AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (2) TMI 329
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....th are 100% EOU. 3. An intelligence was received that some 100% EOU were diverting the imported POY and PTY drawn out of POY without payment of duty by fabricating records to show that goods were transferred under AR 3A against CT 3 form from one 100% EOU to another. The information also indicated that the units purportedly receiving the yarn were engaged in the manufacture of 100% cotton goods and use only cotton yarn for manufacture of goods but were falsely showing consumption of PTY/PFY. In these set of facts, the factory premises of M/s. RTL, APL and STL were searched. Certain documents were recovered and the statements of various persons were recorded. On the basis of these documents and statements, show cause notices were issued to M/s. RTL, M/s. APL and M/s. STL to recover Central Excise duty on diverted PTY/PFY jointly and severely along with interest and imposition of penalty and penalties on other co-noticees. It was also alleged that it was a well-planned conspiracy to defraud revenue by M/s. RTL, M/s. APL and M/s. STL. As M/s. RTL would get CT 3 certificates issued for procurement of PTY/PFY, the CT 3 would be used by SPL and APL to clear PTY/PFY under AR 3A, the ya....
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....the same were entered in raw material register under the signature of Circle officer. The appellants have maintained all required records and filed RT 11 returns regularly. The appellants had submitted all the documents relating to the supply of PTY/PFY from M/s. APL and M/s, SPL. He further submits that the appellants had filed a detailed chart showing the export of 4,05,353.3 Kg. Towels with border and 25,821.070 Kg. towels without border. The required quantity of PTY/PFY received by the appellants during the period August, 1995 to April, 1996 and during the period 1.11.1995 to 31.5.1998 , the appellants has (exported total quantity of approx. 725 MT of towels out of which 405 MT exported with border which contains PTY /PFY and the remaining quantity was without border in which no PTY/PFY was used. A search was conducted in this case in the premises of the suppliers on 17.7.1998 and 23.7.1998. Thereafter, in follow up action, the appellant's factory was visited on 11.9.1998. Records were resumed from the factory of the appellants but no discrepancy was found therein. At the time of visit of the factory of the appellants, 300 Kgs PFY was lying in the factory whereas the case o....
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....aments vs. CC (Port) Kol [2009 (233) ELT 289 (SC)] 5. Tribhuvandas Bhimji Zaveri vs. CCE [1997 (92) ELT 467 (SC)] 6. PGO Processors (P) Ld. Vs. CCE [2000 (122) ELT 26 (Raj)] 7. Basudev Garg vs. CC [2013 (294) ELT 353 (Del)] 5. He also relied on the CBEC circular No. 171/5/96-CX dated 2.2.1996. In the alternative, he submits that as the excise duty is payable by the manufacturer of the goods, therefore, if the allegation of the department is taken to be true in that case, the supplier has diverted the goods i.e. PTY/PFY to in Bhiwandi market as per the statements of the suppliers, in that case, the duty is to be demanded from the supplier only not from the appellant, as held by this Tribunal in the case of VVN Mfg. and Investors Ltd. vs. CCE, Vadodara [2007 (218) ELT 407 (Tri-Ahmd)]. 6. On the other hand, learned AR opposed the contentions of the learned Counsel and drew our attention to various submissions recorded during the course of hearing. Particularly to the statements of Shri Ravinder Garg, Shri H P Bharadwaj, Shri Jagbir Singh, Shri Sanjeev Khera, Shri Susheel Verma, Shri KK Jhunjhunwala, Shri Shyam Bihani and various transporters and broker....
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....ods and use only cotton yarn for manufacture of goods but falsely showed consumption of PTY which means that appellants did not require POY / PTY as raw material in manufacture of export goods. 9. These allegations of the Revenue are based on various statements of supplier, transporters and the statement of persons on behalf of the appellants. On the basis of these statements, Revenue has concluded that the suppliers were engaged in diversion of imported goods without payment of duty and appellant also issued CT 3 certificate to the suppliers to procure goods without payment of duty which have been diverted to the open market on the instructions of the appellants by the supplier. Therefore, the appellants are liable to pay duty along with interest and penalties on both the appellants have been imposed. 10. The defense of the appellants is that yarn in question i.e. PTY/PFY is an input for them to manufacture terry towel which have been used in manufacture of export goods which were ultimately exported which is not in dispute. In support of this contention, the case of the appellants is that during the course of investigation 300 Kgs. of PTY was physically found in their facto....
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....either the transporter nor the employee of the transporting company. We also find that all the statements recorded of the supplier recording the name of the transporters but none of the transporters were made parties to the show cause notices and no proceedings were initiated against the transporters. Therefore, reliance on the statement of the transporters creates doubts. The Revenue has also relied upon the statement of some of the employees of the appellants namely Shri Ravinder Garg, (one of the appellant), Shri H P Bharadwaj, Shri Jagbir Singh, Shri Sanjeev Khera, Shri Sushil Verma, Supervisor, Shri Kartar Singh, Inspector. We have seen statement of these people. Infact in the statement of Shri Ravinder Garg, it is admitted fact that they are using PTY for making border of towel and for stitching the sides. The percentage of yarn was 5-6 % of the total weight of towel. The statement of Shri Sanjeev Khera, Director (Tech) also confirmed that when they have orders for using the PTY in the borders of the towels, the requirement was about 4% and the statement recorded on 11.9.98 also submits that they are using the PTY as raw material but the past one a half years, they have had n....
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....been made out only on the basis of the statement of Shri Baldev Singh, Managing Director of the appellant and no other evidence in the form of to manufacture of such huge quantity, the consumption of electricity, additional packing material, payment for purchase of additional packing material, payment received for clandestine removal goods, how the goods were transported has been brought on record by the Adjudicating Authority or the inspecting team, therefore, relying on the above said decision cited hereinabove, we hold that charge of clandestine removal is not sustainable in the absence of any corroborative evidence to the statement of Shri Baldev Singh, Managing Director," 14. In this case also, the Revenue have relied on the assumptions that the PTY/PFY is not an input for the appellant to manufacture their final product which is found incorrect. 15. Therefore, in the absence of any corroborative evidence produced by the Revenue, the case of the Revenue is not sustainable, 16. In these circumstances, as appellants have been able to prove that PFY/PTY is the raw material and they have procured these raw materials on the strength of CT 3 issued by appellant for procurem....