The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), quashed duty demand as there was no reliable evidence on stentering of fabrics.
M/s. Jindal Texofab Ltd (JTL), the appellant is engaged in the processing of cotton fabrics. The officers of Central Excise Department during search, seized various records including a file containing delivery slips, based on which statements of some of the buyers mentioned in the delivery slips were recorded who stated that they used to purchase processed fabrics from M/s. JTL but were receiving bills of M/s. Shrinathji textiles wherein the fabrics were shown as hand dyed/bleached/screen printed.
The Adjudicating Authority held that M/s. JTL is not eligible for nil rate of duty as it had machineries installed in its factory and since fabrics were processed with the aid of power; the condition of exemption notification no. 3/2001-CE dated 1.3.2001 is violated.
Accordingly imposed penalty upon M/s. JTL and on the other co-noticees. The appellants preferred appeal before the Commissioner of Central Excise (Appeals) who upheld duty demand of Rs. 20 crores and further imposed penalty of Rs. 20 crores upon M/s. JTL.
The Counsel for the appellant, Rahul Gajera contended that no duty can be demanded from M/s. JTL, as it was not the manufacturer of the fabrics in question and merely allowed use of its Stenter to M/s. Shrinathji Textiles whose employee was posted in the factory of M/s. JTL and that since the material and labour was that of M/s. Shrinathji textiles who used the Stenter and premises of M/s. JTL.
The Counsel for the Revenue, V.G. Iyengar (Authorized Representative) reiterated the findings given in the impugned Order and submitted that impugned order is legal and proper.
A Coram comprising Ramesh Nair, Judicial Member and Raju, Technical Member observed that “There is otherwise no reliable evidence showing the said quantity of 11 L meters fabrics was stentered by the appellant in its premise. In the circumstances, duty demand cannot be sustained upon M/s. JTL. Since duty demand cannot be sustained, penalties upon the appellants are also liable to be set aside.”
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
