TaxTMI 
TaxTMI 
2000 (3) TMI 97
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...., engaged in the trading of yarn as well as woollen jerseys. They supply goods to the Director General of Supplies and Disposals (DGS&D), Government of India, against orders of various indentors. By show cause notice dated 28-10-1988, the Department alleged that the appellants had mis-declared the composition of the yarn with intent to evade the Central Excise duty. It was alleged that during the period September, 1983 to July, 1988 the appellants had supplied 1,42,846.902 Kgs. of woollen worsted yarn to Ordnance Clothing Factory, Shahjhanpur as detailed in Annexure B and B1 to the notice. It was alleged that the appellants had mis-declared the composition of the yarn in the Central Excise gate passes for availing of exemption under Notific....
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....pellants had been supplying the yarn to the DGS&D after purchasing them from the market since it was not possible for the appellants to supply the entire goods manufactured in their own factory. For such supplies, it was not required to maintain any records under the Central Excise Rules. The charge of evasion of duty on yarn weighing 1,42,846.902 Kgs supplied to the DGS&D during the material period was therefore denied. It had also been submitted before the Collector that their spinning unit was working under the close control and watch of the Central Excise Department and since appellants were a L-4 licencee they were maintaining registers in the prescribed form showing receipt and consumption of various fibres and consumption of yarn man....
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....also very well include supplies made by the appellants to the DGS&D after procuring the yarn from outside sources. Reliance placed by the Department in the inspection reports of various inspecting authorities relating to the goods to be supplied was also contested by the appellants on the ground that those was not sufficient material to infer that the goods were manufactured by the appellants. The goods that were inspected were no doubt at the appellants' premises, but it did not necessarily imply that it consisted of only the factory premises and not the precincts of the factory. Ld. Counsel submitted that it was important to note that when the appellants' premises were searched, no excess of goods or any discrepancy in the appellants' sta....
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....ctured in their factory. 5.Ld. Counsel relied on the following case law in support of his submissions : (1) Rishab Refractories Pvt. Ltd. v. CCE Chandigarh - 1996 (87) E.L.T. 93 (Tribunal) (2) Eros Metal Works (P) Ltd. v. CCE - 1989 (43) E.L.T. 361 (Tribunal) 6.Defending the impugned order, Ld. SDR submitted that even as per the appellants' own admission, they had capacity to manufacture on an average 80 Kgs. of yarn per day. The allegation of clandestine production and removal of the quantities mentioned in the show cause notice was very much within the said capacity. He referred to the certificate given by the Technical Expert stating that he c....
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....gards the claim of the appellants that there was no bar under the contract with the DGS&D for supplying the yarn after obtaining the fibre from the outside sources, reliance has been placed on the letter dated 9-8-1989 from the Director (Co-Ord) DGS&D stating that since the contractor had declared that he would supply the goods of "his own" make, the appellants could not claim that they could procure fibre or yarn from outside and supply it to the DGS&D in terms of the contract. He had also found that in the pre-inspection report conducted by officers of the DGS&D, stores offered for inspection had clearly mentioned the stores as manufactured by the appellants themselves. It was therefore held that worsted woollen yarn supplied by the appel....