OSWAL KNIT INDIA LTD. Vs. CCE

JUDGEMENT

(1.) HEARD both sides and perused the record.

(2.) THE case is before me upon remand by Hon'ble High Court of Punjab and Haryana at Chandigarh under order dated 10.7.06. The remand order may be read: Accordingly, we set aside the order of the Tribunal and remand the matter for fresh decision on merits accordance with law. The parties are directed to appear before the Tribunal for further proceedings on 14.8.2006. The appeal is disposed of in the above terms.

(3.) THE facts of the case are that appellants were manufacturing ready made garments for several years, and those garments being exempt from Central Excise duty, they were not required to take Central Excise licence also. With effect from 1st May 2001, certain kinds of readymade garments became liable to Central Excise duty. Even before that, on 2nd March 2001, the appellant had written a letter to the jurisdictional Supdt. informing that "we presume that we are exempt from the Central Excise duty". Subsequently, some correspondence took place between the parties. Finally on 16.7.2001, Excise officers visited the appellant's factory and seized readymade garments worth about Rs. 24 lakhs. On the same day, the appellant deposited the duty in regard to the seized stock. Subsequently, show -cause notice dated 6th November 2001 was issued proposing confiscation of the seized stock and imposition of penalties. Rule 25 and 26 of Central Excise Act and Section 11AC of Central Excise Act were invoked. The appellant contested the proposals; but failed in adjudication. The Assistant Commissioner confiscated the goods under Rule 25 but gave the appellant an option to redeem them on payment of a fine of Rs. 5 lakhs. A penalty equivalent to the duty involved on the goods was also imposed under Rule 25 of Central Excise Rules read with Section 11AC of the Central Excise Act. A penalty of Rs. 20,000/ - was imposed on Dinesh Gupta, Director of the appellant. The matter was taken up before Commissioner (Appeals). The ld. Commissioner held that "no penalty is imposable upon the appellant No. 1 under Section 11AC. However, penalty is imposable upon them under Rule 25." Penalty was reduced to Rs. 2 lakhs. The penalty on the Director was set aside. Thus, the only issue that survives for consideration in the present appeal is whether the penalty imposed on the appellant manufacturer under Rule 25 is sustainable. The impugned order is silent on the confiscation of seized goods. Therefore, the question is as to what is the position of confiscation and redemption fine.