MAHESH SILK MILLS Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) APPEAL No. E/2172/99 -MUM, filed by M/s. Mahesh Silk Mills, Surat, and Appeal No. E/2317/99 filed by M/s. Chandan Prints, Surat are directed against the same Order -in -Original No. 06 of 1999, dated 26 -2 -1999, passed by the Commissioner (Adjudication), Central Excise, Mumbai. As the issues involved in both the appeals are interconnected and arise out of the same impugned order, both these appeals are being disposed by this common order. Briefly stated the facts of the case are that the appellant M/s. Mahesh Silk Mills is engaged in the processing of man -made fabrics (belonging to various cloth merchants/traders) on job work basis attracting Additional Duty under the Additional Duties of Excise (Goods of Special Importance) Act, 1957. The factory premises of the appellant M/s. Mahesh Silk Mills and seven shop premises of cloth merchants/traders were searched on 19 -10 -1995 by the officers of the Directorate General of Central Excise Intelligence, Zonal Unit, Mumbai, and the shop premises of M/s. Chandan Silk Mills being one of the seven shops searched. During the course of search at M/s. Mahesh Silk Mills on 19/20 -10 -1995, some short and some excess quantities of finished/semi -finished/grey man -made fabrics were detected by the officers, for which show cause notice was issued on 17 -4 -1996 by the Commissioner, Central Excise, Surat. The officers also seized one diary from the factory premise of Mahesh Silk Mills containing fabric details like Name, Date, No., Meterage, Name of Fabric, etc. allegedly showing quantities of grey fabrics received from 47 cloth merchants/traders and corresponding processed fabrics sent back by M/s. Mahesh Silk Mills after processing to the said merchants/traders during the period September to October, 1994. On comparing the figures contained in the diary with the Lot Register maintained by M/s. Mahesh Silk Mills, the officers suspected that M/s. Mahesh Silk Mills processed 16,82,267.15 linear meters of man -made fabrics without proper accountable in Central Excise records and removed the same clandestinely without payment of Additional Duty of Rs. 30,18,378/ - during the period of September to October, 1994. During the search at the premises of M/s. Chandan Prints, one of the seven cloth merchants whose shop premises were also searched on 19 -10 -1995, the officers recovered and seized one file containing grey fabric challans for the period 15 -7 -1992 to 13 -10 -1995, under which Chandan Prints had sent grey fabrics for processing to various fabric processors including Mahesh Silk Mills, and found that Mahesh Silk Mills had received grey fabrics from Chandan Prints on 29 -3 -1994 and 5 -8 -1993 and sent the same back after processing without payment of Additional Duty amounting to Rs. 33,957/ -. Another show cause notice dated 31 -3 -1998 was issued to Mahesh Silk Mills by invoking extended period of time limitation for recovery of duty of Rs. 30,18,378/ - for the year 1994 -95. After due process of adjudication, the Commissioner (Adjudication), Central Excise, Mumbai confirmed the demand of Rs. 30,18,378/ - along with interest against Mahesh Silk Mills, imposed penalty of Rs. 30 lakhs on them under Rule 173Q(1), and confiscated land, building, plant and machinery of Mahesh Silk Mills under Rule 173(Q)(2) of the Central Excise Rules, 1944 by giving an option to the appellant to redeem the same on payment of redemption fine of five lakh rupees within one month of receipt of the impugned Order -in -Original. A penalty of Rs. 30,000/ - was also imposed on Chandan Prints under Rule 209A of the Central Excise Rules, 1944.

(2.) 1. Learned Advocate Shri Paresh M. Dave arguing on behalf of the appellants made the following submissions:

(3.) WE have heard both sides and perused the case records. The issue involved is alleged clandestine and manufacture of man -made fabrics by the appellant M/s. Mahesh Silk Mills.