CX - Clandestine removal of Textured Yarn - Appellant submitting that they had used duty paid POY for manufacture on which no CENVAT was availed and, therefore, they are entitled for benefit of Notfn. 6/2002 - no observation of lower authorities on evidentiary value of CA certificate - matter remanded: CESTAT
By TIOL News Service
AHMEDABAD, AUG 31, 2016: ON a visit to the factory premises, the Officers retrieved a private notebook allegedly containing clearances without payment of duty. On completion of investigation, it was noticed that the Appellant had removed 26157.60 kgs of finished Textured Yarn clandestinely without payment of duty during the period from 01.04.2002 to 07.06.2002.
A SCN was issued for recovery of duty of Rs.4,71,675/- and on adjudication, the demand was confirmed and equivalent penalty was imposed on appellant and personal penalty of Rs.10,000/- on the Authorized Signatory of the Company u/r 26 of CER, 2002.
As the Commissioner (Appeals) dismissed the appeals, the appellants are before the CESTAT.
The appellant submitted that the POY used in the manufacture of Textured Yarn had suffered duty; there are purchase invoices in this regard and, therefore, they are entitled for benefit of notification 6/2002-CE; moreover, they had not availed CENVAT Credit on the said POY. Nonetheless, as the entire amount of duty was paid by them soon after the detection of the case and before issuance of Show Cause Notice, therefore, no penalty is imposable on the Appellant. So also, both the authorities below had not allowed the Appellant to pay 25% of the penalty imposed u/s 11AC of CEA,1944 on fulfillment necessary conditions, which they are eligible to in view of the decision in Harish Silk Mills - 2010-TIOL-510-HC-AHM-CX.
The AR submitted that the Adjudicating authority had recorded reasons for not accepting the three invoices produced by the Appellant as the quantity mentioned therein was not sufficient to manufacture the textured yarn cleared without payment of duty; that in his statement the Authorized signatory had stated that they purchased the POY to manufacture the goods cleared clandestinely; that retraction was an afterthought.
The Bench observed -
+ It is an admitted fact that during the period from 01.04.2002 to 07.06.2002, the Appellant had manufactured and cleared 26,157.600 kgs of Textured Yarn without payment of duty.
+ On perusal of the said Notification (6/2002-CE), it is clear that two conditions need to be satisfied so as to be eligible to the benefit of said notification. These are namely, the duty must have been paid on the POY used for texturisation and CENVAT Credit should not have been availed on the said POY. The claim of the Appellant that even though they had cleared 26,167.600 kgs of manufactured Textured yarn without payment of duty, however, the same had been manufactured from duty paid POY and they had not availed CENVAT Credit on the said POY.
+ We find that the authorities below had not accepted the quantity of 23540.700 kgs mentioned against the three invoices issued by M/s Parsurampuria Synthetics in calculating the total quantity of POY received and consumed, and also observing that the same did not conform to the quantity of removal of Textured Yarn i.e. 26,167.600 kgs even after adding 1.75% as the quantity towards oil gain, which works out to only 23,952 kgs. In other words, both the authorities below had arrived at the finding that the Appellants had not adduced sufficient evidence to establish that the POY used in the manufacture of 26,167.600kgs of textured yarn had suffered duty.
+ The claim of the Appellants, on the other hand, was that they had produced evidences including the CA certificate to show that the said quantity of POY had been purchased and consumed in their factory; the payments were made through A/C payee cheques, accordingly it should be accepted. From the impugned Order we could not notice any observation on the evidentiary value of the said certificate and its acceptability...
Concluding that it was appropriate to verify/examine the said evidences before arriving at any conclusion, the matter was remanded to the Commissioner (A). It was also directed that after determination of duty liability, quantum of penalty on the Appellants be considered keeping in view the cited decisions regarding eligibility to discharge 25% of penalty.
The Appeals were disposed of.
(See 2016-TIOL-2257-CESTAT-AHM )
