P.G. Chacko, Member (J) - (1.)AFTER examining the records and hearing both sides, we are of the view that the appeals should be disposed of at this stage. Accordingly, after dispensing with predeposit, we take up the appeals.
(2.)THE original authority, in adjudication of a show -cause notice issued to M/s Aravind Spinners (P) Ltd. and others, confirmed demand of duty of over Rs. 25 lakhs against the said company and imposed on them a penalty of equal amount. It also imposed penalties on Shri G. Thillai Kumar. Director of the company, as also on M/s Vijay Textiles and M/s Venkateswara Textiles, all under Rule 209A of the erstwhile Central Excise Rules, 1944. The decision of the Additional Commissioner was upheld by the Commissioner (Appeals). Four of the batch of appeals before us are by the above parties.
(3.)THE original authority, in adjudication of another show -cause notice issued to M/s Thirumalai Mills (partnership firm) and others, confirmed demand of duty of over Rs. 30 lakhs against the said partnership firm and imposed on them equal amount of penalty. It also imposed penalties under Rule 209A on Shri Thillai Kumar, qua partner of the above firm, as also on M/s Venkateswara Textiles and Shri K. Swaminathan, Proprietor of M/s Vijay Textiles. This decision of the authority was also upheld by the Commissioner (Appeals). The remaining four appeals are by the above parties, aggrieved by the appellate Commissioner's order.
Ld. Consultant representing M/s Aravind Spinners (P) Lid. M/s Thirumalai Mills and Shri G. Thillai Kumar, submits that the Order -in -Original was passed in violation of the principles of natural justice inasmuch as cross -examination of some of the co -noticees including a few buyers and two reeling units was not allowed. All those persons had given incriminating statements against the company and the partnership firm. Before the first appellate Authority, the plea of negation of natural justice was raised, but the same was not properly considered. It is submitted that ld. Commissioner (Appeals) took the erroneous view that co -noticees could not be cross -examined. According to ld. Consultant, all the clearances of Cotton Yarn -the subject matter of this case -were well accounted in terms of Rule 96E of the Central Excise Rules, 1944. Contextually, it is pointed out that the company and the partnership firm, during the material periods, were engaged in the manufacture of Cotton Cone Yarn (dutiable), which was got converted into Hank Yarn (exempted) through reeling units. The clearances of Cone Yarn by the appellants to the reeling units were made under cover of AR3As as required under Rule 96E ibid and the latter, after conversion of the yarn into hank form, returned the product back to the appellants under cover of their own AR3 As. Thereafter, the Hank Yarn, which was exempt from payment of duty, was cleared without payment of duty under cover of proper invoices in the normal course. After narrating this business activity, ld. Consultant claims that the goods in question were well accounted for under the aforesaid documents. But these documents were not given any weightage by the lower authorities. The Consultant representing the other appellants submits that his clients (buyers of hank from the above company and partnership firm) had received only Cone Yarn from them. It is submitted that his clients had stated so in their statements given under Section 14 of the Central Excise Act and such statements were never retracted. Ld. Consultant reiterates his clients grievance against the Rule 209A penalties imposed on them.