MUKESH DYE WORKS Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) M /s. Mukesh Dye Works were manufacturer's of MMF falling under Chapter 54 and 55 of the Schedule to CETA it had two partners during the material period i.e. October, 1988 to March, 1993. The Commissioner demanded duty of Rs. 23,93,843.87 under Section 11A(2) and imposed penalty of Rs. 23 Lakhs under Rule 173Q, He also confiscated land, building etc. and allowed it to be redeemed on payment of Rs. 1 lakh. He further imposed penalties on the two partners hence these appeals.

(2.) BRIEFLY the facts are that appellants surrendered their licence on 16 -2 -1993, as they did not wish to continue manufacturing goods. The facts that the licence was surrendered by the appellants on that date is not in dispute. One Shri P.D. Desai was working with the appellants as a Manager when the unit was functioning. He resigned from the firm and took up employment with M/s. Oswal Dying and Printing Works who happened to take the appellants mill on lease. M/s. Oswal obtained the Central Excise Registration and started functioning w.e.f. April, 1993. In May, 1993 the officers visited the premises of M/s, Oswal, conducted verification of stock seized some quantity of fabrics unaccounted; recorded statement of P.D. Desai and that of the Proprietor of M/s. Oswal and some customers. After completion of investigation a show cause notice was issued proposing to recover additional duty of excise and handloom cess alleged to have been evaded by clandestinely removing MMF to the tune of 28,00,420.05 Sq. Mtr during the period October, 1988 to May, 1993. The show cause notice also proposed to confiscate the plant and machinery and to impose penalties. It is evident from the notice that it was M/s. Oswal who were required to show cause to the Commissioner. Nowhere in the show cause notice, the present appellants or its partners were asked reply to the appellants made in the notice. The department however marked the copies of the show cause notice to the appellants and handed them over to Shri P.D. Desai with instructions to further hand them over to the two partners. Shri P.D. Desai however, informed the Collector in his letter dated 1 -12 -1993 that he could not hand over the notices to the appellants as they were out of station. After further correspondence if so transpired that the show cause notices dated 28 -10 -1993 were given to the partners only on 3 -10 -1997 without the annexure referred to in the copies of the show cause notices. The appellants claimed before the Commissioner that the notices issued to them were barred by limitation as they were issued to them only on 3 -10 -1997 M/s. Oswal in their reply dated 24 -11 -1994 stated that they commenced production only in April, 1993 after obtaining a fresh registration and that they were not in any way responsible for the alleged evasion that seemed to have taken place when the mills were under the control of M/s. Mukesh Dye Works and since the notice was not given to the persons who were responsible for the alleged evasion they cannot be held responsible for the evasion. (M/s. Oswal took over only in March, 1993) Thus Oswal Industries contended that they cannot be held responsible for the acts of commission and omission done by the predecessors and M/s. Mukesh Dye Works contended that they received the show cause notice only in 1997 and whatever demand was raised in the show cause notice was time barred.

(3.) THE department, realizing the fact that the appellants (M/s. Mukesh Dye Works) were the ones, who had control over the mills during the period October, 1988 to March, 1993 a corrigendum dated 27 -11 -1998 was issued to the original show cause notice asking Mukesh Dye Works to reply to the allegations and this corrigendum was received by them on 11 -1 -1999. Through this corrigendum the appellants were required to show cause as to why the duty of Rs. 23,93,843/ - should not be demanded along with penalty on the quantity of MMF alleged to have been removed from the factory without payment of duty during the period October, 1988 to 1993.