SUNDARAGANAPTHY SPINNING MILLS Vs. CCE

JUDGEMENT

(1.) This appeal is directed against the Order -in -Appeal No. 79/2002 -CBE(GVN) dated 22.3.2002 passed by the Commissioner of Central Excise (Appeals), Trichy by which the Commissioner has rejected the appeal of the appellants and upheld the order of the original authority whereby the original authority had confirmed a duty demand of Rs. 97,080 under Section 11A of the CE Act, 1944 and imposed a combined penalty of equal amount under Section 11 AC and 173Q of the CER, besides confiscating 10 bags of cotton yarn on cones weighing 500 kgs and valued at Rs. 45,000 with option to redeem the same on payment of fine of Rs. 10,000. He has also imposed a penalty of Rs. 7,500 on the transport company with whom the goods had been entrusted for transport and from whose premises the goods were confiscated.

(2.) Brief facts of the case are that on a surprise visit by the officers of the Preventive group to the premises of one M/s Almatheswara Lorry Service, they found 10 bags of cotton lying for the purpose of transportation without any supporting documents such as lorry receipt/way bill etc. The officers therefore effected seizure of the same under a mahazar on a reasonable belief that the goods had not suffered duty at the time of clearance from the factory viz. M/s Sundaraganapathy Spinning Mills (P) Ltd., the appellants herein. Statement was recorded from the Director of the appellants wherein inter alia he has stated that he happened to know that the officers visited their mills on the previous day evening to verify the Central Excise records, with regard to despatch of 10 bags of cone yarn from their mill to the Transport Company. To a question by the officers, he stated that they had sent 10 bags of cotton cone to the Transport Company on 8.12.98. He has also admitted that there was shortage when compared with physical stock and the reason for the shortage was that invoice No. 68 was prepared and kept for his signature which pertain to him and this invoice was kept undetached from the book but the goods were sent without invoice. Statement was also recorded from the partner of the Transport Company who confirmed the receipt of 10 bags of cone without proper documents. He has also stated that he was not aware whether the goods had suffered duty. It was noticed on further investigation that the appellants had purchased raw material cotton and clandestinely manufactured and cleared cotton yarn to the turn of Rs. 28375 kgs. It was in these circumstances that show cause notice was issued to the appellants which culminated in the order of adjudication passed by the original authority whereby he has confirmed the demand of duty and imposed penalty against which the appellants preferred appeal before the lower appellate authority who rejected their appeal and hence this appeal.

(3.) Shri P.K. Parameswaran, learned Counsel for the appellants referred to the written arguments made by the appellants wherein it is inter alia stated as under: