PRABHAVATI SAHAKARI SOOT GIRNI LTD Vs. COLLECTOR OF CUS AND C EX

JUDGEMENT

(1.) THIS is an appeal directed against the order of the Addl. Collector bearing F.No. V(52.03)15-72/Adj/87 7440, dated 20-2-1989. Under the aforesaid order of the Addl. Collector, he has imposed the duty amounting to Rs. 20,822.85 on a quantity of 1,42,325 kgs of cotton yarn on the ground of mis-declaration of counts of yarn produced and cleared and another demand of Rs. 1,02,922.60 on 88,661 kgs of cotton yarn alleged to have been suppressed and not accounted in the R.G.-I register. The Addl. Collector in the impugned order has also demanded central excise duty on a quantity of 110 kgs. of cotton yarn of 40 counts not accounted for by the appellants. The appellants were also imposed with a penalty of Rs. 25,000/- under Rule 9(2) read with Rule 173Q of the Central Excise Rules.

(2.) The brief facts for the purpose of disposal of this appeal can be stated as below:

(3.) ON the question of suppression of production, Shri Shah contended that the allegation of suppression of production to the extent of 88,661 kgs of yarn, is totally without any basis. For producing this large quantity of yarn, at least a quantity of one lakh kgs of cotton is needed as raw material and for procuring this cotton, minimum outlay of Rs. 20 lakhs is needed at the relevant date. The raw material account does not show any variation with regard to receipt of excess raw cotton for producing the alleged suppressed quantity. The department have also not brought any private record to show that this large quantity of cotton has been purchased and utilised without accounting for in the raw material register. No evidence of removal of any quantity of finished yarn clandestinely, has been produced. The daily production register has been taken as the basis for comparison with the RG-I entries. This register indicates production at spindle stage and subsequently lot of process takes place. The age old practice, which even now continues, is to account for cotton yarn only after it is made in the form of cones or hanks. The stage of accounting in the RG-I is only at the packing stage and hence no worthwhile comparison between the production figures of Ring Frame Register and the RG-I register can be made. Variation between the daily production register and the RG-I record is not more than 5%. He also contended that in any case, the department seeks to rely only on Ring Frame Register for alleging mis-declaration of counts and daily spinning and winding production register for alleging suppression of production. No other corroborative evidence has been given for sustaining the allegation. In this context, he cited the decision reported in 1989 (39) ELT 655 (Tri.) in the case of Kasmir Vanaspati Pvt. Ltd.