Customs, Excise and Gold Tribunal - Mumbai
L.D. Textile Industries Ltd. vs Collector Of Central Excise And Customs on 22 October, 1990
Equivalent citations: 1992(58)ELT236(TRI-MUMBAI)
ORDER R. Jayaraman, Member (T)
1. This is an appeal directed against the order of the Collector of Central Excise & Customs, Baroda, bearing No. 64/MP/89 dated 29-12-1989 demanding duty totalling Rs 1,39,44,646/-. In the said order, the Collector has also ordered confiscation of 43 bags of yarn seized from the factory premises but allowed the same to be redeemed on payment of fine of Rs 1,55,000/-. The Collector has also ordered confiscation of plant and machinery of the appellants but permitted redemption on payment of fine of Rs. 10.00 lacs. A penalty of Rs 30.00 lacs has also been imposed by the Collector on the appellants under Sub-rule (1) of Rule 173Q of the Central Excise Rules, 1944.
2. Facts of the case for the purpose of disposal of this appeal, as narrated by the Ld. Consultant Shri K. Srinivasan, can be stated as below:
3. The appellants are manufacturers of excisable yarn classifiable under Tariff Item No. 18 III(ii) and 18E of the First Schedule to the Central Excises & Salt Act, 1944. They are holding licence for the manufacture of the different varieties of yarn. The appellants obtained advance licence for the import of polyester fibre under the DEEC Scheme on 3-5-1983. The appellants informed the concerned jurisdictional Supdt., Central Excise, Range III, Ankleshwar vide their letter dated 18-6-1983 enclosing a copy of the import licence and intimated that they were expecting to receive the imported polyester fibre against the said licence at any time. Thereafter on 20-6-1983 they wrote another letter to the said Supdt. intimating the details of advance licence, DEEC book, quantity and description of goods and description of export products. In this letter they also stated that they proposed to convert the imported polyester fibre into yarn in their factory at Ankleshwar and this yarn would be converted into fabrics in their weaving unit at Bombay and accordingly requested for permission to work under Rule 191B of the Central Excise Rules, 1944. Thereafter on 24-6-1983 the appellants wrote a letter to the Excise authorities at Ankleshwar informing about the receipt of the fibre imported under the advance licence. They also filed the classification lists in respect of yarn made out of imported fibre under their letter dated 30-6-1983. However, the Range III Supdt. of Central Excise, Ankleshwar under his letter dated 8-9-1983 intimated the appellants that since the goods are manufactured out of imported polyester fibre and viscose staple fibre without payment of customs duty in bond and the goods are intended for manufacture of export goods also in bond partly at Ankleshwar and partly at Bombay, the goods became out of Central Excise Control and it would be governed by the Customs Rules. Hence the finished goods are not required to classify in the classification list and accordingly the classification lists were returned. The appellants also wrote to the Supdt. of Customs, Bharuch and to the Assistant Collector of Customs Surat, requesting them to inform the procedure to be followed under the Customs Rules, whereupon the Customs authorities informed that the yarn has to be removed under transport vouchers as per the procedure prescribed under Chapter IV-A of the Customs Act. Thereafter, the appellants were removing the goods under such transport vouchers pre-authenticated by the Customs and Excise officers. However, they were maintaining the RG-1 records for production of all the varieties of yarn manufactured out of imported polyester fibre in a separate RG-1 register and removing them under the customs vouchers. They also filed the RT-12 returns showing the nil rate on such clearances enclosing therewith the copies of transport vouchers. Shri K. Srinivasan, the Ld. consultant, diligently took us through the aforesaid correspondences exchanged between the Central Excise department and the appellants and also with the Customs authorities of Bharuch and Surat. Narrating the facts further, he stated that a demand first came to be issued by the Supdt. on 5-11-1984 covering the period from July 1983 to Oct. 1983 alleging that no gate passes authenticated by the excise authorities have been used for the clearance of yarn. These clearances have been effected to their head office (of L.D. Textiles Vikroli, Bombay) and as per the bills this yarn is shown as made from imported fibre against the advance licence No. 2596010 and in respect of the removal after 16-10-1983, vouchers bearing the seal of the Customs Supdt. have been used. It is also alleged that the condition of the advance licence and also as per the Scheme enumerated in Appendix 19 of the Import Export Policy AM 1984-1985 does not contemplate any exemption from payment of excise duty on yarn manufactured by the appellants and cleared without gate passes. The Excise Rules contemplate a particular procedure in respect of the goods to be exported out of India under the claim for rebate and none of the procedures have been followed. On the basis of these allegations duty has been demanded on a quantity of 1,91,500 kgs. The appellants in their reply to the Assistant Collector concerned denied the allegations and requested for dropping the proceedings. This was followed by another demand notice from the same Supdt. on 25-3-1985. A third one on 6-4-1985 and the replies to the show cause notices were also sent by them on 12-12-1985. Shri K. Srinivasan, the Ld. consultant, took us through the said demands and replies sent by them. After issue of these notices, the Assistant Collector (Preventive) Headquarters, Baroda, visited the factory and after search, carried out a seizure of 2065.300 gms. of Cellulose Spun Yarn and Non-Cellulose Spun Yarn. Subsequently another show cause notice dated 22-8-1985 was also issued, which was also replied to by the appellants. Thereafter, another show cause notice was issued by the same Supdt. under his notice No. MP/Case/LD/85 dated 29-11-1985, wherein the allegation of contravention of Rules 9, 52, 52A etc. of the Central Excise Rules and also wrong availment of waiver of Central Excise requirement under Notification No. 299/79 dated 8-12-1979 was made. In the show cause notice, a reference is made to the earlier show cause notices indicating that these show case notices are also in link with this case. Thereupon, the appellants wrote to the Collector asking for clarification as to whether the notice dated 29-11-1985 has been issued in supersession of the earlier show cause notices or whether the earlier show cause notices are still in force. In this letter dated 25-4-1987, they have denied the allegation and sought for the aforesaid clarification. In reply thereto the Collector's office indicated that they are required to file the reply on the charges made in the show cause notice dated 29-11-1985. Thereafter, the Collector passed an ex parte order without getting the detailed reply and without considering their earlier replies to the individual show cause notices. This order was challenged before this Bench and this Bench under its order No. 1510/87-WRB dt. 16-12-1987 set aside the order and remanded the case back for de novo consideration after giving reasonable opportunity of being heard and also for filing the reply. Even after the remand, an addendum was issued to the show cause notice dated 29-11-1985 by the Collector under Addendum dated 29-1-1988, requiring the appellants to show cause as to why the plant and machinery should not be confiscated. Likewise, individual memos were also issued intimating that in respect of the earlier show cause notices issued by the Supdt. which were answerable to the Assistant Collector, would now be decided by the Collector of Central Excise, Baroda. Thereupon the adjudication proceedings were carried through, which resulted in the passing of the impugned order.
4. After elaborately narrating the facts as indicated above and taking us through the relevant documents, Shri K. Srinivasan, the Ld. Consultant, identified the issues for advancing his arguments as below:
5. The main issue for decision in the appeal is whether there is any attempt at clandestine removal and wilful suppression of facts and fraud to evade payment of duty justifying imposition of penalty and demanding duty beyond a period of six months and whether Rule 9(2) of the Central Excise Rules can be invoked in such a case, where clearances have been effected on the basis of pre-authenticated Customs Voucher, copies of which were also submitted alongwith the RT-12 Returns and the quantities of such removals have also been indicated in the RT-12 Returns.
6. Apart from the aforesaid main issue, he also identified the other issues before advancing his arguments :-
(i) When the case already adjudicated on the basis of a show cause notice issued by the department is remanded back to the Collector for the only requirement of compliance of the observance of the principles of natural justice, whether the Collector is justified in issuing an addendum to the show cause notice, thereby seeking to expose the party to a liability for greater penalty by proposing afresh confiscation of plant and machinery,
(ii) Whether the show cause notice dated 29-11-1985 could be construed to be in supersession of the earlier four show cause notices issued by the same officer.
(iii) Whether confiscation of 43 bags of yarn seized from the bonded store room from the appellants' factory is legally sustainable.
(iv) Whether confiscation of plant and machinery and imposition of redemption fine of Rs. 10.00 lacs towards them is justified.
7. On the question of issuing an addendum to the show cause notice proposing confiscation of plant and machinery, he cited the decision of the Supreme Court in the case of Banshi Dhar Lachhman Prasad and Anr. v. Union of India and Ors reported in 1978 (2) ELT (J 385) and also the decision of the Special Bench (CEGAT) reported in 1989 (40) ELT 444 - Knit Foulds P. Ltd. v. Collector of Central Excise. It was contended by him in the context of the aforesaid decisions, the appellants cannot be subject to a higher penalty and de novo adjudication could not deprive the appellant of the favourable directions obtained by him from the adjudication officer earlier and the de novo adjudication order would not have the effect of subjecting him to a greater penalty.
8. On the question of show cause notice dated 29-11-1985 being in supersession of the earlier show cause notices, he cited the decision of the" CEGAT Special Bench reported in 1985 (20) ELT 120 - Collector of Central Excise & Customs, Madurai v. Sun Paper Mills Ltd. Cheranmahadev. He also contended that the notice dated 29-11-1985 referring to the visit of the Excise Preventive Officers and seizure of the goods has no significance because of the fact that for the same period, demand has already been issued by the Supdt. and nothing new was found out by the Preventive Officers excepting seizure of legitimately accounted for goods lying in the bonded store room as offending goods. He referred to the panchnama drawn of the seizure to point out as to how they are treated as offending goods. He, therefore, contended that the show cause notice issued on 29-11-1985 could only be construed to be in supersession of the earlier show cause notices and going by the date of this show cause notice, all the demands for the entire period are time barred. Even the earlier show cause notices are time barred in respect of major part excepting one. On the question of 43 bags of yarn seized, he contended that these goods were lying in the bonded store room. They are also found to be accounted for. This is evident from the panchnama drawn on 3-6-1985. These goods have been seized only because they were the left over quantity of the yarn manufactured out of the imported fibre and huge quantity of yarn so manufactured has been cleared under the Customs vouchers without payment of excise duty and without preparing Central Excise gate passes. Only on this ground, the goods have been treated as offending goods and seizure has been effected. On the question of confiscation of plant and machinery, he contended that this was not the allegation in the original show cause notice dated 29-11-1985. By way of an addendum issued after the case was remanded back for de novo consideration only for the limited purpose of complying with the principles of natural justice, this addendum has been issued and on that basis plant and machinery has been confiscated. He, therefore, contended that since the addendum itself is illegal, confiscation of plant and machinery ordered on the basis of this addendum is required to be set aside.
9. Coming to the main issue, the Ld. Consultant Shri K. Srinivasan contended that he has elaborately dealt with the facts of the case and also taken us through the various documents, which will clearly indicate that at every stage they have kept the department informed of the position and gone by their instructions only. The allegation that they have not filed the classification lists is also without any basis. The department's allegation that they sought for availment of Notification No. 299/79 is also not sustainable because the admitted position is that they are licenced factory. Even their declaration filed was only on compulsion from the department, when it is known to the department that the factory is manufacturing yarn from indigenous raw materials as well as from the imported materials, no relaxation under the aforesaid notification is called for. They have never claimed that their unit is a 100% export oriented unit. Even their letters to the department do not give any indication that they are manufacturing in bond. If the department has mis-construed their letters, on their own, and wrongly advised them of the procedure to be followed in this case, they are to blame only themselves. In this context, he also referred to the cross-examination proceedings of Shri Y.S. Garud, Supdt. of Central Excise, Ankleshwar and another Supdt. of the same Range Shri D.P. Naik. He also pointed out that if the goods have been removed under the Customs vouchers, it was specifically done under the directions of the Supdt. of Customs. Since the excise department had advised them to approach the Customs holding that they are out of Excise Control, they had approached the customs authorities and as per their advice they were removing the goods under customs transport vouchers. He also referred to the letter dated 8-9-1983 from the Supdt. of Central Excise, Ankleshwar, returning the classification lists filed by them stating that the goods will be governed by the Customs Rules and the goods are not required to be declared for Central Excise purposes. He also referred to their letter written at the very beginning itself on 20-6-1983 whereunder they have specifically sought for permission to work under Rule 191B of the Central Excise Rules. However, the Assistant Collector of Central Excise, Baroda vide his letter dated 20-8-1983 addressed to the Supdt., Ankleshwar has read the letter in his own way and presumed that they are manufacturing the goods under the customs bond and held that they will be governed by the procedures prescribed under Ministry's Circular No. 59/79 CEX dated 11-12-1979. Hence their application for working under Rule 191B was not acted upon. Having done this, the department cannot turn round and say that the prescribed procedure for export of goods under rebate or under bond has not been followed by the appellants. In view of the mass of correspondences exchanged with the department it would be evident that nothing has been suppressed away from the department and the cross-examination proceedings of the concerned officers also reveal that the departmental officers were not clear about the procedures to be followed. Hence in the context of the aforesaid factual position, allegation of suppression or clandestine removal cannot be sustained. He also contended that invoking Rule 9(2) of the Rules for confirming the demand by the Collector is not legally sustainable because the clearances were within the knowledge of the department. In the context of his submissions he also cited a number of decisions to urge that the extended period is not applicable and the demand is hit by time bar. Since there is no mala fide, no penalty can be imposed.
10. Shri C.P. Arya, the Ld. SDR, on the other hand, supported the order of the Collector by referring to his findings with regard to the various letters cited by the Learned Consultant claiming bona fides on the basis of these letters. He contended that all these letters created an impression that the appellants were working under the Customs bond as a 100% export oriented unit, and despite the fact that the excisable yarn is required to be cleared under proper gate passes by following the prescribed procedure under the Central Excise law, they have been removing the goods on their own and these goods have been diverted without being exported. He also contended that even if there had been some mis-understanding on the part of the officers, the cause for the misunderstanding should have been removed by the appellants and in any case the goods are claimed to have been removed for export but no proof of export has been furnished by the appellants. In this context, he referred to the findings of the Collector in page 29 of the order, wherein the Collector has observed that the quantity of yarn covered by the show cause notice is 1242.500 MT, whereas their export obligation fulfilled was only to the extent of 13.5 MT of Synthetic Woven Fabrics and 29.25 MT Blended Spun Yarn. Hence the balance quantity of yarn has been illicitly diverted for home consumption under the guise of removal for export purposes. There is clearly a mis-statement. Even admitting that RT-12 Returns have been assessed, they have been assessed only on the basis of their declaration that they are meant for export purposes. If this is not satisfied by them, allegation of suppression and fraud can be sustained and extended period invoked. On the question of addendum to the show cause notice Shri C.P. Arya, the Ld. SDR pleaded that since the earlier order has been set aside and the case has been remanded for de novo consideration addendum is justified, since it is on the same facts and circumstances of the case and this is not in the nature of any additional evidence not dealt with in the earlier show cause notice.
11. On the question of show cause notice dated 29-11-1985 in supersession of earlier show cause notices, he pleaded that it is clearly mentioned that earlier show cause notices are also included in the notice issued on 29-11-1985 and hence they cannot be treated of having been superseded.
12. Regarding confiscation of 43 bags of yarn, he contended that had this seizure not been effected, they would also have been removed in the same manner by the appellants, contrary to the provisions of the Rules. He thus supported the order.
13. After hearing both the sides and after perusal of the documents, through which, we were taken, we would first propose to deal with the main issue, namely, whether there is any attempt on the part of the appellants at clandestine removal or wilful suppression of facts and fraud has been committed to evade payment of duty justifying imposition of penalty and demanding duty beyond a period of six months.
14. For this purpose, we identify the following documents, which are required to be reproduced for proper appreciation and also read these documents in the context of the Collector's findings:-
(i) Letter dated 20-6-1983 from the appellant reproduced as below:
"We are manufacturing "CELLULOSIC/NON-CELLULOSIC SPUN YARN" at our factory. We have entered into an agreement with the Customs Authorities at Bombay and obtained Advance Licence No. 2956010 dated 3-5-1983 and Duty Exemption Entitlement Certificate No. 004781 dated 20-5-1983 from Joint Chief Controller of Imports & Exports, Ahmedabad for importation of Polyester Staple Fibre, 30 Tonnes and Ployester Filament Yarn 15 Tonnes under export obligation. We will be manufacturing dress material out of Cellulosic/Non-Cellulosic Spun Yarn from the imported Fibres and Yarn. We have also received one consignment of Polyester Staple Fibre against the same advance licence.
Since, we have got the Spinning facility at our Ankleshwar Factory only we will be required to send the Spun Yarn to our weaving Unit situated at Bombay without payment of Duty under the same context and Licence, for further processing. From there the finished product viz. dress materials will be exported under the said obligation.
Under the above circumstances, we may be permitted to work under Rule 191B of Central Excise Rules, 1944. We are also ready to execute the bond under the said Rules. Necessary permission may kindly be accorded at an early date."
15. The Collector's finding on this letter, the relevant portion are extracted as below :
"I find that in this letter dated 20-6-1983 the party referred to the aforesaid advance licence and DEEC and stated that "since we have got the spinning facility at our Ankleshwar factory only we will be required to send the spun yarn to our weaving unit situated at Bombay without payment of duty under the same context and licence for further processing." By saying this, the party presented a case in this letter that under the context of importation of Polyester Staple Fibre and under the aforesaid advance licence and DEEC they will be required to send the Spun Yarn made at their Ankleshwar factory from Customs duty free imported material to their weaving unit situated at Bombay without payment of duty. In other words, the party stated their case in the letter dated 20-6-1983 in a manner that despatch of Spun Yarn from their Ankleshwar factory without payment of duty to their Bombay unit would be covered by the Advance licence in the context of their export obligation and DEEC issued to them. It is significant that they used the expression "without payment of duty" in the context of Advance Licence and DEEC without in any manner indicating that no Central Excise duty will be paid on removal of Spun Yarn from Ankleshwar factory. When in the context of their agreement with Bombay Customs, DEEC and Advance Licence, they stated about supply of Yarn from Ankleshwar factory to Bombay unit 'without payment of duty', it could only mean without Customs duty. As the letter gave no context or background whatsoever of central excise duty, the expression 'without payment'of duty' in the aforesaid context of advance licence and DEEC could not in any way convey, deal or mean without payment of central excise duty. Advance licence has nothing to do with central excise duty liability and it granted no exemption from central excise duty and procedure. Their cryptic request in this letter for permission to work under Rule 191B of Central Excise Rules, 1944, was also a part of such mis-representation of facts and deliberate twisting of legal provisions because Rule 191B of Central Excise Rules, 1944, applies to a manufacturer who obtains excisable goods on which excise duty has not been paid for the manufacture of articles which are exported and it also permits the manufacture in bond of articles for export subject to the prescribed conditions and limitations. Party's elliptical request for permission under Rule 191B was totally misleading and it conveyed an intention to export yarn from their Ankleshwar factory and not removal of yarn within the country because:
(a) Rule 191B applied to export of articles manufactured in bond from non (excise) duty paid excisable goods.
(b) Party was manufacturing yarn, inter alia from indigenous raw materials.
(c) Advance Licence so conspicuously referred to by the party, inter alia, carried export obligation for 29.25 MT of blended spun yarn.
If anything an application under Rule 191B from Ankleshwar factory to Range Supdt. at Ankleshwar could only mis-lead the Central Excise Officers at Ankleshwar that excisable goods were exported from Ankleshwar factory and it helped to conceal that yarn was removed without payment of central excise duty to a Bombay unit and was not exported.
Suffice it to say that this letter dated 20-6-1983 from the party totally mis-represented the facts and declared no facts relating to central excise duty liability on yarn. In such context of Advance Licence, DEEC Scheme and Rule 191B, there was no inkling to any central excise officer that party would unilaterally remove yarn to a Bombay unit without central excise gate pass and without payment of central excise duty."
On a straight and simple reading of the appellants' letter dated 20-6-1983, we find that this letter is in the nature of a request for working under Rule 191B of the Central Excise Rules, 1944, in respect of yarn manufactured out of imported fibre under DEEC scheme for removal to their weaving unit at Bombay. The Collector's reading of the letter to the effect that the words "without payment of duty" only mean customs duty and hence this could not in any way convey or mean "without payment of central excise duty" does not stand the test of simple reading of the said letter. The letter is addressed to the Range Supdt. and in this letter they have specifically requested for permission to work under Rule 191B of the Rules. Rules 191B of the rules is applicable only where excisable goods are to be removed for export purposes without payment of central excise duty and hence there cannot be any misleading by the Central Excise officer on this aspect. It is also not correct on the part of the Collector to hold that the appellants have not declared any facts relating to central excise duty liability on the yarn. There is no need for any one to tell the central excise officer that the excisable yarn produced in a factory (though out of imported fibre) attracts central excise levy and they have to be governed by Central Excise Rules. We also had a look at the letter of the Assistant Collector, Baroda, Division V, addressed to the Supdt. This letter is dated 20-8-1983. In this letter, reference is made to the appellants' letter dated 20-6-1983. From this letter, it is evident that the Assistant Collector has presumed, on his own, that the appellant intends to manufacture yarn and fabrics in customs bond and they will be governed by the Ministry's circular dated 11-21979 and hence the question of relaxation of Rule 191B does not arise in this case. It is also an undisputed fact that the appellant was holding the central excise licence during the material period and continued to hold the same. It is also a known fact to the central excise officers that the appellants were removing the goods made out of indigenous fibre on payment of central excise duty. It is also not disputed that RT-12 returns have been filed showing the quantity of yarn cleared on payment of duty as also the quantity of yarn manufactured out of imported fibre without payment of duty. It is also not in dispute that the copies of customs transport vouchers were enclosed to the RT-12 Returns. Viewed in the context of this position, we are not able to be convinced that the appellants deliberately misled the Central Excise Officers and adopted a wrong procedure with a view to evade payment of duty. We are therefore unable to support the finding of the Collector on the letter of 20-6-1983. It is also observed that the appellants have filed a classification list under their letter dated 20-8-1983. These classification lists are found to have been returned by the Supdt. under his letter dated 8-9-1983. It is pertinent to reproduce the contents of this letter as below:
"Since you are importing Polyester fibre and viscose staple fibre without payment of customs duty in bond and are to manufacture the goods meant for export also bond partly at Ankleshwar and partly at Bombay unit, these goods become out of Central Excise control and it will be governed by the Customs Rules under the circumstances the goods manufactured by you under the above scheme are not required to classify in the classification list as such the classification list No. 130/83 and 131/83 are returned herewith."
Even from the aforesaid letter, the departmental officer seems to be under the misconception that the appellants are manufacturing under Customs Bond and they are governed by the Customs Rules. It is needless for us to go to the other documents for arriving at this conclusion, since we observe from the cross-examination proceedings of Shri Y.S. Garud, Range Supdt. of Bharuch, wherein he fairly concedes in reply to a pointed question whether the appellants mislead him in any manner, his answer was "only in respect of advance licence, we were not clear." In this cross-examination, he also admits that "no facts or information were withheld or suppressed from him by the appellants." In the cross-examination of Shri D.P. Naik, another Supdt., it is evident that the application of the appellants dated 20-6-1983 was sent by them with a recommendation for granting permission to work under Rule 191B of the Rules. However, the Assistant Collector of Central Excise, Baroda, has held that the question of relaxation of Rule 191B does not arise in the present matter. He also fairly conceded that there is no mention of Customs Bond in the letter dated 20-8-1983. Be that as it may, even a simple and straight reading of their letter dated 20-8-1983 does not give an impression to us that their intention was to mislead the department.There appears to be an apparent confusion in the minds of the dealing officers, who are central excise officers, possibly not being conversant with the advance licence scheme. It appears to us that they have mistaken the advance licensing scheme as one of 100% export oriented scheme, where the units are required to work under the customs bond. This appears to be the plausible reason for the direction issued by the concerned officers of the department. In this view of the matter, we hold that if a wrong procedure has been followed on account of which the goods have been removed without gate passes or without following the prescribed procedure for export of goods under bond, the department also has to bear due share of the blame for this. However, the one pertinent argument of the Department, which appeals to us is that all these clearances nave been effected under the ostensible declaration of the appellants as meant for export purposes. Even the RT-12 Returns declare that these are goods for export and cleared at nil rate in relaxation of Rule 191B. Hence it is necessary and incumbent on the part of the appellants to satisfy the departrnent that the yarn cleared (though following a wrong procedure because of the misunderstanding by the department) have been actually used in the export goods and they have been duly exported. In reply to the Ld. SDR's argument, Shri K. Srinivasan, the Ld. Consultant, contended that the department had all along been referring to only one advance licence. They have imported fibre under more than one advance licence and there are also clearances of yarn in respect of import against the other advance licences. However, he could not give the details of the same. He pleaded that this was not the question put to them nor a specific allegation made on this. We, however, observe that the quantity covered by the show cause notice is specific and these are claimed to have been removed under RT-12 Returns with remarks for export in relaxation of Rule 191B. Hence we are unable to agree with the Ld. consultant Shri K. Srinivasan that no specific allegation is made on this. On the contrary, the cause for demand is directly related to the non-exporljofvarn cleared under the declaration as for export purposes. Hence, even if a wrong procedure is followed because of the wrong advice of the Departmental officers, it does not take away the substantive burden cast on the appellants to establish that yarn cleared under the declaration for export purposes in relaxation of Rule 191B, was actually utilised in the production of export goods and such goods duly exported. If this burden is not discharged it would amount to wilful mis-statement and mis-declaration on RT-12 Returns, attracting the extended period and penal liability. Hence without expressing any opinion as to whether the appellants have made a wilful misdeclaration or otherwise at this stage, we would deem it proper to direct the appellants to produce all acceptable evidences showing the accountal of yarn removed without payment of duty, in the production of export goods and export of such goods, before the Collector for arriving at a proper finding on this aspect. Since we have observed that a wrong procedure has been followed in this case, only on account of the misunderstanding of the Departmental officers, they cannot now insist on production of AR 4A as proof of export. They are to be satisfied by other collateral evidences such as records maintained at Bombay Weaving Unit, where the said yarn is stated to have been utilised in weaving of fabrics and export of such fabrics co-related with the export documents. The appellants should produce such acceptable evidences before the Collector within two months from the date of receipt of this order, who, thereupon, should consider the same. In case any verification is called for on such evidences produced, the Collector is at liberty to cause such enquiry in regard to the evidences so produced and thereafter pass final order in accordance with the law. Hence, on this main question, we remand the case back to the Collector with these observations and hence set aside the demand and penalty, for determination afresh in the light of our above observations.
16. As regards confiscation of 43 bags of yarn, it is observed that the seizure has been effected from the bonded store room. There is no allegation that this has not been accounted for. The only allegation is that this is part of the remaining quantity, where yarn has been removed without gate passes and without payment of duty. We are unable to appreciate the legality of such an order. When the goods are yet to be cleared and they are also duly accounted for in the statutory records, no seizure is justifiable, merely because this also would have been removed without payment of duty subsequently. Hence we set aside the order of confiscation and direct release of the yarn, which should be cleared in accordance with the provisions of the Central Excise law.
17. As regards the confiscation of plant and machinery, this is linked to the question of issue of addendum, after the case was remanded back to the Collector for de novo consideration. It is not as though the department was not aware of the legal provisions regarding the liability of confiscation of plant and machinery. If it has not been alleged specifically in the notice issued on 29-11-1985, which was earlier adjudicated upon by the Collector, it is not open for them to allege it after the case has been remanded back only for the limited purpose of compliance with the principles of natural justice. In any case, it does not appear to be in good spirit. Moreover, we have observed that observance of the wrong procedure and clearance of goods without gate passes is partly on account of the department's own mis-understanding of the whole situation. In such a case, the extreme penalty of confiscation of plant and machinery is not called for, especially when it is not alleged in the original show cause notice issued and such an order came to be passed only on the basis of an addendum issued during the course of de novo adjudication proceedings.
18. In view of our findings on the main issue, it is needless for us to consider the other minor issues and we do not propose to go into them.
19. The appeal is disposed of in the above terms.