TaxTMI 
TaxTMI 
2002 (1) TMI 133
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....ry. The results showed higher counts against the declared ones. Therefore, the officers took out samples of one cone each from the bags said to contain 60s and 90s count of cotton yarn combed cone yarn kept ready for clearance in their godown. The cones so drawn were the samples of each bag and the serial number of the packing of the bag was affixed on the samples. They were tested for the count of yarn in the laboratory of the mills and the test results revealed that 144 bags of 60s combed yarn and 24 bags of 90s combed yarn showed higher counts which were even more than the tolerance limit prescribed by the department. Thus, there were 144 bags of 60s combed yarn and 24 bags of 90s cone which were found to exceed the tolerance limit and hence they were seized under a mahazar. 2. Representative samples drawn from the lot segregated as (i) higher counts exceeding the tolerance limit of 60s count (ii) higher counts exceeding the tolerance limit of 90s (ii) counts within the tolerance limit of 90s and (iv) counts within the tolerance limit of 90s, were sent to the Chemical Examiner, Madras as per Central Excise Procedures for verification of count. The test results revealed ....
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....9(2) of Central Excise Rules read with proviso to Section 11A(1) of the Central Excise Act, 1944. Besides, they were asked to explain why penalties under various rules should not be imposed and 144 bags of combed yarn declared as 60s and 24 bags of combed yarn declared as 90s, which were released provisionally, should not be confiscated. 5. The Appellant's factory filed their interim reply dated 2-12-94 and further reply vide letter dated 28-4-97 and relied on several judgments to deny the allegation of manufacture of higher counts. They contended that they were filing classification list from time to time of different counts and the same were approved by the department. The department were drawing samples periodically and testing the same and the test memos were accepted by the department. They denied mis-declaration of any count. They contended that although the show cause notice referred to seizure of 7920 kgs of cotton yarn, but no demand was raised on this amount. They also submitted that the Wrapping Register showed the correct size of the cotton yarn produced by them. All the registers maintained were pre-production registers which were there to monitor the size in ....
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....s. 25,000/- on the SQC Supervisor, Shri Muthukrishnan. 8. Arguing for the appellants, ld. Senior Counsel, Shri B. Kumar contended that the test results which were obtained from time to time were in favour of the party. None of the details with regard to drawal of sample of on 1-3-91, 23-3-93 and 25-6-93 showed any adverse finding. He pointed out that the test result of samples taken on 17-2-94 also was not disclosed to the party and those samples and the results were not relied in the show cause notice for the reasons known to the department. He contended that when there was no adverse reports on any of the test samples which were drawn from time to time and when the final invoice of sale and the evidence in the form of customers' affidavits was produced, then it cannot be rejected without giving reasons. He submitted that it clearly demonstrated that department had not proved their case with regard to higher production and sale of goods by receiving higher amounts. There is no evidence produced by the department to show that they bad sold higher counts by declaring lesser counts in the invoices and that they had received higher amounts. He contended that none of the custo....
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....ore raising the demand. Therefore at the outset, the show cause notice itself is not maintainable, because Wrapping Register are relevant and statutory registers like that of RG 1, which are also verified by the Central Excise Officers from time to time and the same may be examined. In fact the count mentioned in the Wrapping Register would tally to that of RG 1, Gate Pass Clearance and Sales Invoice. Therefore the allegation of 'misdeclaration' is not tenable in the facts and circumstances of the case." 9. It was also pointed out that they had maintained Idle and Waste register which related to utilization of spindles. The word "Idle" denotes stoppage of spindles, due to power failure, maintenance and cleaning stoppages, for want of manpower, for want of preparatory bobbins. The word 'Waste' denotes waste of material that it collected from each department to ascertain the waste and therefore the differential duty based on 'idle and waste register' is not justifiable. He also contended that demands are barred by time as there was no intention to evade duty. There was no clandestine removal of any goods at anytime during the course of manufacture and hence merely depending ....
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....e consented that the matter to be remanded so that justice can be done to both sides. 12. On a careful consideration of the submissions made by both the sides, and on perusal of the entire records and the final analysis made by the ld. Commissioner in the finding portion of the order, it is seen that the Commissioner was satisfied with several pleas raised by the appellants and has granted benefit of doubt and scaled down the duty from Rs. 76 lakhs to Rs. 26 lakhs. It is not denied by the department that for this very period, for which the demands have been raised from time to time, deptt. had been drawing test samples and the results of said samples for those periods were in party's favour and there was no charge of mis-declaration or evidence of clearance for those periods after the test results were taken on the ground of higher counts. It is only after a period of time, when the officers visited and found that the bags had cones with higher counts and the cones in the machinery also showed higher count, then they doubted the correctness of those clearances. On the basis of statements and the test results of samples drawn from the in-processed material, the department h....