THE UNION OF INDIA Vs. AGRAWAL DESIGNING

JUDGEMENT

(1.) THIS is an application Under Section 35 -H of the Central Excise Act, 1944 (hereinafter to be referred to as 'the Act') for the issuance of a direction to the Central Customs Excise and Gold (Control) Appellate Tribunal, New Delhi (for short 'the CGAT) to draw up a statement of the case and refer the following questions, said to be questions of law arising out of its order Annexure/3 dated 3.5.1999 to this Court:

(2.) THE brief facts of this case as found by the Tribunal are: that the Officers of the Central Excise Department visited the factory premises of the respondent assessee on 21.4.1973 and found that he was engaged in the process of mercerising cotton fabrics with the aid of power; that a certain quantity of cotton fabrics so mercerised on 19.4.1993 was found lying in the factory; that the said quantity of goods was seized as the respondent has manufactured the same without taking central excise licence or complying with other central excise formalities; that on scrutiny of the records in the factory, the Officers found that the respondents had already cleared 125144.66 sq. meters of mercerised cotton fabrics without payment of Duty. Therefore, the Collector Central Excise ordered to confiscation on the aforesaid goods with option to the assessee to redeem the same on payment of Rs. 50,000/ - as redemption fine and imposed a penalty of Rs. 40,000/ - on the respondent assessee. The Tribunal vide its final order dated 3.5.1999 disposed of the appeal setting aside the confiscation, redemption fine and penalty but confirming the demand of duty of Rs. 14.354.98P. on the quantity of fabrics processed with the aid of power prior to 11.4.1993.

(3.) THE contention of the learned Counsel for the respondent -assessee has been that the substituted provision in the Act of 1957 which specifically incorporated provision relating to the levy of penalty under the Central Excise Act, 1944, made it applicable only with effect from the date when the said amendment was brought in to effect vide Finance Act, 1994 and is not retrospective in operation so far as the levy of penalty under the provisions of the Act of 1957 is concerned. It has been the case of the Revenue that since all provisions relating to levy and collection of additional duties as they apply in relation to the levy arid collection of excise duty on the goods covered under the Central Excise Act were made applicable by Sub -section (3) of Section 3 of the Act of 1957. The levy of penalty being an ancillary to the process of collection was already in existence and, therefore, the substituted provision must be deemed to be clarificatory in nature so far as it relates to the question of penalty and not of substituted provision to be operative retrospectively particularly keeping in view that the Act of 1957 is not an independent legislation but is merely supplementary to the existing law relating to the levy of excise duty.