GUJARAT KHADI PRATISHTAN Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioner, a public trust as well as a society registered under the Central Societies Registration Act, 1860, has filed the present petition under Articles 226 and 227 of the Constitution of India challenging the judgement and order dated 2nd September, 2003 passed by the Customs Excise and Service Tax Appellate Tribunal (hereinafter referred to as the Tribunal ), whereby the appeal preferred by the petitioner against the order dated 22nd January, 1998 passed by the Commissioner, Central Excise, has been dismissed.

(2.) The facts of the case stated briefly are that the petitioner intended to set up a unit for the purpose of manufacturing detergent washing powder in the year 1992 and consequently, took steps for setting up a manufacturing plant at Chhatral in the name and style of Kamdhenu Gramodyog Detergent Unit . By a notification No.88/88-CE dated 1st March, 1988 as amended from time to time, the Central Government in exercise of powers under sub-rule (1) of rule 8 of the Central Excise Rules, 1944 exempted goods of the description specified thereunder from the whole of the duty of excise leviable thereon provided that such goods are manufactured in rural areas by registered co-operative societies, or by women s societies, or by institutions recognised by the Khadi and Village Industries Commission or the State Khadi and Village Industries Boards or by units run with the cash assistance from District Rural Development Agencies under the Integrated Rural Development Programme (IRDP). The goods specified thereunder, interalia, included laundry and carbolic soaps. The petitioner who claims to be recognized by the Khadi and Village Industries Commission (hereinafter referred to as KVIC ) vide certificate N.WZIC/GUJ/56/93-96 under the Khadi and Village Industries Commission Act, 1956, filed a declaration before the Assistant Collector of Central Excise Rural Area on 21st November, 1993 as required under Notification No.13-CE(NT) dated 14.5.93 claiming exemption under Notification No.88/88 dated 1st March, 1988 as amended by Notification No.35/93 dated 28.2.93. It appears that the petitioner availed of cash assistance from Gujarat State Khadi Gramodhyog Board for the purpose of manufacturing synthetic detergent falling under heading 34.02 and was granted permission for starting factory at Chhatral. However, instead of starting the factory at Chhatral as approved by the Board, the petitioner started the manufacturing detergent powder at Iyava, Sanand, by taking the factory premises and machinery on lease.

(3.) Pursuant to information regarding evasion of Central Excise duty by the manufacturers of detergents and cake, on 21st January, 1994 the Central Excise Preventive officers visited the factory premises of the petitioner at Nilkant Industrial Estate, Chhatral manufacturing detergent washing powder and acid slurry and seized a specified quantity of detergent washing powder and acid slurry on the ground that the petitioner had cleared detergent powder illicitly without obtaining Central Excise Registration and without payment of duty leviable thereon. Subsequent thereto, a show cause notice dated 13thApril, 1994 came to be issued to the petitioner calling upon it to show cause, interalia, as to why the detergent powder and acid slurry placed under seizure should not be confiscated and as to why central excise duty ofRs.22,09,785.90 should not be demanded under section 11-A of the Central Excise Act, 1944 (hereinafter referred to as the Act ) read with Rule 9(2) of the Rules along with under rule 173-Q of the Rules. The show cause notice culminated into an order in original dated 22nd January, 1998 passed by the Commissioner, Central Excise confirming duty demand of Rs.22,09,785/- and ordering confiscation of the goods seized under rule 173-Q of the Rules, redeemable on payment of a token fine of Rs.1000/-. The Adjudicating Authority however, refrained from imposing any penalty on the unit. The petitioner carried the matter in appeal before the Tribunal but did not succeed.