LexCOMMISSIONER OF CENTRAL EXCISE, MADURAI versus AYYAPPAN TEXTILES LTD.
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' [2013] 7 S.C.R. 771 COMMISSIONER OF CENTRAL EXCISE, MADURAI v. A YYAPPAN TEXTILES LTD. (Civil Appeal No. 6766 of 2003) JULY 23, 2013. [SUDHANSU JYOTI MUKHOPADHAYA AND J. CHELAMESWAR, JJ.] Central Excise Tariff Act, 1985: A B c Heading 52. 03 - Cotton yam of various counts - Demand raised against assessee for manufacturing cotton of higher counts than the declared ones - Held: If on inspection of a manufacturing premises on a particular day it is detected that goods of a particular specification are being manufactured, 0 the department is entitled in law to presume that (until the manufacturer proves the contra) goods of the same specification are continued to be manufactured - However, in the instant case, no samples were drawn for Revenue to draw an initial presumption - Further, having regard to the paltry E amount involved in the matter and the first appellate authority ' found substance in the defence of assessee, judgment of first appellate authority as affirmed by Appellate Tribunal, not interfered with.! Evidence Act, 1872 - s.114,111.(d). The respondent-assessee was issued a show cause F notice ·dated 24.6.1994 stating that on the inspection of its factory premises, entries in two registers indicated that the assessee was manufacturing cotton yarn of higher counts than the declared ones. Revenue came to the prima facie conclusion that the assessee was liable to G pay a further sum of Rs.4,98,034/- towards duty of goods allegedly manufactured between 1.2.1989 to 14.8.1993, and was also liable to penalty. The Collector, Central 771 H 772 SUPREME COURT REPORTS [2013] 7 S.C.R. A Excise confirmed the demand to the extent of Rs.1,33,573/-. On appeal by the Revenue, the matter was remitted by the first appellate authority and the Deputy Commissioner upheld the demand raised in the show cause notice. But on appeal by the assessee, the B Commissioner (Appeals) restricted the demand to Rs.1,32,573/- as was initially held by the Collector, Central Excise. Revenue's appeal was dismissed by the Tribunal. Dismissing the appeal, the Court C HELD: 1.1 If the department on inspection of a manufacturing premises on a particular day detects that goods of a particular specification are being manufactured, the department, in view of the principle enunciated in s.114, Illustration (d) of the Evidence Act, D 1872, is entitled in law to presume that (until the manufacturer proves the contra) goods of the same specification are continued to be manufactured .. However, the case on hand is not a case where the said prii1ciple can be applied as no samples were drawn at all E for the department 'to draw an initial .presumption. The content of the recovered FILE and the statements of the employees of the respondent must be examined to ascertain the fact whether the respondent manufactured during the period covered by the FILE - yarn of a higher F count than the declared one. Only after establishing such fact the department would be entitled to draw a presumption. There is no clear finding on record from any one of the authorities· below that the materials gathered by the department would establish that basic fact. [para G 14-15] [778-G-H; 7'79-A-C) H Ramalinga Choodambikai Mills Ltd. v. Government of India & Others 1984 (15) E.L.T. 407 (Mad.) - approved. Bojaraj Textiles Mills Ltd. v. Assistant Collector of Central COMMISSIONER OF CENTRAL EXCISE, MADURAI v. 773 AYYAPPAN TEXTILES LTD. Excise 1990 (45) E.L.T. 559 (Mad.) and The Government of A India represented by its Secretary, Ministry of Finance, Department of Revenue & Insurance, New Delhi and Others Ii. The Chirala Co-operative Spinning Mills Ltd., Chirafa 1980 E.L.T. 174 (A.P.) - referred to. B Collector of Central Excise, Coimbatore v. Cambodia Mills Ltd., 2001 (128) E.L.T. 373 (Mad.) - disapproved. Superfil Products Ltd. v. CCE, Chennai 2002 (48) · R.L.T. 319 (CEGAT - Chennai) - cited. c 1.2 On the other hand, the 1st appellate authority found that the defence of the assessee - that the test reports obtained by it for a different purpose but not to ascertain the count of a day are not representative of the count of the production of the entire week - is a tenable D defence. The Tribunal instead of deciding the correctness of such a conclusion went into the questions of law unwarranted by the facts of the case. Further, having regard to the paltry amount involved in the matter, the l
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