HINDUSTAN PRODUCTS Vs. CCE

JUDGEMENT

(1.) THE appellants filed this appeal against the adjudication order passed by the Commissioner. In this case, the duty amounting to Rs. 99,89,349 was confirmed on the ground that during the period from 1.4.95 to 16.2.99, the appellants manufactured and cleared chenille yarn without payment of duty. A penalty of equal amount was also imposed on the appellants.

(2.) THE brief facts of the case are that on 16.2.99, the unit of the appellants was visited by the Revenue Officers and it was found that there were 65 machines used in the manufacture of chenille yarn. The chenille yarn was liable to excise duty and the appellants are clearing chenille yarn without payment of duty. On 17.2.99, the statement of Shri Rajeev Kumar, proprietor of the firm was recorded who admitted the fact regarding manufacture of chenille yarn and also admitted that they were manufacturing chenille yarn for the last 5 -6 years and clearing the same without payment of duty. The Revenue Officers also made enquiry from the customers which also shows that the appellants were clearing the chenille yarn. Show cause notice was issued to the appellants for demanding duty and imposing penalty on them. After affording an opportunity of hearing to the appellants, the impugned order was passed.

(3.) THE contention of the appellants is that they were trading in cotton yarn and also undertaking the process of doubling the cotton yarn and both were not liable to Central Excise duty. They were also trading in chenille yarn and only in the month of January 1999, the appellants purchased 65 machines for the manufacture of chenille yarn. The contention of the appellants is that they produced the invoices regarding the purchase of machines from M/s. Ruchi Engineers and M/s. Puneet Dhiman International only in the month of January 1999. Before January 1999, the appellants had no capacity to manufacture the chenille yarn. Therefore, the demand for the period earlier to January 1999 is not sustainable.