SOMA TEXTILES AHMEDABAD Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioner-Company is engaged in the business of manufacturing textiles and it is running a textile mill in the name and style of M/s. Soma Textiles. The petitioner-Company received two show cause notices dated 2/11/1972 and 8/12/1972 By these show cause notices the petitioner was called upon to show cause as to why penalty should not be imposed upon the petitioner-Company on the ground that cloth of Sort Nos. 315 and 319 of running cloth was converted into rags and cleared by paying duty at the lower rate The petitioner appeared before the authority concerned and submitted its explanation. After hearing the petitioner the Collector of Central Excise Baroda passed order dated 23/10/1973 and held that the petitioner had deliberately cut the second cloth into rags with a view to evading payment of excise duty livable thereon inasmuch as rags were exempted from payment of duty at the material time. The Collector further held that the petitioners had given incorrect marks as rags on cotton fabrics of Sort No. 319 showing that these cotton fabrics were damaged or sub-standard rags inspite of the fact that these goods were obtained from running length of cotton fabrics known as piece of cotton fabrics as defined in Rule 96-A(i) of the Central Excise Rules 1944 and not form damaged or sub-standard cotton fabrics as defined in Rule 96-A(ii). He further held that the petitioner had made incorrect entry of production manufacture and storage in the R. G. I. Register in respect of cotton fabrics weighing 11247 k. g. equivalent to 129340 sq. mt. or 115113.04 sq. mtrs. and removed the same from the factory premises as rags or damaged or sub-standard cotton fabrics without payment of any duty though the goods were not the cut pieces of damaged or sub-standard cotton fabrics. The Collector further held that the charges leveled against the petitioner for contra- vention of the provisions of Rules 96-B 96 226 53 173 173 173 and 173-Q(d) of the Central Excise Rules 1944 were proved. The Collector passed order imposing penalty of P.s. 2 0 under the provisions of Rule 173-Q(ii) of the Rules and further ordered confis- cation of goods under seizure valued at Rs. 59 60.5 ps. However the petitioner was given option to redeem the goods on payment of fine of Rs. 5 0 in lieu of confiscation within three months from the date of receipt of the order. The Collector also ordered to confiscate the land building plant and machinery etc. belonging to the petitioner but gave option to redeem the same on payment of fine of Rs. 250.00 in lieu of confiscation within three months from the date of receipt of the order. It is further ordered that the petitioners shall pay duty at the appropriate livable rate prevalent at the material time on the original piece of cotton fabrics measuring 18044.30 sq. mtrs. (20274.5 L. mtrs.) equivalent to 1763 k.g. of Sort No. 319 Fined Dyed Mercerized Cambric under seizure from which rags have been obtained in a manner otherwise than as provided by law. The Collector also passed order directing the petitioner to pay duty at the appropriate rate prevalent at the material time on the original pieces of cotton fabrics measuring 115113-04 sq. mtrs (or 129340.5 L. mtrs) (equivalent to kg. 11247 of Sort No. 319 from which rags had been obtained in a manner otherwise than as provided by law.

(2.) The petitioner carried the matter in appeal before the Central Board of Excise & Customs. There also the petitioner lost. The order passed by the Board of Central Excise & Customs dated 8/01/1975 is produced at Annexure E to the petition. However the Board held that about 2% of the total production of fabrics of each of the two varieties (i. e. No. 319 & 315) be taken as genuine rags and it should be allowed free of duty. Having regard to the facts and circum- stances of the case in respect of the entire Sort No. 319 the Board directed that the demand of duty be reduced by 2% and in case of Sort No. 315 the Board directed that the demand for duty be reduced by 5%. Subject to the aforesaid modifications the Board rejected the appeal. It appears that the petitioner carried the matter in revision before the Central Government. There also the petitioner has lost.

(3.) Legality and validity of the aforesaid orders have been challenged by the petitioner by filing this petition. The facts in brief may be stated: