AMBAL MILLS LTD Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THIS appeal arises from the Order -in -Original No. 59/Collector/88 dated 21.7.98 passed by the Collector of Central Excise. Coimbatore confirming the duty amounting to Rs. 36,961.20 on the DHCR cleared as DHPR yarn during the period from 5.3.87 to 24.4.87 in terms of Rule 9(2) of the Central Excise Rules, 1944 read with Section 11A of the CE Act, 1944. Further he has also confirmed the duty amount of Rs. 7,26,096.36 on 907600 kgs. of yarn in terms of Rule 9(2) of the CE Rules read with Section 11A of the CE Act. 1944 which were cleared under similar mis -declaration during the period from 1984 to 4.3.1987 instead of the original demand of Rs. 7,49,286.340 on yarn weighing 936600 Kgs. A combined penalty of Rs. 1.00 lac has also been imposed on the appellants under Rule 9(2), 52A and 173Q of the CE Rules, 1944. The Collector has ordered confiscation of 16,633 Kgs of 31s SF DHRC yarn valued at Rs. 6,32,054.00 and granted release of the goods on provisional basis on payment of redemption fine of Rs. 1,25,000 lacs.

(2.) THE brief facts of the case are that the appellants are manufacturers of yarn including staple fibre yarn. Some of the yarn manufactured by them are cleared in hank form and the yank yarn in plain reel is exempt from payment of duty while hank yarn in cross reel is liable to payment of duty. The Officers of the HQ Preventive. Coimbatore visited the mills by surprise on 24.4.87. In a stock challenge conducted by them they found staple fibre yarn weighing16,633 Kgs. in double cross reel form (DHCR). However, the yarn was entered in the statutory book as double yank plain reel (DHPR) yarn free of duty. Thereafter, the officers seized stock of 31s SF yarn weighing 16,633 Kgs and the same was released provisionally to the assessees on execution of bond. Although on the spot clarification, the management claimed that their recording of DHCR yarn as DHPR yarn was due to a clerical mistake, officers recorded statement and conducted further investigation. At; the conclusion of investigation officers formed a prima facie opinion that the mill was habitually clearing dutiable yarn as duty free DHAR yarn. They were also of the opinion that the mill had commenced this practice from, September1984 onwards. Show cause notice was issued to the appellants viz. Ambal Mills Pvt. Ltd. Somanur demanding duty of Rs. 7,92,544.42short paid by them and asking them as to show cause as to why penalties for various contraventions committed by them should not be imposed.

(3.) THE appellants replied to the show cause notice on 21.4.88.In the reply they claimed that incorrect entry was made in the RG1register of the seized 31s staple fibre DHCR yarn as DHPR yarn. However, no inference could lie that similar situation had obtained from March 94 onwards. It was also claimed that the evidence ledin the show cause notice was not sufficient to sustain the charge. They also made request for cross -examination of certain dealers from Erode in the reply to the show cause notice and the request was granted and four dealers were cross -examined before the Collector on 9.5.88. The record of cross examination of those four dealers was furnished to the Consultant of the appellants immediately. The appellants thereafter filed written submission and in the written submission following submissions were made: