TaxTMI 
TaxTMI 
2018 (3) TMI 623
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.... the investigations appeared to the department that:- i. Appellants had indulged un- accounted purchase of cotton ii. They had indulged in unaccounted manufacture of cotton yarn iii. Excess stock of cotton yarn was found in search of the premises on 5.3.2004 iv. The appellant cleared cotton to job work units without cover of invoices / job work challans without accounting. v. Cotton yarn was sent for further processing without cover of central excise documents. The appellant received sale proceeds in cash in respect of unaccounted clearances for cotton yarn. vi. Department took the view that appellants had contravened the following provisions of Central Excise Act, 1944 and the Rules made thereunder:- i. Rule 4 and 8 of Central Excise Rules, 2001 &2002 inasmuch as they manufactured and removed excisable goods viz. Cotton yarn payment of duty; ii. Rule 6 of Central Excise Rules, 2001 &2002 inasmuch as they manufactured and removed excisable goods viz. Cotton yarn without assessing the duty payable on such goods; iii. Rule 10 of Central Excise Rules, 2001 & 2002 inasmuch as they did not properly account ....
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....y cleared it without accounting. (iv) That the said job worker becomes the principal manufacturer of such excisable goods and accordingly the liability to discharge central excise duty of such excisable goods vests on the said job worker. However, the adjudicating authority held that as the appellant had supplied cotton cone yarn to manufacture a like quantity of cotton hank yarn at the premises of the job workers, without cover of central excise documents, appellant had effected payment of duty on the cotton cone yarn sent by them to their job workers. Accordingly, based on these grounds, the adjudicating authority confirmed duty liability on unaccounted clearance of cotton cone yarn by appellant for the year 2002 03 to Rs. 9,79,987/- and Rs. 11,62,543/- for the period 2003 04. The adjudicating authority also confirmed duty liability of Rs. 3,37,037/-proposed in Annexure E2 of the show cause notice in respect of shortage of cotton yarn of various counts found by the officers. In fact, the adjudicating authority confirmed reduced duty liability of Rs. 24,79,477/-. Penalty of Rs. 19,79,477/- was imposed under section 11AC on M/s.Radha Textiles. Penalties under Rule 26 of Ce....
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....ect of alleged clearance of hank yarn manufactured by the appellant and not cone yarn. Moreover, there has been reference to Rule 12B anywhere in the allegations or charges laid down in the show cause notice. 3.6 With regard to the reliance of computer print outs made in respect of alleged differential duty liability, for the period 2003 04, ld. counsel draws our attention to para 227 to 231 of the appeal filed, which is part of the reply to the show cause notice made by them, wherein the defense in respect of reliance on computer print outs has been brought out. As contended therein, the conditions prescribed in section 36B of the Central Excise Act, 1944 was not specified in respect of the data retrieved from the floppies and relied upon in the show cause notice. Hence the demand for 2003 04, which relies on these data retrieved from the floppies cannot be admitted as evidence as per the said section 36B of the Act. (to explain in respect of duty confirmed by Order-in-Original for the year 2003 04 by adding reliance on computer print outs). 3.7 With respect of demand of duty liability on shortage of cotton yarn of various counts found in the premises on 7.1.2004, ld. counse....
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....as been issued proposing differential duty liability only in respect of hank yarn allegedly cleared without accounting by the appellant to their job workers. On this ground, differential duty of Rs. 17,61,395/- was proposed for the year 2002 03 and Rs. 30,09,040/- was proposed for the year 2003 04 as evidenced from the Annexure E5 of the show cause notice. 6.1 However, we find that the adjudicating authority has chosen not to demand any duty liability on such clearances of hank yarn but instead has ordered demand of duty in respect of cone yarn clearances by the appellant. The reasoning of the adjudicating authority as brought out in paras 103 and 104 of the adjudication order are reproduced for ready reference:- "103. In this case, the duty is demanded on the basis of clearance of cotton hank yarn by RTPL, the year 2002-03 and 2003-04. During the above period, RTPL did not have any infrastructure in their factory for doubling and reeling of cotton cone yarn. From the documents, it is seen that the cotton hank yarn for which duty is demanded for the year 2002-03 was manufactured at Super Textiles, Pudukottai, Universal Yarn, Dindigul, SNB Textiles, Dindigul and Sri Kuma....
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....uty, I propose to restrict the demand of duty from RTPL to the quantity of cotton cone yarn manufactured and cleared by them to their job workers without payment of duty. Hence I find that RTPL are liable to pay duty on 148967.50 kg of cotton cone yarn that was supplied by them to their job workers for the purpose of doubling and reeling. The actual price of 100% cotton single yarn in cones prevailing during the year 2002-03 as recorded in the invoices of RTPL is taken as the Cum-duty price to arrive at the total value of clearance. The total duty payable on the above unaccounted clearances of cotton cone yarn by RTPL during the year 2002-03 works out to Rs. 9,79,987/- (BED : Rs. 8,52,163/- AED : Rs. 1,27,824/-)" 6.2 We are unable to fathom these findings of the adjudicating authority. The adjudicating authority cannot obviously go beyond the parameters of the demand proposals made in the show cause notice. This is the law that has been laid down in plethora of decisions. 6.3 Thus, on this very aspect, we are of the opinion that the impugned order cannot sustain. 6.4 Interestingly, as seen from para 104 reproduced above, the adjudicating authority is conscious that the sho....
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.... was inserted by the Central Excise Amendment Rules, 2003 by notification No. 24/2003-CE (NT) dated 25.3.2003. Sub-rule (1) of the Rule 12B when inserted read as follows:- "Notwithstanding anything contained in these rules, every person (not being an export-oriented unit or a unit located in special economic zone) who gets yarns or fabrics falling under Chapter 50, 51, 52, 53, 54, 55, 58 or 60 or readymade garments falling under Chapter 61 or 62 of First Schedule to the Tariff Act, produced or manufactured on his account, on job work (herein after referred to as '"the said person") shall obtain registration, maintain accounts, pay duty leviable on such goods and comply with all the relevant provisions of these rules, as if he is an assessee: Provided that the job worker may, at his option, agree to obtain registration, maintain accounts, pay the duty leviable on such goods, prepare the invoice and comply with the other provisions of these rules. In such a case the provisions of these rules shall not apply to the said person. The job worker, may, at his option, authorize the said person to, on his behalf as his agent, maintain accounts, pay duty, prepare invoic....