Customs, Excise and Gold Tribunal - Mumbai
Abubakar M.Y. Shaikh vs Commissioner Of Central Excise on 28 January, 1999
Equivalent citations: 1999(110)ELT917(TRI-MUMBAI)
ORDER J.H. Joglekar, Member (T)
1. The appellants in this case were working under the physical control system. They were receiving polyamide (nylon) chips under Chapter X procedure at Nil rate of duty and manufacturing monofilament yarn from them and clearing the same on payment of duty. One consignment of 4 M. Tons was cleared by them under Gate Pass No. 1 on 24-9-1991 showing the variety of goods as 'nylon monofilament yarn' and showing classification under Heading 54.04. Although, they were under physical control, it appears that they had filed a classification list on 23-9-1991. Samples of the product were drawn on the date of clearance i.e. 24-9-1991 and were sent for chemical test. The chemical examiner opined that the sample was of synthetic monofilament yarn and this opinion was dated 29-10-1991. In the meanwhile, on 3-10-1991, the Superintendent wrote to the assessee saying that the correct classification would be 5406.19 as synthetic filament yarn and not under Heading 54.04 as artificial mono-filament yarn. They were requested to pay the additional duty. In the meanwhile, the assessees had protested that they had paid duty at higher rate than that was being paid on similar goods by another manufacturer viz. Zeb Mono-Plast. A show cause notice dated 16-4-1992 was issued seeking recovery of differential duty, confiscation of part of the goods seized from the consignment cleared at lower rate of duty and imposition of penalty. Before the Collector, the assessees cited the Supreme Court judgment in the case of M/s. N.B. Sanjana [1978 (2) E.L.T. (J 399)] and claimed that the notice was bad on the aspect of limitation. The Collector in his order took cognizance of the cited judgment but merely held that the facts being different, the ratio thereof would not apply. In his order he held that the assessees had mis-declared the product deliberately with intent to evade duty. He thus proceeded to confirm the demand, to confiscate the goods and to impose the penalty. The present appeal is against this order.
2. I have heard Shri Saiyed, ld. Consultant for the appellants and Shri K.M. Patwari, the ld. DR for the Revenue.
3. The assessees at the material time were operating under the physical control system where the clearance of any goods on payment of duty could be effected only under counter signature of the jurisdictional officer. When such counter signature was made, the consignment was assessed to duty. The gate pass was accompanied by an application for removal in the proper format. In this situation, it has to be held that the goods were cleared with the knowledge of the Department. Rule 9(2) speaks of a situation where goods are removed in a clandestine manner. In the cited judgment, it has been held that where goods have been removed with prior permission of the Central Excise authorities, Rule 9(2) would not apply. The ld. Collector was wrong in holding that the facts were different and therefore, the ratio of the judgment would not apply. The ratio of this judgment would apply in every case where the clearances were made with the knowledge of the department. Where under a physical control system the physical clearance is deemed to be supervised, the department cannot deny the knowledge. Therefore, the basis for the demand does not sustain.
4. It would appear that the assessees had relied upon the judgment to plead the aspect of limitation also. I find that the show cause notice which is issued beyond the period of six months from the date calculated from the date of assessment does not make any allegation at all as to the suppression etc. by the assessees. In such a situation, the findings of the Supreme Court in the case of Raj Bahadur Narain Singh Sugar Mills [1996 (88) E.L.T. 24] would apply. This is so even where the Collector has covered the lapse in the show cause notice in his order holding that there was deliberate and willful mis-declaration. I thus find that provisions of Rule 9(2) could not be invoked in the present case either to demand duty or to impose penalty. Since the goods were cleared with the knowledge of the department, the action of confiscation also would not sustain. The impugned order is set aside. The appeal is allowed with consequential relief.