S.R. TISSUES PVT. LTD Vs. CCE

JUDGEMENT

(1.) THE departmental proceedings which led to these appeals can be outlined thus: Central Excise (Preventive) Officers, on 14.10.1998, intercepted one 'tempo' (goods vehicle) loaded with a consignment of 65 cartons of tissue paper rolls, napkins and facial tissue consigned by M/s S.R. Tissues Pvt. Ltd., Hari Nager, New Delhi (hereinafter referred to as 'S.R. Tissues') to M/s Sugandh Agencies, Chandigarh, along with a consignment of 74 cartons of Aluminium Home Foils from M/s S.R. Foils Ltd., Hari Nager, New Delhi (hereinafter referred to as 'S. R. Foils') to the same consignee. The officers, after recording the statement of the driver of the vehicle and examining the documents produced by him, seized the consignment of 65 cartons of tissue paper rolls etc. which were believed to be liable to confiscation. On 15.10.1998, they visited the factory premises of S.R. Tissues and found therein machinery for converting jumbo rolls of tissue paper to various sizes of napkin, rolls and facial tissue paper. They also verified the stock of finished goods and found that the goods were bearing 'S.R.' brand name with the logo of a bird -in -club, besides the product name. The goods were believed to be liable to confiscation and hence seized. In a simultaneous search in the office premises of the party also, a stock of similar finished goods bearing the same brand name/logo was found and the same was also seized on similar grounds. Statements of Shri Rishi Gupta (Director of S.R. Tissues.) and Shri Rakesh Gupta (authorised signatory of the company) were also recorded under Section 14 of the Central Excise Act. On the basis of all the evidence gathered as above by the officers, the Department issued show -cause notice (SCN) dated 12.4.1999 to S.R. Tissues proposing, inter alia, to confiscate the goods seized from the vehicle, factory premises and office premises and to impose penalty on them. Later on, another SCN was issued to them on 12.7.1999 proposing to recover Central Excise duty of Rs. 21,45,890 on the branded goods (tissue paper rolls, napkins and facial tissue papers) cleared by them during the period 1.8.1997 to 14.10.1998, to levy interest on the amount of duty under Section 11AB of the Central Excise Act and to impose penalty on them under Section 11AC of the Act and Rules 173Q etc. of the Central Excise Rules. This SCN also proposed to impose penalty on Shri Rakesh Gupta under Rule 209 -A of the Central Excise Rules.

(2.) THE main allegations of the Department were (a) that M/s S.R. Tissues were engaged in the manufacture of excisable goods viz. toilet rolls (of width not exceeding 36 cm.) napkins and facial tissue papers falling under Tariff Sub -Heading 4818.90, from jumbo rolls of the respective materials (exceeding 36 cm. in width) falling under TSH 4803.00, by the process of cutting, slitting etc. amounting to 'manufacture' under Section 2(f) of the Central Excise Act; (b) that the brand name/logo was owned by M/s S.R. Foils and did not belong to S.R. Tissues, and therefore the latter was not eligible for SSI exemption from payment of duty in respect of the goods affixed with such brand name/logo which belonged to "another person" within the meaning of this expression under the Exemption Notification No. 175/85 -CE and the successor -Notifications (including Notification Nos. 16/97 -CE dated 1.4.1997 and 8/98 -CE dated 2.6.1998); (c) that M/s S.R. Tissues were engaged in clandestinely manufacturing and removing such branded goods without payment of duty during the period 1.8.1997 to 14.10.1998; (d) that they contravened the provisions of Rules 9(1), 52 -A, 53, 173 -B, 173 -E 173 -G, 174 and 226 of the Central Excise Rules; and (e) that, for the aforesaid reasons, the sezied goods were liable to be confiscated and M/s S.R. Tissues were liable for penal action. The SCN dated 12.7.1999, which invoked the extended period of limitation under Section 11 -A of the Act, further alleged that the Company had contravened the aforesaid provisions of law with intent to evade payment of duty and that Shri Rakesh Gupta, being the authorised signatory of the company, was responsible for manufacturing , storing and removing the goods without payment of duty in the course of day -to -day business and had reason to believe that the goods were liable to confiscation and he was liable to penal action under Rule 209 -A for his acts of omission and commission.

(3.) THE SCNs were contested by the noticees. The jurisdictional Commissioner of Central Excise passed a common order in adjudication of both the SCNs. It is this order which has been challenged before the Tribunal by M/s S.R. Tissues and Shri Rakesh Gupta in appeal Nos. E/839/2000 -C and E/840/2000 -C respectively. The appellant company is aggrieved by (i) confiscation of the seized goods with option for redemption on payment of fine of Rs. 15,000 (in respect of the 65 carton of goods seized from the vehicle), Rs. 1,15,000 (in respect of the stock of goods seized from the factory premises) and Rs. 7,000 (in respect of the goods seized from the office premises); (ii) confirmation of the demand of duty to the tune of Rs. 18,18,551 on the goods cleared during the period 1.8.1997 to 14.10.1998, under Rule 9(2) of the Central Excise Rules read with the proviso to Section 11 -A(1) of the Act; (iii) order for levy of interest on the duty amount under Section 11 -AB of the Act; and (iv) imposition of penalty of Rs. 18,18,551 under Rule 173Q of the Rules read with Section 11 -AC of the Act. Shri Rakesh Gupta's challenge is against the imposition of penalty of Rs. 1,00,000 on him by the adjudicating authority under Rule 209 -A of the Rules.