Customs, Excise and Gold Tribunal - Ahmedabad
L.D. Textiles Industries Ltd. vs Commissioner Of C. Ex. on 7 March, 2007
ORDER M.V. Ravindran, Member (J)
1. All these stay applications are directed against the Order-in-Original No. 31-7-2006 which confirmed the demand of Central Excise duty, imposed equivalent amount of penalty on the company and also imposed penalties on the employees of the company, in addition to confiscation of plant & machinery, and land & building, etc. belonging to the appellant company, with an option to redeem the same on payment of redemption fine.
2. The issue involved in this case is that the officers of Directorate of Anti-evasion visited the premises of the appellant company. After recording the statement and completion of investigation, the authorities came to the conclusion that the appellant company was indulged in mis-declaring the final product and availing the benefit which were not available to them. Based on this conclusion show cause notice was issued to the appellants which on adjudication resulted in confirmation of demand and imposition of penalties and confiscation of plant, machinery and land & building.
3. Learned Advocate appearing on behalf of the appellants submits that the adjudicating authority has erred in confirming the demand. It is his submission that the main ground of the Revenue is that the appellant has not used the polyester staple fibre waste (PSFW) in the manufacture of polyester waste viscose fibre (PWVF) but had used PSF in the manufacture of polyester waste viscose fibre (PWVF). It is the submission that the Revenue had based this allegation on the fact that they had conducted visit to one of the supplier of the appellant. It is his submission that the period dispute in this case is from April, 1992 to February, 1995. He submits that for the period April, 92 to December, 94 the Revenue issued show cause notices demanding duty relying upon the analysis of the sample drawn in December, 1994. It is his submission that this is totally incorrect, as for the period April, 1992 to December, 1994 adjudicating authorities in respect of the same appellant had held that the appellant has correctly classified their final product in two categories i.e. blended fibre made out of PSF and Viscose and blended yarn made from polyester waste and viscose. The Revenue has not challenged these various adjudication orders, and hence, issue stands settled up to December, 1994 in favour of the appellant. As regards demand of duty from December, 1994 to February, 1995 it is his submission that they had purchased polyester waste from various parties and these parties were investigated by the authorities and the case was booked against them for clearance of polyester staple fibre in the guise of polyester waste. This case was decided in favour of the assessees by the Tribunal in the case of Reliance Industries Ltd. and Ors. v. CCE, Bombay as reported at 2003 (159) E.L.T. 164 (T) : 2003 (106) ECR 472. It is the submission that if the Tribunal has come to the conclusion that these assessees had supplied polyester waste, then the charge of Revenue today for the period December, 1994 to February, 1995 does not arise. It is his submission that the entire amount of demand is hit by limitation as the show cause notice was issued to the appellant on 9-7-2006 for the alleged mis-declaration from April, 1992 to February, 1995.
4. Learned SDR on the other hand submits that the fact that the appellant's input was analysed by the CRCL, Delhi and opined that the raw material was nothing but staple fibre of uniform length and uniform diameter. This would indicate that the appellant had, in fact, procured PSF and not polyester waste. If PSF is used in the manufacture of blended yarn then the appellant is not eligible for the benefit of exemption, if any. He relies heavily upon the test report given by CRCL in respect of the inputs. It is his further submission that the appellant had purchased polyester waste @ Rs. 70/- per kg. which was almost the value of polyester staple fibre which is indicative that what was received by the appellant was PSF and not polyester waste.
5. Considered the submissions made at length by both sides and perused the record. We find that the entire demand of duty has been worked out by the Revenue based on the analysis of samples of input which was drawn from the factory in the month of December, 2004. CRCL opined that "the sample is in the form of white fibrous mass and consisted of fibre of uniform length and diameter". We are unable to accept the contention of the learned SDR that the demand is sustainable on this ground. There is no answer to the fact that for the period April, 1992 to December, 1994 the same final product of the appellant was subjected to various show cause notices and adjudication orders which went in favour of the appellants and remain settled as the Revenue had not filed any appeal against this orders. Further, we also notice that the appellant are manufacturers of Fibres of PSF and viscose and are also manufacturing blended yarn made from polyester waste and viscose (Para 31 in impugned Order). It may be possible that the sample drawn , by the Revenue authorities of the inputs may be of fresh polyester staple fibre which was being used by the appellant in the manufacturing of blended fibre made out of PSF and viscose. It is on record that the appellant had purchased polyester waste (47% of their requirement) from MPPL who were subjected to investigation on the ground that they were supplying PSF in the guise of polyester waste. The said case has ended in favour of that assessee as held by the Tribunal in the case of Reliance Industries & Ors. (supra). There is nothing on record to show that the authorities have investigated other suppliers of polyester waste to the appellant. We also find merits in the arguments of the learned advocate that the show cause notice issued on 9-7-1996 is blatantly time barred as during the relevant period show cause notice had to be issued within 6 months and extended period can be invoked, if there were suppression, mis-statement with intention to evade payment of duty. It is on record during the period April, 92 to December, 94 the appellants were issued various show cause notices on this very same issue and adjudication orders were passed in their favour. Hence show cause notice dated 9-7-96 covering the extended period would be hit by limitation.
6. Accordingly, we find that the appellants have made out prima facie case for complete waiver of pre-deposit of duty and penalties imposed, both on merits and on limitation. All the stay applications for waiver of pre-deposit of the amount of duty and penalties are allowed and recovery thereof stayed till the disposal of the appeals. Since amount involved in this case is substantial we direct the Registry to list these appeals for out (of turn hearing on 23rd July, 2007.
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