Hindustan Products Vs. Cce

Hindustan Products vs Cce

Type Court Judgment Court Customs Excise and Service Tax Appellate Tribunal CESTAT Delhi Decided Sep 24, 2003

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Citation: sooperkanoon.com/32397
Court: Customs Excise and Service Tax Appellate Tribunal CESTAT Delhi
Judge: S Kang, a T V.K.
Decided On: Sep 24, 2003
Subject: Service Tax

Case Summary

AI-generated summary - not the official court judgment text.

Service Tax

Key legal issue: Service Tax

Parties & Advocates

Appellant / Petitioner

Hindustan Products

Respondent

Cce

Legal References

Reported In: (2004)(92)ECC211

Excerpt

.....period, there must be some mention of the machines used for the manufacture of such yarn in the survey report of the insurance company.5. the contention of the appellants is also that the demand quantified on the basis of their total clearance of yarn. the appellants produced the evidence on record to show that they were also trading in cotton yarn which is not liable to excise duty. therefore, the quantification of demand is only on the basis of presumption that all the clearances made by the appellants are in respect of chenille yarn manufactured by them.6. the learned sdr on behalf of the revenue submitted that the proprietor of the firm on 17.2.99 admitted that they were manufacturing chenille yarn for the last 5-6 years and clearing the same without payment of duty. there is no mention of the fact that the machines used for the manufacture of yarn are purchased in january 1999. even in the retraction made on 18.2.99, this fact was not mentioned. the fact regarding purchase of the machines used in the manufacture of yarn in the month of january 1999 is only disclosed by the appellants in reply to the show cause notice in the year 2001. therefore, this contention is only after-thought.8. the contention of the appellants is that they started manufacturing the chenille yarn in the month of january 1999 and they purchased 65 machines only in the month of january 1999. we find that the proprietor of the firm in his statement dated 17.2.99 admitted the fact that they were manufacturing the chenille yarn for the last 5-6 years. he has not mentioned the fact that the machines were purchased only in january 1999. even in the retraction dated 18.2.99, no such averment is made.the machines were shown to be purchased in january 1999. on specific query from the bench regarding proof of payment made by the appellants in respect of these machines, the appellants' contention is that these machines were purchased against cash. in the circumstances, we find no infirmity in.....

Full Judgment

1. The appellants filed this appeal against the adjudication order passed by the Commissioner. In this case, the duty amounting to Rs. 99,89,349 was confirmed on the ground that during the period from 1.4.95 to 16.2.99, the appellants manufactured and cleared chenille yarn without payment of duty. A penalty of equal amount was also imposed on the appellants.

2. The brief facts of the case are that on 16.2.99, the unit of the appellants was visited by the Revenue Officers and it was found that there were 65 machines used in the manufacture of chenille yarn. The chenille yarn was liable to excise duty and the appellants are clearing chenille yarn without payment of duty. On 17.2.99, the statement of Shri Rajeev Kumar, proprietor of the firm was recorded who admitted the fact regarding manufacture of chenille yarn and also admitted that they were manufacturing chenille yarn for the last 5-6 years and clearing the same without payment of duty. The Revenue Officers also made enquiry from the customers which also shows that the appellants were clearing the chenille yarn. Show cause notice was issued to the appellants for demanding duty and imposing penalty on them. After affording an opportunity of hearing to the appellants, the impugned order was passed.

3. The contention of the appellants is that they were trading in cotton yarn and also undertaking the process of doubling the cotton yarn and both were not liable to Central Excise duty. They were also trading in chenille yarn and only in the month of January 1999, the appellants purchased 65 machines for the manufacture of chenille yarn. The contention of the appellants is that they produced the invoices regarding the purchase of machines from M/s. Ruchi Engineers and M/s.

Puneet Dhiman International only in the month of January 1999. Before January 1999, the appellants had no capacity to manufacture the chenille yarn. Therefore, the demand for the period earlier to January 1999 is not sustainable.

4. The contention of the appellants is also that the statement made by the proprietor of the firm on 17.2.99 was retracted on the next day.

Therefore, retracted statement cannot be made basis for demand. Their contention is that the appellants started their business of trading in yarn in the year 1992 and in the year 1993-94, they installed doubling machine and also started manufacturing the cotton yarn by doubling apart from trading of the cotton yarn. In May 1997, a fire broke out in their factory and most of the cotton yam in the factory was damaged. In this respect, the appellants made insurance claim and in the survey report of the insurance company only shows that the presence of doubling machines. The contention of the appellants is that if they were manufacturing chenille yarn during that period, there must be some mention of the machines used for the manufacture of such yarn in the survey report of the insurance company.

5. The contention of the appellants is also that the demand quantified on the basis of their total clearance of yarn. The appellants produced the evidence on record to show that they were also trading in cotton yarn which is not liable to excise duty. Therefore, the quantification of demand is only on the basis of presumption that all the clearances made by the appellants are in respect of chenille yarn manufactured by them.

6. The learned SDR on behalf of the Revenue submitted that the proprietor of the firm on 17.2.99 admitted that they were manufacturing chenille yarn for the last 5-6 years and clearing the same without payment of duty. There is no mention of the fact that the machines used for the manufacture of yarn are purchased in January 1999. Even in the retraction made on 18.2.99, this fact was not mentioned. The fact regarding purchase of the machines used in the manufacture of yarn in the month of January 1999 is only disclosed by the appellants in reply to the show cause notice in the year 2001. Therefore, this contention is only after-thought.

8. The contention of the appellants is that they started manufacturing the chenille yarn in the month of January 1999 and they purchased 65 machines only in the month of January 1999. We find that the proprietor of the firm in his statement dated 17.2.99 admitted the fact that they were manufacturing the chenille yarn for the last 5-6 years. He has not mentioned the fact that the machines were purchased only in January 1999. Even in the retraction dated 18.2.99, no such averment is made.

The machines were shown to be purchased in January 1999. On specific query from the Bench regarding proof of payment made by the appellants in respect of these machines, the appellants' contention is that these machines were purchased against cash. In the circumstances, we find no infirmity in the impugned order where the Commissioner held that the plea that the machines for manufacture of chenille yarn were purchased in the month of January 1999 is only after-thought.

9. Regarding quantification, we find that the appellants produced the evidence on record and the Revenue also made some enquiries from their customers to show that they were also trading in the cotton yarn which is not dutiable. The demand was quantified taking into consideration all the clearances made by the appellants as of chenille yarn which according to our opinion is not sustainable. The Revenue is duty bound to raise the demand in respect of chenille yearn manufactured and cleared by the appellants without payment of duty. As the appellants were also trading in the cotton yarn which is exempted, therefore all the clearance made by the appellants shall not be presumed to be in respect of chenille yarn manufactured by them. This aspect requires reconsideration. Therefore, the impugned order is set aside and the matter is remanded to the adjudicating authority for requantification of the demand on the basis of chenille yarn manufactured and cleared by the appellants during the relevant period. The appeal is disposed of by way of remand.

Same Court & Year Customs Excise and Service Tax Appellate Tribunal CESTAT Delh... Same Parties Hindustan Products vs Cce Same Subject Service Tax Same Judge S Kang, a T V.K.