CCE, INDORE-I Vs. BABU BHAI SOMABHAI PATEL

JUDGEMENT

(1.) THE facts of this case are briefly stated below: - -The respondents were engaged in the manufacture of hand -made biris (branded) falling under Chapter Sub -Heading No. 2404.39 of the Schedule to the Central Excise Tariff Act, 1985 during the relevant period. These biris were made from duty -paid unbranded hand -made biris. The branded hand -made biris manufactured by the respondents were exempted from payment of Central Excise duty under Notification No. 111/83 -CE dated 1.3.1983 as amended. On the basis of intelligence received by the Department to the effect that the respondents were collecting an amount representing Central Excise Duty from the buyer through Invoices/Bills raised by them, Officers of the Central Excise conducted enquiries by way of verification of invoices and other records and recording of statement of a working partner of the respondent firm under Section 14 of the Central Excise Act and reached the conclusion that the respondents had collected Central Excise Duty to the tune of Rs. 50,39,228/ - from the buyers on clearances of the branded biris during the period 1.4.1989 to 25.4.1994 without paying any such duty to the Central Excise while availing the benefit of exemption under the aforesaid Notification No. 111/83. Accordingly, by show cause notice issued to the respondent, the Department sought to recover the aforesaid amount of duty from them under the provisions of Section 11D of the Central Excise Act. The party resisted the proposed action of the Department by way of their written reply to the show cause notice and their oral submissions before the adjudicating authority. The defence of the party was mainly two -fold. Firstly, they maintained that no amount was liable to be recovered from them under Section 11D of the Central Excise Act, for any period prior to 20.9.1991 and also for any period beyond the period of 6 months as envisaged in the proviso to Section 11A of the Act. Secondly, in answer to the Department's allegation that the invoices issued by the respondents to the buyers at the time of sale of the goods showed the Central Excise Duty element separately, thereby evidencing collection of such duty by the former from the latter on the goods namely "Branded Hand -made Biris". The respondent explained that the duty amount shown on the invoices was not any duty collected by them from the buyers but the duty paid on the unbranded hand -made biris by the manufacturers thereof and that the duty amount was so shown on the invoices as desired by the buyers.

(2.) IN adjudication of the above dispute the Commissioner of Central Excise accepted the aforesaid explanation offered by the party and accordingly reached the finding that no amount was collected as Central Excise duty by the respondents on the branded hand -made biris at the time of sale to the buyers. Accordingly, the Commissioner dropped the show cause notice proceedings against the party. While doing so, however, the Commissioner did not advert to the issue as to whether the provisions of Section 11D were applicable to the case or not vis -a -vis the plea of the party in that behalf. The Revenue is aggrieved in the present appeal, by the above order of the adjudicating authority dropping proceedings against the party. The respondents have filed their cross objections in the appeal, aggrieved by the non -consideration, by the Commissioner, of their plea of inapplicability of Section 11D of the Central Excise Act to their case.