NEW INDIA DYEING AND FINISHING Vs. CCE

JUDGEMENT

(1.) The instant 8 appeals are directed against the Order -in -Original dated 10.2.2000 passed by the Commissioner of Central Excise, Chandigarh. The Commissioner vide the said order confirmed duty demand of Rs. 61,58,331.30 and imposed penalty of Rs. 62 lakhs against M/s. New India Dyeing and Finishing Mills, Batala, confirmed duty of Rs. 5,55,259.95 and imposed penalty of Rs. 6 lakhs against M/s. New India Printing Works, Batala, Amritsar. The Commissioner has also imposed penalties of Rs. 5 lakhs on M/s. J.D. Woollen and Silk Mills, Rs. 6 lakhs on M/s. Pahwa Silk Mills Pvt. Ltd., Rs. 3 lakhs on M/s. Chain Singh and Sons and Rs. 1 lakh on M/s. Devinder Singh Pahwa. He had further imposed penalty of Rs. 15 lakhs on appellant, Chain Singh, Partner of M/s. New India Dyeing and Finishing Mills, Rs. 15 lakhs on Devinder Singh, Manager of M/s. New India Printing Works, Batala and Rs. 2 lakhs on M/s. Vishnu Sahay Subhash Chand and of Rs. 3 lakhs on M/s. Dharam Pal Satish Kumar.

(2.) The allegations levelled against the manufacturing units is that, as against the recorded quantities of processed man made fabrics and processed man made knitted fabrics, the appellants/manufacturers have removed clandestinely large quantities of fabrics from their manufacturing premises to various customers, without discharging central excise duty thereon. The thrust of the allegations is based on the documentary evidence unearthed through searches carried out at various places namely business premises of various customers. It is claimed by the appellants that, about 86 premises were searched covering various customers and no excess material was seized. The allegation is based solely on the basis of the statements of the buyers who have claimed that they have purchased processed fabrics from the appellant's manufacturing units. However, through raids conducted on the premises of the buyers no unaccounted printed and knitted fabrics were found. It is claimed by the appellants that, the bills which have been collected do not indicate that the same pertain to the purchase of processed fabrics. The appellants claimed that the bills relate to the trading activity of the appellants or sister concerns who deal in trading of unprocessed fabrics. It was claimed that, the persons who had given the statements against the appellants, claiming to have purchased the processed fabrics, have not been made available for cross -examination. It is also pleaded that, the factory was subjected to surprise check by the officers of the department on 684 occasions (Appellants subsequently revised the figures to 640). The appellants claimed that none of the surprise checks brought out any irregularity in the factory of the manufacturing units.

(3.) Reliance was also placed by the appellants on Chapter Note 4 inserted under Chapter 60 of the Central Excise Tariff with effect from 16.3.1995. In terms of the said Chapter Note, processing of knitted fabric became subject to excise duty only from that date, whereby processing of knitted fabrics was deemed to be a process of manufacture. Therefore, it is pleaded that on that ground also, duty could not be collected on the processed "knitted fabrics" allegedly cleared in a clandestine manner by the appellants. Appellants also pleaded that, the manufacturing units were not capable of manufacturing the alleged excess quantities since they did not have the manufacturing capacity to undertake the manufacturing of the alleged unrecorded quantities. A certificate from the Chartered Engineer was furnished before the Adjudicating Authority to indicate the production capacity.