MONITEX DYE PRINTS Vs. CCE

JUDGEMENT

(1.) The appellant is a processor of fabrics. The goods produced by it became liable to duty at compounded rate w.e.f. 16.12.98. Thus, whatever was the manufactured stock available on 15.12.98 was required to be cleared on payment of duty according to the normal procedure, i.e. on ad valorem basis. The appellant treated a stock of 1,19,449.10 Linear meters as the outstanding stock of manufactured fabrics on 15.12.98 and cleared that stock on payment of duty on ad valorem basis. Two Show -cause Notices dated 18.6.99 and 24.12.99 were subsequently issued alleging that as on 15.12.98 the appellant had an additional finished stock of 6,47,801.45 Linear meters and the appellant was liable to pay duty on that stock as well on ad valorem basis. The appellant contested the duty demand but to no avail. He failed before the Commissioner (Appeals) also. Hence, the present appeal.

(2.) We have perused the records and considered the submissions made by both sides. Learned Counsel representing the appellant took us through the various documents to establish that duty had been correctly discharged. Appellant's RG -1 register in which daily stock account is recorded, was verified by the Central Excise officer on 15.12.98. Learned Counsel pointed out that, under column 16 which covers closing balance in the bonded store room, the quantity entered and verified by the officer (by rounding) was 1,19,449.10 L. Meters and submitted that this was the quantity of finished goods as verified by the officer. Learned Counsel also pointed out that in respect of the quantity of 6,47,801.45 L. Meters figuring under column 15 an in finishing room, "loose", the officer made no entry as finished stock. He further pointed out that the appellant had submitted a stock statement on 15.12.98 to the jurisdiction Superintendent of Central Excise declaring "stock as per the RG -1 register as on the mid -night of 15.12.98 as 1,19,449.10 BSR". Learned Counsel pointed out that -this declaration of stock had also been signed by the officer as verified on the same day. It is the learned Counsel's submission that after accepting these declarations after due verification, it was not open to the Revenue to subsequently allege that the quantity figuring in the RG -1 register as "loose" also formed part of manufactured of goods. Learned Counsel took us to the entries for the subsequent dates also and explained that the outstanding "loose" stock of 6,47,801.45 L. Meters had been treated as opening balance of the next date (16.12.98). He submitted that that stock alongwith fresh issue from Form -IV register (raw materials) was being carried forward for further processing and sale. Learned Counsel submitted that the correct position was explained by the appellant in detailed letter dated 2.6.99. He placed specific stress on the explanation under Serial Nos. 7, 8 and 9 and pointed out that the appellant had explained the 'loose' stock of 6,47,801.45 L. Meters as at stages like spotting, bleaching, or matching and had not undergone stentering on 15.12.98. Learned Counsel pointed out that it is after discarding that explanation, the lower authorities had demanded tax without taking into account the appellant's explanation.

(3.) It is clear from the record that appellant had declared his outstanding stock of finished goods to the jurisdictional authority on 15.12.98. The quantity so declared was only 1,19,449.10 L. Meters and this quantity was verified by the officer on the same day. Same is the figure rounded and certified as checked in the RG -1 register also by the officer. In these circumstances, we are of the opinion that the stock of manufactured goods on 15.12.98 was required to be accepted as 1,19/449.10 L. Meters only. The claim for duty in respect of additional stock of 6,47,801.45 L. Meters of fabric in loose condition does not seem to be justified for other reason also, because this is the stock subsequently carried forward from 16.12.98 for further manufacture alongwith fresh issues from Form IV register.