SRI SELVAKUMAR TEXTILES Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) Officers of Central Excise on 28 -2 -2000, intercepted a Tempo which was transporting 14 bags of 55's cotton yarn, without Central Excise invoice from the factory of M/s. Lakshmi Textile Exporters Ltd., Coimbatore (for short, LTEL) (appellants in Appeal No. E/913/2004). The Officers seized the vehicle and the cotton yarn. It appeared to them from an invoice dated 14 -2 -2000 produced by one Shri Raju (who was accompanying the goods) that the goods were being transported to the premises of M/s. Sri Selvakumar Textiles (in short, SSKT). A statement of Shri R. Manoharan, Manager of SSKT (appellants in appeal No. E/911/2004) was recorded by the officers. A statement was also recorded from a functionary of M/s. LTEL. Subsequently a show cause notice was issued to M/s. LTEL, M/s. SSKT and Shri K. Rajendran, owner of the Tempo (appellant in Appeal No. E/912/2004). In adjudication of this notice, the original authority confiscated the cotton yarn (valued at Rs. 1,16,000/ -) with a redemption fine of Rs. 29,000/ -, confiscated the vehicle with a redemption fine of Rs. 25,000/ -, imposed a penalty of Rs. 10,672/ - (equal to duty on the yarn) under Section 11AC of the Central Excise Act on M/s. LTEL and a penalty Rs. 3,000/ -under Rule 209A of the Central Excise Rules, 1944 on M/s. SSKT. The first appellate authority upheld the decision of the adjudicating authority. Hence the present appeals.

(2.) After examining the records and hearing both sides. I find that, admittedly, the cotton yarn was cleared from the factory of M/s. LTEL without payment of duty and was being transported to M/s. SSKT. The removal of the goods was, admittedly, not accompanied by any duty -paying document. Such goods were certainly liable to confiscation. The lower authorities gave option for redemption of the goods against payment of Rs. 29,000/ -. There is no reason to consider this amount as unreasonably high, having regard to the fact that goods valued at Rs. 1,16,000/ - was being removed from the factory without invoice and without payment of duty. The redemption fine, therefore, requires to be affirmed.

(3.) The duty on the goods, amounting to Rs. 10,672/ - was paid by the party on 22 -3 -2000, before the issuance of show cause notice. The lower authorities have imposed a penalty of equal amount on the manufacturer under Section 11 AC on the ground of clandestine removal of yarn. It has been argued by ld. Consultant that this penalty cannot be sustained as the duty had been paid prior to issuance of the show cause notice. Certain decisions have been cited by him in support of this argument. The argument has been contested by ld. SDR, who has relied on Final Order Nos. 126/2005, dated 24 -1 -2005 and 365/2005, dated 8 -3 -2005 [2005 (186) E.L.T. 178 (T)] of the South Zonal Bench (Chennai) to argue that the case law cited by ld. Consultant is not applicable to the facts of the instant case as the payment of duty in the instant case was not voluntary. The duty was paid on,ly after clandestine removal of goods was noticed by the department. Countering this argument, ld. Consultant has submitted that whether or not payment of duty was voluntary is immaterial. In this connection, he has relied on the Madras High Court's judgment in CCE, Madras v. Jkon Engineering (P) Ltd. [2005 (67) RLT 157 (Mad.)]. The following questions of law had arisen before the High Court :