KAPADIA DYEING, BLEACHING & FINISHING WORKS Vs. CCE

JUDGEMENT

(1.) THE assessees manufactured processed man made fabrics. The officers intercepted a vehicle carrying such fabrics valued at Rs. 36,274.50 on which duty was not paid and which were not covered by a valid gate pass. These goods and the vehicle carrying the same were seized. In follow -up operations the records available with the assessee unit were seized and examined. Show cause notice dated 13.2.1985 sought to recover duty on fabrics clandestinely cleared as well as duty evaded by the assessees on such fabrics surreptitiously processed and cleared during the period September, 1979 to August, 1984. After hearing the assessees the Collector passed the impugned order. He found that the seized textiles were liable to confiscation and directed that cash security taken for their provisional release be appropriated. He ordered confiscation of plant, machinery etc. and prescribed a fine for their redemption. As regards the duty evaded the show cause notice did not mention the amount but merely prescribed the period and mentioned the quantity of fabrics allegedly clandestinely cleared. The Collector however in the impugned order made the initial computation at Rs. 35,62,365.75. He found that the period September, 1979 to June, 1980 fell beyond the extended scope of the show cause notice. Dropping the demand for that period, he confirmed the demand for Rs. 32,01,123.57. The present appeal is against this order. Shri Willingdon Christian, learned advocate appearing with Shri Mayur Shroff, advocate, stated that the basic Excise duty was not leviable on processed man made fabrics but what was leviable was the Additional Duties of Excise imposed under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957. He stated that the Delhi High Court in their judgment in the case of Pioneer Silk Mills v. UOI : 1995 (80) ELT 507 :, 1998 (79) ECR 553 (Del) had held that the provisions of the Central Excise and Salt Act, 1944 relating to provisions of collection of duties alone had been incorporated in the said Act and therefore actions of confiscation of fabrics and of imposition of penalty would not sustain. It is his submission that the ratio of this judgment applied until the amendment of the Act in 1994. It is his submission that in view of the law laid down by the Delhi High Court, the orders of confiscation and of imposition of penalty do not sustain.

(2.) AS regards the duty quantified it is his submission that he does not wish to contest the duty amounting to Rs. 15,97,629.07 estimated for the period July 1983 to August, 1984. It is his submission that the demand amounting to Rs. 35,62,365.75 for the period September, 1979 to June, 1983 is based on a single parameter and that is of consumption of electricity upon which the normal production has been determined and the demand is made to sustain on comparison of the production shown in the books as against the production that could be achieved on application of the single parameter. Shri Willingdon showed us several references occurring in the learned Collector's order establishing that the normal production was determined only on the single parameter. It is his submission that the concerned rule 173E itself gives a number of parameters to be considered while determining the normal production of which consumption of electricity would be one parameter. He stated that the normal production determined on one single parameter could not sustain the demand.

(3.) WE have carefully considered the rival submissions.