ORDER
Lajja Ram, Member (T)
1. These are eight appeals – two filed by M/s. Oswal Woollen Mills Ltd. (hereinafter referred to as ‘OWM’), two filed by M/s. Nahar Spinning Mills Ltd. (hereinafter referred to as ‘NSM’), and four appeals filed by the Revenue being aggrieved with the common Order-in-Original Nos. 130-133/CE/98 dated 29-7-1998 passed by the Commissioner of Central Excise, Chandigarh. They were heard together and are being disposed of by this common order.
2. M/s. OWM and M/s. NSM were engaged in the manufacture of knitted fabrics/knitwears and were using worsted woollen yarn. Yarn of wool in plain (straight) reel hank, whether single or multifold (hereinafter referred to as ‘Hank Yarn’) enjoyed full exemption from central excise duty under notification no. 24/95-CE dated 16-3-1995. Both M/s. OWM and M/s. NSM were using exempted woollen worsted yarn in hank form and were converting the same into cone yarn for use in the manufacture of knitted fabrics. Under Note 3 of Chapter 51 of the Central Excise Tariff, conversion of any form of yarn into another form of yarn amounted to manufacture.
It was alleged in the show cause notice dated 3-10-1996 issued to M/s. OWM, 373, Industrial Area ‘A’ Ludhiana, that M/s. OWM had manufactured yarn of cones and had cleared the same for captive consumption without payment of central excise duty. Duty of Rs. 4,25,08,574/- was demanded for the period 16-3-1995 to 30-4-1996 invoking the extended period of limitation. The provisions of Section 11 AC of the Central Excises Act, 1944 (hereinafter referred to as the ‘Act’) were invoked by way of addendum issued on 6-11-1997.
In the second show cause notice dated 2-12-1996 issued to M/s. NSM, 427, Industrial Area ‘A’ Ludhiana, similar allegations were made for the period 1-5-1996 to 22-7-1996 and demand of duty of Rs. 3,22,740/- was made.
Show cause notice dated 30-12-1996 was issued to M/s. OWM, Unit No. 3, G.T. Road, Sherpur, Ludhiana, with regard to the manufacture of woollen yarn in the form of cones out of their own hank yarn cleared from the EB-4 godown to their weaving section for captive consumption. In this show cause notice dated 30-12-1996, demand of Rs. 68,41,473/- for the period 16-3-1995 to 22-7-1996 was made.
In another show cause notice dated 30-12-1996 issued to M/s. OWM, Unit No. 5, Industrial Area ‘A’, Ludhiana, it was alleged that M/s. OWM had manufactured woollen yarn in the form of cones falling under Heading No. 51.07 of the Central Excise Tariff out of the exempted hank yarn brought from outside and cleared the same for captive consumption in the manufacture of knitwear falling under Chapter 61 of the Central Excise Tariff attracting NIL rate of duty. It was alleged that this was done without giving notice of manufacture to the Department, without the issue of central excise invoice, without filing declaration under Rule 173B and Rule 173C of the Central Excise Rules, 1944 (hereafter referred to as the ‘Rules’), without accountal, without maintenance of central excise statutory records, without obtaining central excise registration and without payment of central excise duty amounting to Rs. 22,46,823/-. The period involved was from 16-3-1995 to 22-7-1996.
3. All the show cause notices were adjudicated by the Commissioner of Central Excise, Chandigarh, who under his common Order-in-Original dated 29-7-1998 confirmed the demands as raised in the show cause notices except in appeal No. E/3065/98-D wherein as against the demand of Rs. 4,25,08,574/- as made in the show cause notice dated 3-10-1996, a demand of Rs. 4,22,12,865/-was confirmed. Penalties of Rs. 4,22,12,860/-, 3,22,740/-, 68,41,470/- and 22,46,820/- were respectively imposed on ‘NSM’, 373, Industrial Area ‘A’, Ludhiana, ‘NSM’, 427, Industrial Area ‘A’, Ludhiana; ‘OWM’ Unit No. 3 and ‘OWM’ Unit No. 5.
4. The Commissioner of Central Excise who adjudicated the matter with regard to interest under Section 11AB held that no interest was payable under Section 11AB as it was introduced in the Finance Bill 1996 and was effective from 28-9-1996 and that the present show cause notices pertained to the ‘period prior to 28-9-1996.
Against this part of the order, the Revenue had filed four appeals.
5. All the eight appeals – two filed by M/s. NSM, two filed by M/s. NSM and four by the Revenue were heard together on 27-4-2000, when Shri Harbans Singh, Advocate, with Shri N.D. Jain, Director, appeared for OWM and NSM. Shri R.S. Sangia, JDR, with Shri V.M. Udhoji, JDR, represented the Revenue.
Shri Harbans Singh, Advocate, submitted that NSM had two units -one was a spinning unit and the other was engaged in the manufacture of knitted fabrics. Similarly, OWM had two units – one was a composite unit engaged in spinning and weaving, while the other unit was only manufacturing fabrics. Woollen yarn in hank form enjoyed exemption from duty. The units availed of the exemption and used yarn so cleared under exemption in the manufacture of knitted fabrics. While making the yarn fit for use in the manufacture of knit-ted fabrics, some support was necessary to the hank yarn. Hank yarn was without any support. The yarn in hank was wound on cone in a loose manner only for its use captively. It was his submission that the units were not converting hank yarn into cone yarn and that no cone yarn in marketable form came into existence. He referred to Note 3 to Chapter 51 of the Central Excise Tariff and submitted that the units were not converting hank yarn into any other form of yarn, and what was really being done was to provide a support to the yarn to make it usable for knitting purposes. No process of manufacture was involved in such arrangement. He referred to notification no. 24/95-CE dated 16-3-1995 under which hank yarn enjoyed exemption from the whole of the duty of excise leviable thereon. Reference was also made to the notification no. 35/95-CE dated 16-3-1995 under which yarn (other than sewing thread) double or multifold including cabled yarn enjoyed exemption when used in the manufacture of fabrics. The assessee were under the bonafide belief that no Central Excise Duty was leviable when hank yarn was so used in the manufacture of knitted fabrics.
The learned advocate submitted that in any case there was no justification for invoking the extended period of limitation. The units were registered units and were maintaining statutory records. They were filing regular returns. The units were being visited by the Central Excise Officers now and then. There was no suppression on their part. The extended period of limitation was not invocable.
No mandatory penalty and interest was payable as the provisions relating thereto were not applicable during the period of dispute. It was his submission that the Central Excise Duty at the most could be demanded for the normal period of limitation. Further as they had not collected Central Excise Duty, now being demanded, the assessable value had to be worked out in terms of the Tribunal’s decision in the case of Sri Chakra Tyres Ltd. v. CCE, Madras, 1999 (32) RLT 1 (T). He also pleaded that in appeal No. E/3067/98-D the benefit of Modvat Credit is also admissible to the assessee.
In reply, Shri R.S. Sangia, JDR, submitted that converting of hank yarn into cone yarn was a process of manufacture and the Central Excise Duty has been correctly demanded. Hank and cone were two different forms of yarn. He referred to the various statements on record wherein this position has been admitted by the representatives of the notices. The learned JDR pleaded that all grounds taken by the noticees had been discussed by the adjudicating authority and that a correct view has been taken by him. Provisions regarding mandatory penalty and interest were also applicable to the case.
6. We have carefully considered the matter. Both M/s. OWM and M/s. NSM were engaged in the manufacture of hank yarn which enjoyed full exemption from the payment of Central Excise duty under Notification No. 24/95-CE dated 16-3-1995. Such hank yarn was used in the manufacture of knitted fabrics. Before its use in the manufacture of knitted fabrics, hank yarn was converted and was wound on the cones. The noticee were clearing the exempted hank yarn to another unit and were also using the same for the conversion of cone yarn. Whether captively consumed or cleared to the other sister concern, in all cases the hank yarn was rewound on cones as the hank yarn was not usable in the power looms. The adjudicating authority had held that the process employed by the notices for conversion of yarn received in hank form into yarn in the form of cones amounted to the process of manufacture and the duty of Central Excise was chargeable on such conversion of yarn from exempted hank yarn to dutiable cone yarn.
7. Under Finance Bill 1995 (Bill No. 12 of 1995) effective from 16-3-1995, in Chapter 51 of the Central Excise Tariff relating to wool. Note 3 was substituted vide Item No. 21 in Part 1 of the Forth Schedule to the Finance Bill 1995 [refer page B-95 of 1995 (76) E.L.T.] as under –
“3. In relation to products of heading Nos. 51.06, 51.07, 51.08 and 51.09, dyeing, printing, bleaching, mercerising, twisting, texturising, doubling, multiple-folding, cabling or any other process or any one or more of these processes, or the conversion of any form of the said products into another form of such products shall amount to ‘manufacture’.
Under Heading No. 51.07, yarn of combed wool was classifiable.
8. The notices had submitted that they had no ground for converting hank yarn into cone yarn as they were only using hank yarn captively for manufacturing knitted fabrics. For facilitating the use of hank yarn into manufacture of knitted fabrics, the yarn had to be provided a support and that no conversion into cone yarn was undertaken by them. The winding of cone for support was used with no prescribed standard for weight. Size of the cone was not uniform. The process was undertaken only for the purpose of manufacturing knitted fabrics and not for sale or marketing. In the form the yarn was wound on the cones, the notices asserted that it could not be marketed.
9. While we are not in agreement with these submissions of the no-ticees, we consider that the matter could be disposed of on the ground of limitation alone.
10. The very purpose of providing exemption to hank yarn was to help the handloom sector which provides employment to large number of people from the weaker section of society. Hank yarn is not usable as such by the powerlooms. By providing a definition for ‘Manufacture’ in such a way that the conversion of hank yarn into cone yarn attracted the duty liability, it was ensured that the benefit meant for handlooms was not usurped by the powerlooms who were by and large not paying Central Excise duty at the weaving stage. It was only at the yarn stage that the yarn used by powerlooms was made dutiable and thus duty differential between handlooms and power looms was maintained. The intention of the Legislature was clear and unambiguous and any mis-interpretation in this regard will have serious repercussions to the handloom sector.
11. Without further dealing with this aspect of the matter, we consider that while Central Excise duty was chargeable when hank yarn was converted into cone yarn the noticees have a strong case on limitation.
12. In the four appeals – two filed by OWM and two by NSM, four show cause notices had been issued. In appeal No. E/3065/98-D show cause notice was issued on 3-10-1996 and the period involved was 16-3-1995 to 30-4-1996; in appeal No. E/3066/98-D the show cause notice was issued on 2-12-1996 and the period involved is from 1-5-1996 to 22-7-1996; in appeal no. E/3067/98-D the show cause notice was issued on 30-12-1996 and the period involved is from 16-3-1995 to 22-7-1996. Both the noticees have pleaded that in case their submission with regard to the process of manufacture and the exemption from the payment of Central Excise duty are not accepted, even then the major portion of the demand will be hit by time-bar inasmuch as, according to them, in the facts and circumstances of the case, there was no justification for invoking the extended period of limitation.
13. Now we will examine this aspect of the matter. Both the noticees were registered with the Central Excise Department since the year 1992. The registration No. of OWM was 133-R-VII/LDH/92 and that of NSM was 12-R-VII/LDH/92. They were maintaining Central Excise statutory records. The yarn account was maintained by NSM for the years 1994-95,1995-96 and 1996-97 and the photocopies of the accounts, stock registers etc. are placed in the paper books II of appeal No. E/3065/98-D. The supplies of the yarn were covered by invoices/bills which contained the date, number, weight, value etc. Payments were said to be made by cheque/draft. It is also seen that their classification lists had been approved (refer pages 18-26 of the paper book in appeal No. E/3067/98-D). The copies of the declarations are at pages 27-49 of the paper book in appeal No. E/3067/98-D, and that of the gate passes are at pages 50-61 of the paper book in appeal No. E/3067/98-D. It also appears that regular RT 12 returns were being filed and some of the copies are placed at pages 63-115 of the paper book in appeal No. E/3067/98-D.
14. The allegation of suppression has been made on the grounds that no notice of manufacture of cone yarn was given, no excise registration for conversion of hank yarn into cone yarn was obtained from the Central Excise Department, invoices in this regard were not issued and RG-I register was not maintained and that no declarations had been filed.
The noticees had denied all these allegations and have submitted that there was genuine doubt that the processing undertaken by them did not amount to the process of manufacture.
Prior to 16-3-1995 insofar as the woollen yarn was concerned, the process of conversion from hank yarn to cone yarn did not amount to the process of manufacture. The processes undertaken by the notices were said to be the same as they were undertaking before 16-3-1995. It was their plea that they were under bona fide impression that putting the yarn on cones will make no difference insofar as they were concerned.
Reference has been made to the Trade Notice No. 10-C.E./95, dated 16-3-1995 of the Chandigarh Collectorate wherein it was clarified as under –
“In Chapters 51, 52, 54 and 55, new Notes are being inserted defining the scope of ‘manufacture’ in relation to various post-spinning activities carried out on the respective yarns. However, all such activities except twisting and texturising are being exempted. (Fourth Schedule to the Finance Bill, 1995 and Notification No. 35/95-CE refer).”
This Trade Notice clarified that except the twisting and texturising, no other process was a dutiable process. The noticees have contended that this Trade Notice thus made it clear that no further duty was payable on cone yarn when the hank yarn had already enjoyed exemption from the payment of duty. They had further submitted that they were not undertaking the processing of twisting and texturising and thus could reasonably have a view that they were not required to pay any Central Excise duty when the support was provided to hank yarn to make it suitable for manufacturing knitted fabrics.
We may also refer to Notification No. 35/95-CE dated 16-3-1995 which had been referred to in the Trade Notice dated 16-3-1995, referred to above.
Under this notification dated 16-3-1995, the yarn (other than sewing thread) double or multifold including cabled yarn falling under Chapters 51, 52,54 and 55 enjoyed exemption if the yarn was –
(i) meant for use in the manufacture of fabrics; and
(ii) manufactured out of yarn falling within chapters 51, 52, 54 and 55 on which the appropriate duty of excise has already been paid.
The noticees have submitted that the yarn in their case was meant for use in the manufacture of fabrics and the hank yarn out of which the yarn in their hand had been cleared under exemption. It was their plea that the payment of NIL duty was also the payment of appropriate duty.
They have relied upon the Supreme Court decision in the case of CCE, Patna v. Usha Martin Indus., 1997 (94) E.L.T. 460 (S.C.) and Tribunal’s decision in the case of Maharashtra Steel Indus, v. CCE, Aurangabad, 1997 (95) E.L.T. 342 (T).
They have also referred to the Ministry’s Circular No. 198/32/96-CX dated 19-4-1996 wherein it has been clarified as under –
‘It had been brought to notice of the Board that some Commissioner-ates are not allowing exemption to double or multiple fold yarn, if used in the manufacture of embroidered fabrics in terms of SI. No. 1 of Notification No. 35/95, date 16-3-1995 on the ground that such embroidery yarn is not being used in the manufactured fabrics’.
The matter has been examined by the Board. The expression “manufacture of fabrics” as used at SI. No. 1 in Notification No. 35/95 needs to be distinguished from “weaving of fabrics “. A wider meaning of the expression “manufacture of fabrics” will include, in addition to weaving, the processes like knitting, crochetting, embroidering etc., also. Even after embroidery, the nature of fabric does not change. Embroidered fabrics are also subsequently subjected to the process of bleaching, dying etc. As such, yarn used for embroidery cannot be said to have not been used in the manufacture of fabric. In this view of the matter, it is hereby clarified that use of said yarn for embroidery of fabrics will be covered by the expression “manufacture of fabrics” for the purposes of Notification No. 35/95, dated 16-3-1995.
[Based on M.F. (D.R.) Circular No. 198/32/96-CX, dated 19-4-1996]
15. From the above Trade Notice dated 16-3-1995, the language used in Notification No. 35/95-CE dated 16-3-1995 and the Board’s clarification dated 19-4-1996, it is seen that the doubt in the mind of the noticees about the duty liability on the processing of hank yarn for manufacture of knitted fabrics, was not unfounded.
16. The adjudicating authority in para 29 of the order had admitted that the noticees had been filing RT-12 returns with the Department. He has also noted the arguments of the noticees that in the manufacture of knitwears, the conversion of yarn on cones was a pre-requisite. We find that he had not discussed the various grounds and pleas taken by the noticees in support of their contention that no facts had been suppressed from the Department.
17. The appellants have relied upon the following decisions in support of their contention that there was no justification for invoking the extended period of limitation :-
(1) CCE, v. Chemphar Drugs & Liniments, 1989 (40) E.L.T. 276 (S.C.) -extended period of five years was applicable only when something positive other than mere inaction or failure on the part of the manufacturers is proved;
(2) Padmini Products v. CCE, 1989 (43) E.L.T. 195 (S.C.) – extended period of five years was inapplicable for mere failure or negligence of the manufacturer to take out licence or pay duty when there was scope for doubt that goods were not dutiable;
(3) Associated Cement Companies Ltd. v. CCE, 1989 (40) E.L.T. 159 (T) – extended time limit was not to apply in case of bona fide belief that duty is not leviable. Demand beyond six months’s period was not upheld;
(4) Executive Engineer, KSEB, Kerala v. CCE, Kochi, 1997 (92) E.L.T. 264 (T) when appellant was under bona fide belief that operations carried out by them might not amount to manufacture, suppression of facts with intent to evade payment of duty was not established.
18. We, therefore, consider that the extended period of limitation was not applicable in the facts and circumstances of these cases.
19. The noticees had pleaded that they were under the bona fide belief that no duty was payable in their hands when hank yarn was processed to supply support on cones for facilitating the manufacture of knitted fabrics. If the duty is now demanded, then the price should be taken as the cum-duty price and the benefit of the Tribunal’s decision in the case of Sri Chakra Tyres Ltd. v. CCE, 1999 (32) RLT1 (T), should be extended to them. In that decision, the Tribunal had held that if the excise duty was held to be payable subsequently, then it should be abated from the total sale price realisation by treating it as cum-duty price for purpose of determination of the assessable value and quantum of duty payable.
20. It has also been pleaded that as no duty was paid, the benefit of Modvat credit was also not claimed. The learned advocate had submitted that in appeal No. E/3067/98-D the benefit of Modvat credit be allowed to them.
The Tribunal in a number of decisions have taken a view that the benefit of Modvat credit subject to verification and if otherwise admissible, be extended in favour of the assessees when the duty was not initially paid but was found to be chargeable subsequently. In this connection, we may refer to the following Tribunal’s decisions –
(1) Elgi Equipments Ltd. v. CCE, Coimbatore, 1996 (81) E.L.T. 115 (T);
(2) Dalmia Indus. Ltd. v CCE, New Delhi, 1996 (84) E.L.T. 60 (T).
On both the above counts, we agree with the contention of the noticees.
21. As regards the mandatory penalty under Section 11 AC of the Act and the interest under Section 11AB of the Act, we consider that the provisions relating to mandatory penalty and interest were not in force during the period in dispute.
Sections 11AB and 11AC were inserted in the Act by Section 76 of the Finance (No. 2) Act, 1996 (33 of 1996) and were effective from 28-9-1996 when the Finance (No. 2) Bill, 1996 (Bill No. 45 of 1996 introduced in the Parliament on 22-7-1996) received the assent of the President.
Sub-section (1) of Section 11AB provided that; where any duty of excise has not been levied or paid or has been short levied or short paid by reason of fraud, collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of the Act or the Rules made thereunder with intent to evade payment of duty, then the person liable to pay duty as determined under Sub-section (2) of Section 11A shall in addition to the duty be liable to pay interest at such rate not below 10% and not exceeding 30% per annum as is for the time being fixed by the Central Board of Excise & Customs.
Such interest was payable from the first date of the month succeeding the month in which the duty ought to have been paid under the Act or the Rules made thereunder but for the provisions contained in sub-section (2) of Section 11A till the date of payment of such duty. These provisions with regard to the payment of interest came into effect from 28-9-1996. No retrospective effect had been given to these provisions. In fact, for the removal of doubts it had been declared in sub-section (2) of Section 11AB that the provisions of subsection (1) of Section 11AB shall not apply to cases where the duty became payable before the date on which the Finance (No. 2) Bill, 1996 received the assent of the President.
The Central Excise Duty is payable on the date and time when the excisable goods are removed from the factory or the warehouse. The word ‘Payable’ connotes a legally enforceable payment (refer G. Lakshmi Narayana v. Commercial Tax Officer, First Circle, Hyderabad, 1974 STC (33) at page 558, An-dhra Pradesh High Court, Hyderabad). Tax becomes payable when liability to pay tax arises, and liability to pay tax arises by the happening of the taxable event, (refer Lord Uthwalt in Wallace Brothers & Co. Ltd. v. C.I.T., (1948) 16 ITR 240 (PC); Supreme Court in Kalwa Devadallain v UOI, (1963) 49 ITR 165; Allahabad High Court in M.A. & Company v. Asstt. Commissioner (Judicial), Sales Tax, (1964) 15 STC 487.
In this case we have found that there was no justification for invoking the extended period of limitation. Further, the provisions relating to the payment of interest were put on the statute book subsequently and were not in force during the period in dispute.
We, therefore, agree with the learned adjudicating authority that no interest was payable in these cases.
22. As regards the mandatory penalty under Section 11 AC, where any duty of excise has not been levied or paid or has been short levied or short paid by reason of suppression etc., then the person who is liable to pay duty as determined under sub-section (2) of Section 11A of the Act, shall be liable to pay a penalty equal to the duty, so determined. These mandatory provisions under Section 11 AC were put on the statute book only from 28-9-1996. The provisions were prospective in nature as no contrary intention was manifest from the language of the provisions and no such contrary intention arose by necessary implication.
There are a catena of decisions by the Supreme Court and High Courts that no retrospective operation is to be given to substantive provisions unless the legislature in unambiguous terms had ruled otherwise.
The imposition of penalty is quasi-criminal and the provisions relating to penalty are of penal character. Penalty is in the nature of punishment, (refer Commissioner of Sales Tax, UP, Lucknow v. Moolchand Shyamlal, Belan Ganj, Agra, 1988 (2) SCALE 94 at page 602; and Commissioner of Income Tax v. S. Samanta Singhar, 1988 ITR173 at page 425 (Orissa High Court).
The penalty had to be imposed in accordance with the law prevailing on the date on which the act of concealment took place.
In view of the above legal position, in cases where demand of duty re-lated to the period prior to 28-2-1996, no mandatory penalty under Section 11-AC of the Act could be levied even when the adjudication proceedings have been completed after 28-9-1996.
We may also refer to the Tribunal’s decision in the case of Sonia Engg. Works v. CCE, New Delhi, 1998 (29) RLT 630 (CEGAT), wherein the Tribunal had held that the penalty and interest were not imposable in case the duty liability pertained to the period prior to Section 11 AC came into force.
Thus, we consider that the mandatory penalty under Section 11AB (sic) of the Act could not be imposed.
In the facts and circumstances of the case, we also consider that penalty under Section 173Q of the Rules was also not justified. We set aside the same.
23. Both M/s. OWM and M/s. NSM have submitted that if on merits their pleadings are not acceptable, then the demands should be restricted to the normal period of limitation and the benefits treating their prices as cum-duty prices should be extended to them. In appeal No. E/3067/98-D, the benefit of Modvat credit has also been claimed.
We have analysed the matter in considerable detail and have come to a finding that in the facts and circumstances of the case there was no justification for invoking the extended period of limitation. We agree with the noticees that the demands be restricted to the normal period of limitation and other benefits as claimed be given.
24. The appeal-wise position has been submitted by the notices as under-
Appeal No. - M/s. Nahar Spinning Mills Ltd., v. Commissioner of Central
E/3065/98-D 373, Industrial Area, Ludhiana Excise, Chandigarh.
I. If abatement of duty content is reduced from Assessable value
___________________________________________________________________________
Total assess- Amount Abatement Assessable Amount of Reference
able value as of duty claimed on value after duty
per A/O deter- account of abatement
mined by duty
A/O
___________________________________________________________________________
Rs. Rs. Rs. Rs. Rs.
___________________________________________________________________________
36,70,68,380.20 4,22,12,865 3,78,59,071 32,92,09,309 3,78,59,071 Annex. 'A'
(rate of duty of write-up
11.5%)
___________________________________________________________________________
II. If duty is calculated on the quantity/value for the goods actually sent
to 427, Industrial Area 'A', Ludhiana
Rs.
17,25,462.67 Annex. 'B'
of write-up
III. If extended period of limitation is not
permissible
(a) If all goods are held to 25,26,539 Annex. 'C
have been sent to 427, Industrial of write-up
Area 'A', Ludhiana
(b) If the quantity/value of those 85, 362 Annex.'D' of
goods which are claimed to write-up:
have been sent to 427,
Indl. Area 'A', Ludhiana
Appeal No. E/3066/98-D - Nahar Spinning Mills v. Commissioner of Cen-
Ltd., 373, tral Excise, Chandigarh.
Industrial Area
'A', Ludhiana
I. If abatement of duty content is reduced from Assessable value
___________________________________________________________________________
Total assessable Amount Abatement Assessable Amount Reference
value as per of duty claimed on value after of duty
A/O Deter- account of abatement
mined by duty
A/O
___________________________________________________________________________
Rs. Rs. Rs. Rs. Rs.
___________________________________________________________________________
28,06,434 3,22,740 2,89,453 25,16,981 2,89,453 Annex. 'A'
of write-up
___________________________________________________________________________
II If extended period of limitation is not permissible Rs.
1,75,132 Annex. 'B'
of write-up
Appeal No. - M/s. Oswal Woollen Mills v. Commissioner of Central
E/3067/98-D Ltd., G.T. Road, Sherpur, Excise, Chandigarh.
Ludhiana
Amount of duty determined as per A/O Rs. 68,41,473.00
I. If abatement of duty contents is reduced from Assessable Value, Margin of profit is taken to be 0.79% instead of 10% as taken in the A/O and credit of Modvat on input i.e. wool top is allowed – then the amount of duty comes to Rs. 39,06,280.94 (Reference Annex. ‘A’ of write-up)
II If extended period of limitation is not permissible –
then the amount of duty comes to Rs. 3,23,263/- (Reference Annex. 'B' of write-up)
Appeal No. - M/s. Oswal Woollen Mills v. Commissioner of Central
E/3068/98-D Ltd., Unit No. 5, Industrial Excise, Chandigarh.
Area A, Ludhiana.
Amount of duty determined by A/O Rs. 22,46,823.00
I. If abatement of duty content is reduced from Assessable Value and Margin of profit is taken to be 0.79% instead of 10% as taken in A/O.-then the amount of duty comes to Rs. 18,46,370/- (Reference Annex. ‘A’ of write-up)
II. If extended period of limitation is not permissible –
then the amount of duty comes to Rs. Nil (Reference Annex ‘B’ of write-up)
In appeal No. E/3065/98-D, it has been submitted that if the quantity/value of the goods in dispute which they have claimed to have sent to 427, Industrial Area ‘A’, Ludhiana as deducted from the demand, then the duty liability will come to only Rs. 85,362/-.
We find that the argument that a substantial quantity of yarn had been sold as such, has been discussed by the adjudicating authority in his order and he had concluded that it was highly improbable. But we find that there is no material for us to concur with these findings of the adjudicating authority. This requires further detailed verification and enquiry in the matter. If the plea of the appellants regarding the supply of the yarn to their other unit is found to be correct then accordingly the duty will have to be worked out.
25. In the circumstances of the case the penalties imposed are set aside. No interest under Section 11AB of the Act was also chargeable.
26. The duty already deposited in terms of the stay order be adjusted towards the demand ultimately found on verification and further enquiries and the amount in excess be refunded to the appellants as per law.
27. The four appeals filed by M/s. NSM and M/s. OWM are disposed of in the above terms.
28. The four appeals filed by the Revenue are dismissed. Ordered accordingly.