TaxTMI 
TaxTMI 
2017 (12) TMI 606
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....ected from electrical contractors of the appellant and also from the Tamil Nadu Electricity Board. SCN was issued to the appellant alleging clandestine clearance of goods for the period 07/2001 to 02/2002. After adjudication, the original authority confirmed the demand of Rs. 14,91,530/- towards duty liability on the cone yarn removed for the said period and imposed equal penalty. Besides this, separate penalty of Rs. 10.00 lakhs each on the Managing Director, Shri. R. Periasamy and Technical Director Shri P. Ashok Kumar as well as on Shri R. Thangavel, Proprietor of Devi Group of Textiles/ In appeal, the Commissioner (Appeals) upheld the same. Hence, the appellants are now before this Tribunal. 2. On behalf of the appellant, Ld. Counsel Shri M. Karthikeyan, submitted that the main allegation levelled against the appellant is that they cleared cone yarn (dutiable product) in the guise of hank yarn (exempted product). The said allegation is mainly based upon the case of the department that the appellants did not have reeling machines to convert cone yarn into hank yarn. The officers of the department had visited the premises on 28.07.2001. On such date, they had verified the stock ....
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....d show that the appellant was using generators etc. Merely because the electricity contractor deposed that it is not legal to use additional load without getting sanction from the Electricity Board, the department has arrived at the conclusion that the appellant has started operating/using the reeling machines only with effect from November, 2001. Another document relied by the department is the Bag stock Register seized from SVSM on 28.03.2003. He submitted that this is a private document maintained by SVSM, who is a third party to the proceedings. M/s. SVSM was engaged in warping and sizing of yarn and were procuring their supplies from various spinning mills. They also received supplies from Devi Group of Companies to whom the yarn was sent by the appellants. Thus, the department basing upon the documents recovered from SVSM has alleged that the appellants clandestinely cleared cone yarn. The other documents relied by the department are the statements from customers of the appellant. Most of them have retracted their statements and have also explained that they have purchased hank yarn from the appellants. That the statements of such persons cannot be relied or admitted as evide....
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.... yarn cleared under the invoices raised in the name of other weavers have actually been purchased by Shri R. Thangavel (broker, proprietor of SVSM) from the appellants. That Shri R. Periasamy, Managing Director of the appellant has stated that the sales of their yarn were effected as advised by Shri R. Thangavel. This means that the sale invoices were procured basing on the buyer's particulars furnished by Shri R. Thangavel. The sale invoices did not contain complete details of the consignees. That it can be safely derived that 23920 kgs. of cone yarn was sent to SVSM on behalf of Devi Group of Companies through Shri R. Thangavel by raising invoices of hank yarn in the name of non-existing weavers, thereby hiding the identity under Devi Group of Companies. He submitted that the statements of various purchasers of yarn from the appellant as well as the electricity test report would prove that the appellants were not operating the reeling machines prior to November, 2001. Therefore, though they have raised invoices for clearance of hank yarn during the disputed period, the same pertains to clearance of cone yarn in the guise of hank yarn. That, therefore the demand of duty and th....
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....ment of the Ld. Counsel that the appellant could have very well operated the five reeling machines with this earlier sanctioned load itself is not without substance. Though it may be legally permissible to operate the additional machines only after getting the sanction of additional load, there is no technical hitch to operate the machines with the earlier sanctioned load. Therefore, the allegation of the department that the appellants had not been operating or running the machines before November 2011, is not tenable. The stock verification report issued by Supdt. Shri Dhanasekaran dated 07/2001 would show that there was stock of 3593 kgs. of hank yarn in July, 2001. 5.2 Another document adverted to by the Ld. AR is the Bag Stock Register seized from SVSM. Undisputedly, the appellant are not directly clearing the goods to SVSM. They were supplying the goods to Devi Group of Companies who in turn were supplying the goods to SVSM who had warping and sizing facilities. The quantification for the disputed period has been based upon the said register maintained by SVSM. These are third party documents. The statements made by such persons have not been put to the test of examination an....