CCE, MEERUT Vs. FILATEX (INDIA) LIMITED

JUDGEMENT

(1.) The Revenue has filed this appeal being aggrieved by the decision of the Commissioner. The Commissioner held as under: -

(2.) The facts of the case briefly stated are that the appellants are manufacturers of polyester monofilament yarn, Nylon monofilament yearn and polypropylene yarn of various denierage. The Central Excise Officers visited the factory premises on 11/12.8.94 and undertook physical verification of the excisable goods as well as raw material lying in the factory premises. On verification 371.45 kgs of polyester monofilament yarn of 4500 denierage and 81.45 kgs of Nylon monofilament yarn of different denierage were found short in terms of recorded balance in RG -1 register. Besides shortage of 52.2 kgs of exempted yarn was also found. On being to explain the reasons for the shortage detected, Shri Rakesh Kaul, Production Manager admitted that the shortages and excesses. On perusal of RG 23A Part I register, it was noticed that the appellants had issued polypropylene Chips for the manufacture of final product but no polypropylene yarn was shown to have been manufactured for months together. Shri Rakesh Kaul in his statement dt. 11.8.94 stated that in addition to manufacture of polypropylene yarn, they used polypropylene chips for flushing the extruder at the time of change of nozzle, screw for manufacture of different variety of yarn. It was observed that the quantity shown for flushing extruder appears to have not been utilised in relation to the manufacture of the final products as the flushing extruder is not related to manufacture of the final products. It was, therefore alleged that the credit of duty amounting to Rs. 16,400.70 availed on 1792.43 kgs of P.P. Chips used for flushing extruder was not admissible to the appellants. The appellants debited the credit of duty in RG 23A Part II on 11.8.94. On further scrutiny of the records maintained by the appellants it was noticed that the appellants manufactured Nylon monofilament yarn of 210, 330, 420, 630, 840 and 1050 denierage. The said yarn with tolerance of plus minus 4% is exempted under Notf. No. 26/94 dt. 1.3.94. Prior to 1.3.94 the exemption for such yarn with tolerance of plus -minus 4% was available under Notf. No. 31/93 dt. 28.2.93. During the period from 5.11.93 to the date of visit i.e. 11.8.94, the appellants had cleared exempted varieties of yarn valued at Rs. 34.49 lakhs at nil rate of duty under Notf. No. 31/93 and 26/94 respectively. Scrutiny of laboratory testing log book of nylon monofilament yarn of exempted denierage maintained by the appellants from June, 1994 revealed that in number of cases such nylon monofilament exceeded the tolerance limit of plus -minus 4%. On verification, it was observed that in 30% cases, denierage of nylon monofilament yarn of exempted varieties accounted for in RG -1 register as being exempted was found to be dutiable as the denierage of the same exceeds the prescribed tolerance limit plus -minus 4%. Taking the ratio of 30% as dutiable yarn cleared at nil rate of duty under Notf. No. 31/93 and 26/94 as exempted ones form 5.11.93 to 11.8.94 the duty was calculated to be Rs. 3.75 lakhs for ascertaining the actual denierage. 9 boxes of nylon monofilament yarn 360 denierage and 13 boxes of 210 denierage as accounted for in the RG -1 register as exempted were detained for ascertaining the actual denierage of the same. A SCN was issued to the appellants asking them to explain as to why the duty should not be demanded on the yarn which has been cleared as exempted though denierage of the yarn was more than permissible limit.

(3.) In reply to the SCN, the appellants submitted that denierage changes if there is time lag; that the Officers of the department were guided by the lab report of very short period between July, 1994 till 10.4.94 and used the same as basis for making generalization to arrive at the yarn production account during the entire period form November, 1993; that the sample test carried out on any particular day cannot be made the basis for any kind of enlarging and generalization for application to the entire past period in any manner whatsoever; that the demand of duty is based on assumptions and presumptions both on facts and law; that the demand of duty of excise has been erroneously demanded and unauthorisedly collected; that no modvat credit has been taken by them on P.P. Chips weighing 1793.43 kgs; that the demand of duty of Rs. 13,237.65 in respect of excise duty on goods allegedly found short is factually incorrect; that there was shortage in some items and excess in other items; that the appellants cited lot of case law on their various contentions which was not considered properly. The Commissioner after considering the submissions, case law cited and evidence on records held as indicated above.