Full Judgment
2. The issue pertains to clearance of excisable goods during the period October 1995 - October 1996., by a 100% EOU, M/s. Modern Denim Ltd. who manufacture Denim fabrics.
3. M/s. Modern Denim are a 100% EOU engaged in the manufacture of Denim Fabrics. They have another unit namely Modern Demim who also manufacture the same goods. Officers of Central Excise (A.E.) visited the above units and found that M/s. MDL has not accounted for 153197 meters of Denim Fabrics and M/s. M.D. has found to have not accounted for 81851 meter in their records. Show cause notices were issued to both the units but were later vacated by the Deputy Commissioner of Central Excise Ahmedabad.
4 Investigation conducted by the Anti evasion unit of Central Excise Department seemed to have revealed that M/s. MDL had suppressed its production, and clandestinely removed the suppressed quantity of production to its other unit in DTA, M/s. Modern Denim in order to evade payment of appropriate duty that would have been otherwise payable by them. These allegations are based on certain statements and certain investigations recorded and done by the officers of A.E. The Commissioner of in the impugned order demanded duties and imposed penalties as aforesaid. Hence the application.
6. The applicants plead that principles of natural justice were not observed by the Commissioner while adjudicating the case as he did not allow cross examination of persons whose statements were relied upon and that the case is based on mere assumption and presumption. They argued their duty liability has been incorrectly quantified. They ought to have been given the benefit of notification No. 2/95 applicable to excisable goods cleared from on 100% EOU when the Department held that clearances of goods made by M/s. MD were infact were of M/s. MDL. It was also argued that valuation adopted by the Revenue is incorrect; that CVD is not leviable; that the demand is hit by time bar and penalty is not imposable. Financial hardship is claimed with documentary evidence.
7. We observe that the Department's case is based on extensive investigation. The various facts and contentious issues, in the impugned order will have to be examined at a later stage. Contentions raised on denial of the benefit of Notification No. 2/95 C.E. on whether CVD is leviable or not on whether valuation adopted by the department is correct or not and other issues raised will have to be examined while taking up the appeal. The department's contention that certain quantities of Denim Fabrics manufactured by EOU have been clandestinely removed to the DTA unit from where they have cleared on payment of only Central Excise duty applicable instead of duty leviable on the goods when cleared by EOU has prima facie some merit. The department has prima facie made out a case that the DTA unit (M/s. MD) could not have manufactured the fabrics. Having regard to this we observe that a strong prima facie case for total waiver of duties demanded is not made out by the applicants. After taking the plea of financial hardship into consideration the application for waiver of predeposit is disposed of in the following terms.
8. The appellants are ordered to deposit a sum of Rs. 1 crore towards duty within 12 weeks from the date of this order, upon such a deposit, further deposit of duties and penalties are waived and stay granted.
Compliance on 6.4.2004.