SPECIAL PRINTS LIMITED Vs. CCE

JUDGEMENT

(1.) These appeals are against the order passed by the Commissioner of Central Excise and Customs, Surat in adjudication of a show cause notice issued by him on 12.5.1998 on the basis of the results of the departmental investigation into certain clearances of excisable goods by two of the appellants viz. M/s. Special Prints Ltd and M/s Garden Silk Mills Ltd. The bare facts relevant for the purpose of disposal of these appeals are as under: During the period April 1993 to March, 1998, M/s Special Prints Ltd Surat, on jobwork basis, processed grey man -made fabrics supplied by M/s Garden Silk Mills Ltd, Surat and cleared the processed fabrics to M/s Garden Silk Mills Ltd on payment of Central Excise duty. The show cause notice alleged that the two companies were related persons in terms of Section 4(4)(c) of the Central Excise act and, therefore, M/s Special Prints Ltd should have paid duty on the processed fabrics in terms of the wholesale price at which the goods were sold by M/s Garden Silk Mills Ltd in terms of section 4(1)(a)(iii) of the Act. Therefore, a demand of differential duty amounting to Rs 21,37,51,202/ - was raised on M/s Special Print Ltd. During the period from November 1996 to March 1998, M/s Garden Silk Mills Ltd had, on the jobwork basis, texturised partially oriented yarn (POY) and cleared the same to M/s Special Prints Ltd on payment of Central Excise duty and the latter, in turn, sold the goods to the former, who then sold the goods in the market at a price much higher than the price on which duty had been paid initially by them. The show cause notice alleged that M/s Garden Silk Mills Ltd should have initially paid duty on the texturised yarn in terms of the wholesale price at which they themselves sold the yarn after purchase from M/s Special prints Ltd in the normmal course of wholesale trade in terms of section 4(1)(a)(ii) of the Act. The notice accordingly raised a demand, on M/s Garden Silk Mills Ltd of differential amount of duty of Rs. 60,31,775,30 on the texturised yarn cleared to M/s Special Prints Ltd during the above period. The show cause notice also proposed to impose penalties on the two companies under Section 11 -AC of the act and rule 173 -Q(1) of the Central Excise Rules, 1944. Penalties under Rule 209 -A of the Central Excise Rules were also proposed against shri Soli. J. Bhesania, Director of M/s Garden Silk Mills Ltd and Shri B.J.Modi, Director of M/s special Prints Ltd. The show cause notice, further, implicated two firm namely M/s Garden Associates and M/s Vareli Associates for their alleged involvement by way of transportation of the processed fabrics of M/s Garden Silk Mills Ltd and accordingly, proposed imposition of penalties on them under Rule 209 -A ibid. It was also alleged in the notice that four trucks belonging to Shri Alla Bax Mohd Shaikh, Proprietor of Adnan Roadlines, New Agra Road, Mumbai, which were used for transportation of the processed fabrics of M/s Garden Silk Mills Ltd, were liable to confiscation. A penalty was also proposed to be imposed on Shri Alla bax Mohd Shaikh under Rule 209 -A ibid.

(2.) The allegations in the show cause notice were denied by the parties. TheCommissioner, in the impugned order, confirmed the demands of duty against M/s Special Prints Ltd and M/s Special Prints Ltd and M/s Garden silk Mills Ltd; appropriated the bank guarantee of Rs 2 lakhs furnished by the owner of the trucks at the time of provisional release of the vehicles, towards redemption fine in lieu of confiscation thereof: imposed penalties on the assessee -companies under Section 11AC/Rule 173 -Q and also imposed penalties under Rule 209 -A on M/s Garden Associates, M/s Vareli Associates, shri S.J.Bhesania, Shri B.J.Modi and Shri Alla Bax Mohd Shaikh. Hence these appeals.

(3.) Heard both the sides. The learned Senior Advocate Shri J.F.Pochkhanawala, assisted by the learned Advocate Shri Willingdon Christian, representing the appellants, submitted that the basic issue involved in this case was no longer res integra as it stood settled by the judgement of the Hon'ble Supreme Court in the case of Ujagar Prints Vs. Union of India (1988 (38) ELT 535) as clarified in 1989 (39) ELT 493. The learned Counsel also relied on the apex Court's decision in Pawan Biscuits Co Pvt Ltd Vs. CCE Patna [2000 (120) ELT 24(SC)] as also on the Tribunal's order in S. Kumars Ltd. Vs. CCE Indore [2000 (117) ELT 439] and Prafful Industires and Others Vs. CCE Mumbai [2000 (38) RLT 125.] The learned SDR Shri R.C.Sankhla reiterated the findings as recorded inthe impugned order and also reiterated the Supreme Court's decision in Standard Fire Works Industries and Another Vs. CCE[1987 (28) ELT 56 (SC)].