TaxTMI 
TaxTMI 
2015 (2) TMI 269
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....ent of duty. The said goods were sold to KGDL without mentioning the description of the fabrics on the invoices but only indicating sort numbers. 3. During the investigation, it was also revealed that there was another unit by name M/s. Paramount Textile Mills Ltd . (for short, PTML) which was located near the appellant No.1 unit and the said unit also manufactured identical Denim Fabrics in addition to Grey Cotton Fabrics. The same were cleared to KGDL without payment of duty and without declaring the description. Statements were recorded from Shri S. Saravanakumaran, Asst. Weaving Manager, Shri R. Sivaramakrishnan, Finance Manager and Shri M. Thiagarajan, Managing Director of PML. Statements were also recorded from Shri S. Swaminathan, Deputy Weaving Manager, Shri N.R Janardhanan, Office Manager and Shri E. Thangapandian, Accountant of PTML, and various documents were recovered. Accordingly a show cause notice No.06/2006 dt. 2.8.2006 was issued to PML (Appellant No.1) proposing recovery of duty of Rs. 97,22,578/- along with interest on the Denim Fabrics cleared clandestinely during the period from July 2001 to May 2002 and further invoking extended period and also proposing im....
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....ule 4 (5) (a) of Cenvat Credit Rules as the same were further processed by the original manufacturer M/s.KGDL who in turn cleared on payment of duty for domestic market or cleared for export without payment of duty either under Bond or Letter of Undertaking. He submits that the appellants have not carried out any further processing of fabrics and they manufactured only grey fabrics which is not liable for Central Excise duty. He further submitted that they were receiving duty paid cotton yarn from M/s.KGDL and the same were sent for dyeing without availing cenvat credit whereas M/s.KGDL have availed deemed credit. They have only manufactured grey fabrics and the same were returned to the principal manufacturer. He also submits that since they were following the procedure prescribed under the rules as a job worker, they have intimated to the department at every stage. He has relied upon the following letters: (1) Letter dt. 28.6.2001 issued by M/s.KGDL addressed to the Asst. Commissioner of Central Excise Coonoor Division, Mettupalayam. (2) Letter dt. 13.7.2002 (3) Letter dt. 6.8.2002 issued by the Superintendent of Central Excise, 27, Rajaram Street, Tirumangaiam addressed....
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....sis. The appellants have sold the Denim fabrics to KGDL whereas the same were cleared under challans without payment of duty. The production records recovered from the appellants' unit confirmed that manufacture of Denim fabrics of different colours of 3 thread and 4 thread including Grey Warp and Grey Weft. The appellants had suppressed the facts of manufacture of denim fabrics instead they have declared manufacture of grey cotton fabrics other than Denim fabrics. In the ER-1 the appellants have declared the goods as "Unprocessed Cotton Fabric" instead of declaring it as "Unprocessed Denim Fabrics", which is dutiable. The appellants have only mentioned the sort numbers in their invoices and never mentioned the description of the Fabrics with deliberate misdedaration and wilful suppression of facts. He submits that in the correspondence exchanged between the appellants and the department, as relied upon by the Ld. Advocate, nowhere it was brought to the notice of the department regarding manufacture of "Unprocessed Denim Fabrics" and all the intimations were related to availment of deemed credit by M/s.KGDL . Nowhere, it is stated that the appellants were manufacturing "Unproce....
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....ppellants as well as from M/s.KGDL which were not considered by the Tribunal to give a finding on the extended period of limitation. We have examined the correspondences relied upon by the appellants as referred to supra. It is on fact that the appellants are manufacturers of grey cotton fabrics other than Denim fabrics falling under Chapter Heading 5207.20 attracting "Nil" rate of duty. Investigation also revealed that the appellants have manufactured and processed Denim Fabrics and cleared the same to M/s.KGDL . It is noticed that the appellants adopted two methods. On the one hand, they have received the yarn from KGDL and manufactured grey denim fabrics on job work basis and returned the same to M/s.KGDL who is the principal manufacturer. They have also manufactured Denim Fabrics on their own account wherein they have purchased the yarn, manufactured the Denim Fabric and sold to KGDL on principal to principal basis. The adjudicating authority has already dropped the demand on denim fabrics manufactured and cleared on job work basis and confirmed the demand in respect of yarn manufactured by the appellants on their own account and sold to KGDL. We find that the appellants are he....