including plant and equipment) for carrying out bleaching, dyeing and printing with the aid of power or steam on cotton fabrics falling under Chapter 52 of the schedule to the Central Excise Tariff Act, 1985. For, the Department has not adduced even a single piece of direct evidence in support of the allegation that the applicants during the period 1995-96, 1996-97 and 1997-98 had such facility and so were not entitled to the benefit of Notification No. 40/95-C.E. and 41/95-C.E. both dated 16-3-95. The Department has throughout the S.C. Notice relied upon surmises and conjectures based on hypothetical situations which are in the real of imagination. The Department has although imagined and insinuated things which can be at best be termed wishful thinking only on the part of the Department because the Department has not based its case on any solid evidence but has just gone on to draw inferences and conclusions that suit its purpose. We do not find such evidence on record that could stand the test of scrutiny independently for substantiating the allegations insofar as the period in dispute is concerned. 11. It is also difficult to ag....
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....he following terms :- (a) The first relevant document is the Registration Certificate No. 3/Textile/R.V/93, dated 18-10-93 which bears the signature of Shri Daya Shankar, Superintendent Central Excise & Customs, Range V, Kanpur-I, as the authority issuing the Certificate. (b) The second most relevant document is the Ground Floor Plan of M/s. Saroj Textiles Ltd. (applicants) situated at G-37, Panki , Industrial Area Site No. 1, Kanpur. This Ground plan bears the signatures of Shri Daya Shankar, Superintendent under the word "Approved", besides the signatures of Shri R. Prasad, Inspector, Customs and Central Excise, Range I, Division I, Kanpur under the legend "Verified and found in order". (c) The third document is applicants letter Ref. No. STL/ EXCISE/95, dated 7-4-95 informing of the surrendering of the Excise licence No. 3/Textile/R.V/93. The letter was received by Shri R. Prasad, Inspector, who put his dated (7-4-95) signatures in token of having received the same. (d) The fourth document in this connection is letter C.No. 20-Misc./R.V/94/577, dated 23-5-95 of Shri ....
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....ot substantiated from the facts on record. We also consider that on the basis of the evidences brought on record, it is difficult to substantiate the charge of such a huge evasion of central excise duty spread over a period of 3 years. 14. The case of the deptt. is based on indirect evidence. Inferences have been drawn from the documents relating to electricity consumption. Statements have been read to assume use of power in dutiable processes, and existence of various machines have been taken as an evidence of their use. While a case of evasion of duties could be legally sustained on the basis of accepted indirect evidence and there is no bar in relying upon and accepting the validity of connecting circumstances with the act of evasion, in the present case, we find that no efforts were made to collect any evidence with regard to the fabrics cleared by the appellants. No investigations were made with reference to the orders obtained for processing and the disposal of the processed fabrics. The allegations related to the period 1995-98 and the show cause notice was issued in the year 1999. During the period in dispute, while the appellants have submitted information about....