TaxTMI 
TaxTMI 
2013 (11) TMI 989
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.... and 1995-96. During this period the appellant in terms of Rule 55 of the erstwhile Central Excise Rules, 1944, were filing quarterly return in Form RT-5 regarding principal raw-material used for manufacture to polyester filament yarn and in those return they were mentioning the generation of various type of waste- polymer waste, chip waste and yarn waste arising at various stages of manufacture of filament yarn from DMT, PTA and MEG. 1.2 The factory of the appellant was visited by the Assistant Director (Cost) of the Central Excise Commissionerate, Allahabad on 08.10.96 in course of which the manufacturing process was studied and various records maintained by the appellant, were scrutinized. On that day itself i.e. 08.10.96, a letter was issued by the Department to the appellant seeking clarification on certain points which were replied by appellant under their letter dt. 15.10.96. Thereafter, on 09.12.96 another letter was issued by the Department seeking further clarification which was replied by the appellant on 12.02.97. On 15.03.99 a Show Cause Notice was issued to the appellant alleging that:- (a) During 1994-95 and 1995-96, the appellant have not declared the producti....
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.... 1994-95 & 1995-96, the appellant had produced 94.297 MT and 93.682 MT of P.P. Chips (waste), while in the RG-1 Register, during these years they have recorded the production of only 8.200 MT and 11.961 MT of P.P. Chips (waste) respectively and on this basis duty has been demanded on that is 167.818 MT of polyester chips (waste) that 'P.P. Chip waste' is nothing but polymer waste and this waste of the same quantity is reflected in quarterly RT-5 Return filed during 1994-95 an 1995-96, that the Department's presumption that this waste is different from polymer waste, is incorrect, that the waste referred to in para 4 of the Show Cause Notice has been reflected in the RG-1 Register as well as in RT-5 Returns and had been cleared on payment on duty, that this is clear from the report of the Range Superintendent vide his letter dt. 21.09.04, addressed to Superintendent of Central Excise (appeal), which had been submitted on the directions of the Commissioner (Appeals), that in this letter, the Range Superintendent after verification, had reported that during 1994-95, 94.297 MT of polymer waste and 8.200 MT of chip waste had been generated and had been accounted for in the Central Excis....
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....ng first to the duty demand of Rs. 5,19,110/- on alleged clandestine clearances on 31.075 MT of polyester chips during 1995-96, the allegation in this regard in para 6,7 & 8 of the Show Cause Notice are as under:- Whereas from the investigation, it also appears that the party have failed to reconcile the quantity of 35.075 MT of polyester chips during the year 1995-96. While analyzing the figures relating to polyester chips available in Annexure-4, it has been found as under:- (a) O.B. of P.P. Chips as on 01.04.95 = 482.859 MT (b) Polyester chips manufacture during 1995-96 = 24174.270 MT (c) Total (a+b) = 24657.129 MT (d) Clearances outside the factory = 704.325 MT (e) Clearances for self-consumption in the manufacture of yarns = 23347.139 MT (f) Total (d+e) = 24051.464 MT (g) C.B. as per calculation = 605.665 MT (h) C.B. as as per Balance Sheet = 570.590 MT (i) Differences (g-h) = 35.075 MT The party were asked to clarify the differences of 35.075 MT of polyester chips but instead of giving any specific reply they have indicated in their reply in Annexure-....
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.... have indicated 35.075 MT against the moisture content in their clarification dt. 12.02.97 i.e. Annexure-6 only with intent to reconcile the account of P.P.Chips during 1995-96. Actually it has not taken place but they have removed it clandestinely without payment of Central Excise duty. Since the party have not recorded the actual production of P.P. Chips and clearances made against captive consumption in their RG-1 Register, the aforesaid fact did not come in the knowledge of the Department and clearances against captive consumption in their RT-12s. 5.1. On perusal of the above para extracted from the Show Cause Notice, it would be clear that the basis of allegation of duty demand of Rs. 5,19,110/- on alleged clandestine clearances of 35.075 of polyester chips during 1995-96 is that while as on 31.03.96 the closing balance of the polyester chips as per the Central Excise records and as per the figures given by them was 605.665 MT, the closing balance of polyester chips as on 31.03.96, as given in the balance sheet of 1995-96, was 570.590 MT. The appellants contention is that this difference is on account of moisture content of polyester chips, as the weight of polyester chips....
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....r Central Excise Tariff heading 55.5.10. The polyester chips (waste) is a waste of polymer chips and is classified under Central Excise Tariff heading 3907.60. Therefore, both the products i.e. polyester chips waste and polymer (waste) are different. The polyester chips waste is many times costlier than polymer waste. Hence it appears that the quantities mentioned in Annexure-4 against the column of production of polyester chips(waste) are undoubtedly for the chips waste manufactured during 1994-95 and 1995-96 and do not contain the production figures of polymer waste i.e. hard waste yarn. 6.1 Thus according to the Department, during 1994-95 and 1995-96 the appellant had produced 94.297 MT and 93.682 MTs respectively of 'P.P. Chips waste' while during these years in the RG-1 Register, they have recorded the production of 8.200 MT and 11.961 MT respectively of 'P.P. chip waste'. The appellants contention is that the figures of 94.297 for 1994-95 and of 93.682 MT for 1995-96 as mentioned in para 4 of the Show Cause Notice are the figures of polymer waste which arises at the stage prior to manufacture of polymer chips and in terms of letter dt. 21.09.04 of Range Superintendent, ad....