Customs, Excise and Gold Tribunal - Bangalore
Vibgyor Textiles Processors vs Commissioner Of Central Excise on 30 January, 1997
Equivalent citations: 1997(70)ECR856(TRI.-BANGALORE)
ORDER T.P. Nambiar, Member (J)
1. These stay petitions are filed praying that the pre-deposit of the duty amount in terms of the impugned orders be waived during the pendency of the appeal. The total duty demand involved in all the eight petitions is Rs. 1,04,65,815.09. The period involved in this case 1991,92,93.
2. The point involved in this case is whether the appellant is entitled for the benefit of the notification Nos. 297/79 dt. 24.11.1979 and 253/82 dt. 8.11.1992. The appellants were clearing certain goods by availing exemption and they were carrying certain processes as mentioned in the notifications. The contention of the appellant is that in terms of the above notifications they are entitled to clear the goods without payment of duty. The appellant's contend that they have carried out only the specified processes so far as fabrics are concerned. But the contention of the department is that in addition the appellants have also carried out certain operations like Bleaching and dyeing which are not specified processes for the purpose of the benefit of the notifications.
3. The Learned Counsel Shri G. Sampath appearing for the appellants contended before us that the Show Cause Notice does not show that the appellants carried out the other processes like Bleaching, Dyeing and Printing etc. in respect of the same fabrics. He pointed out that only allegation is the appellants were carrying out other processes in the same premises. He pointed out that though there were infrastructures available in the appellant's factory, they were actually not carrying out the above said processors with respect to the fabrics in question. On the last hearing date when we have heard the matter, the Learned DR, Shri S. Murugandy stated that the appellants were infact carrying out these processes in their factory. In view of the conflicting claims made by both sides, we had directed both the sides on the previous hearing dates to file their respective affidavits in this behalf. The applicant filed an affidavit to the effect stating that they were not at all carrying out these processes like Bleaching, dyeing and printing on these specified fabrics but the department on the other hand filed an affidavit stating that the appellants were carrying out the above said processes. In view of these two affidavits filed, reiterating the respective contentions taken by both the sides, we had directed that a verification should be done by the department and a report should be submitted by the Commissioner for passing necessary orders in this behalf. After a couple of adjournments, a report is today submitted before us which is dt. 16.1.1997. This report of the Commissioner is appended to this order as Annexure-A. A perusal of this report shows that the department in paras 4 and 5 have stated that there is only one invoice raised for processing of cotton cloth fabric during the above period. In respect of man-made fabric of the other GP's covered in the above Show Cause Notice have the same description. In para 5, the department reported that the process of calendering and expanding is an eligible process for claiming the exemption. It was the contention of the department that the assessee has undertaken the processes of bleaching and dyeing and hence the applicant is not eligible for exemption. But the department in para 5 has admitted that the GP's do not indicate that the applicant has undertaken the processes of bleaching and dyeing.
4. But in para 6, it was again reiterated that on a previous Show Cause Notice they had made mahajar dt. 11.9.1989. In the said Mahajar one Mohan who was signatory, had admitted that the appellants have undertaken the processes of bleaching and dyeing on the fabrics raised from M/s. Ashoka Exports, Bangalore.
5. The Learned advocate pointed out that this statement of Shri Mohan and the Mahajar mentioned above was not a part and parcel of the allegation in the Show Cause Notice. In this connection, he pointed out that the question which is to be decided in this case is whether fabrics in question which are concerned in this case has undergone those processes like bleaching, dyeing and printing which are not specified in the notification for the benefit of exemption. He stated that the Collector after verification has not given any specific finding that these fabrics in question which are concerned in this case have undergone those processes.
6. In this connection, the Learned advocate pointed out that after the Tribunal made an interim order for the said verification, the appellants had written letters to the Commissioner offering of the assistance for making such verification. He stated that inspite of those letters, the appellants were not called upon by the Commissioner to take note of the fact as are available in regard to undertaking of the above said processes. He, therefore, stated that the appellant's request for such verification was not taken note of by the Commissioner. He, therefore pointed out that when no specific allegation is made in this regard in the Show Cause Notice and in the absence of any such evidence after due verification, the appellant could not be called upon to pay the duty.
7. The Learned JDR reiterated the report and more particularly paras 4, 5 and 6 of the report. He stated that in view of the earlier admission of Shri Mohan, the department had issued periodical Show Cause Notice for the other periods in question.
8. We have considered the submissions of both the sides. We find that in order to fasten the liability of duty on the appellant there must be proof to show that the appellant had made the unspecified processes on the fabrics in question. It is also a fact that the appellants have got the necessary machines in their factory to carry out those processes. But the mere possession of the machine and capability to take out those processes is not sufficient to fasten duty liability on the appellants. This view was taken by us in the following orders.
In our order No. 832/1996 dt. 16.5.1996 at para 4, we have held as follows:
4. We have considered the submissions. The learned lower authority has stated that the appellant had manipulated the raw material register in Form-IV to show receipt of grey cotton fabrics although man made fabrics were actually received by them based only on vague allegation made in the impugned order without any evidence in this regard. Further, the impugned order itself has not narrated the facts very clearly. In para 20 of the order, it is stated by the adjudicating authority that from the delivery challans attached to the lorry receipts seized from Bombay Andhra Transport it was clear that the fabrics covered were nothing but man made fabrics which had undergone the dutiable processes like bleaching and printing etc. In this connection, it is seen that in the show cause notice at para 4.5, the allegations are to the effect that the lorry receipt copies of the transporter of the grey cloth had certain slips attached with them giving the particulars of the supplier and the nature of the fabric, etc. Therefore, the show cause notice has clearly mentioned that the goods which were covered under the lorry receipts were grey cloth. In that view of the matter, it is seen that the observation of the adjudicating authority that these lorry receipts showed that the goods are dutiable is not borne out by the records. On the contrary it is seen that this finding is against the allegation itself made in the show cause notice. The other finding of the adjudicating authority is that the appellants are having certain machines in their factory which could be used for the purpose of manufacturing the dutiable goods. The mere fact that the appellant had such machines in the factory will not disentitle the appellant to clear those goods which were not subjected to only processes which were covered by the exemption notification. There must be evidence to show that the appellants had processed the goods attracting duty by using those machines. Such an evidence is not coming forth in this case and without any such evidence the finding of the adjudicating authority that merely because they possessed certain machines in this regard is not sufficient to fasten the duty liability on the appellants. No other evidence was relied in the impugned order to show that the appellants are liable to pay duty. The learned DR also could not point out any satisfactory evidence in this regard which were discussed by the adjudicating authority in the impugned order. In this view of the matter, we find that there is no reliable evidence in this case to show that the appellant is liable to pay duty in this regard. In the facts and circumstances, therefore, the appellant is entitled for the benefit of doubt. The demand of duty in terms of the impugned order is not sustainable. The appeal is thus allowed and the demand of duty in terms of the impugned orders are hereby set aside. We set aside the order of the adjudicating authority.
This was followed by us in our order No. 2224/96, dt. 4.11.1996 and 1642/96, dt. 7.10.1996 in the case of Shreyas Enterprises and Chelpark Co. Ltd. It is therefore seen that what is to be established is that these processes have been carried out on the fabrics in question in these cases. For the time being there is no such verification made in this regard and no such evidence is available before us as could be seen from the report furnished by the Commissioner. Therefore, the appellants have a prima facie case, in this view of the matter we grant absolute stay and the consent of both the sides, we take up these appeals themselves for disposal.
10. We have heard the Learned advocate Shri G. Sampath as well as the Learned JDR, Shri S. Murugandy. They reiterated the above submissions. It is now seen that the principles have been laid down by this Tribunal in the aforesaid decision which are cited Supra. It is thus seen that in order to demand duty from the appellants it has to be shown that the appellant had undertaken processes like bleaching, dyeing and printing on these fabrics in question. This is a question of fact which has to be decided by the authorities after due verification in this regard. Since there is no such discussion in the impugned orders and the appellants have offered to make available of the necessary assistance for making such verification. We are of the view that in order to fasten liability of duty on the appellant such verifications should be carried out by department and necessary evidence should be gone into to find out whether such processes have actually been carried out by the appellant or not. It is only when the appellant is shown to have carried out the non-specified processes mentioned above in respect of the fabrics in question the duty can be demanded from them as held by us in the above said decisions.
11. In the premises, we set aside the impugned orders and allow the appeal by way of remand with a direction to the adjudicating authority to dispose of these cases for de novo consideration in the light of our observations made above. The appeals are accordingly allowed by remand.
(Pronounced and dictated in the open Court).