ARUN HOSIERY MILLS Vs. UNION OF INDIA

JUDGEMENT

(1.) By way of the present petition the petitioner seeks quashing of the demand show cause notice dated 3rd April, 1973, order of the Assistant Collector dated 25th February, 1973 and the demand notice dated 29th August, 1983.

(2.) Briefly stated the facts of the case are that petitioner is engaged in the manufacture of electronics equipments for defence. The petitioner was also manufacturing and clearing record players and parts thereof from November 1970 to December, 1972. The petitioner was holding an excise licence under Tariff Item No.37A of the first Schedule of the Central Excises and Sale Act, 1942. It is stated that the record player and parts thereof were exempted from payment of duty under Notification No.145 of 1963 dated 31st August, 1983. The said notification provided that gramophones and amplifiers assembled and/or manufactured out of parts, on all of which appropriate amount of excise or countervailing customs duty is already paid, are exempt from payment of the whole of the duty leviable thereon. As the record players were assembled by the petitioner with duty paid components, the same were exempted from all excise duty under the aforesaid notification. It is stated that the petitioner removed the manufactured record players after availing the due procedure provided under the rules and the departmental instructions. The petitioner was removing the goods against Excise Gate Pass and were entering the particulars thereof in the RG-I Register which was being maintained under the Central Excise Rules. The Range Authorities were duly informed of the receipt of excise/countervailing customs duty paid components in the prescribed form. A copy of the gate pass was sent to the Range Officer along with monthly return. It is stated that the petitioner and excise authorities were under a bona fide belief that the record players manufactured by the petitioner were not subject to excise duty, therefore, the excise authorities did not object to the clearance of the goods without payment of excise duty.

(3.) By Memo No. C-1251 dated 3rd April, 1973 a demand show cause notice under Rule 9(2) and 10-A of the Central Excise Rules, 1944 was issued to the petitioner stating that it had cleared 2729 record players (including 40 ampligrams) assessable to Central Excise Duty under Tariff Item 37-A without payment of duty and called upon the petitioner to show cause why an amount of Rs.87,060.16p be not demanded from them. It was also stated in the said notice that the demand notice was as a sequel to the clarification received by the Collector Central Excise, New Delhi Notice No.90/CE/72 dated 7.11.1972 that record players were not entitled to exemption under notification No.145/63 dated 31st August, 1963. The petitioner did not reply to the said show cause notice.