Customs, Excise and Gold Tribunal - Delhi
Ashok India Engineering Works vs Collector Of C. Ex. on 3 September, 1997
Equivalent citations: 1998(98)ELT659(TRI-DEL)
ORDER K. Sankararaman, Member (T)
1. These are a batch of four appeals filed by M/s. Ashok India Engineering Works and three partners thereof, challenging the demand of duty and imposition of penalty in terms of order-in-original dated 24-4-1989 passed by the Collector of Central Excise, Aurangabad. The said order was passed by the Collector holding that the appellant firm had cleared certain excisable goods without payment of duty. The longer period of limitation was invoked alleging that the appellants had failed to file classification list and had not complied with the required excise formalities including payment of duty. Penalty was imposed on the firm under Rule 173Q while the partners were proceeded against under Rule 209A.
2. Shri Rohan Shah, learned Counsel for the appellants, stated that, on merits, he could not advance any argument as it is the admitted position that the notification which was in force earlier under which they had cleared their goods without payment of duty, was not applicable to their goods after the relevant entry therein relating to their goods came to be deleted with effect from 1-3-1988. They were however, under the bona fide impression that the notification continued to be applicable and their belief arose from the relevant entry in the Central Excise Tariff published by Cencus Publications. He pointed out that at page II, (sic) 415 relating to Tariff Heading 85.36 the entry read as follows:
"Duty nil for switches, blocks and sockets if manufactured on hand operated machines (even when power is used only for moulding purposes). (Sl. No. 21 of the Notification 68/86-C.E.)"
There was also correspondence exchanged by them with the Central Excise authorities after they came to know from other manufacturers engaged in similar manufacturing activities that their products in question namely switches and fuses even if manufactured without aid of power, were liable to excise duty. They requested the departmental authorities to advise them about the proper procedure to be followed. Giving details regarding the period involved vis-a-vis date of issue of show cause notice, it was stated that the notice issued on 22-12-1988 was bafred by limitation for the clearance which had taken place from 1-3-1988 to 31-5-1988. It was stated by the learned Counsel that even before the issue of show cause notice, they had made a deposit of Rs. 85,596.65 p. by way of discharge of duty liability on the goods during the period in question. This amount was actually more than what they were required to pay. Subsequently, they had filed a refund claim which had been allowed by the Assistant Collector when they got a refund of Rs. 24,841/-. It was therefore, contended by Shri Shah that the demand confirmed in the impugned order besides being hit by limitation for the above said period, was also in excess of the amount actually due from them.
3. Touching the aspect of penalty imposed on the firm as well as the partners, learned Counsel contended that the circumstances of the case do not warrant the imposition of any penalty as there was no intention to evade duty. They had also taken up the matter with the departmental officers regarding the procedure to be followed by them after they had come to know the correct position in law regarding the dutiability of their product and the non-dutiability of the exemption notification. It was also submitted that, in any case, the penalty amount was excessive and disproportionate to the alleged offence. This contention was raised by them without prejudice to the main submission that no penalty was actually warranted since the relevant Rule 173Q which was invoked against the firm, only laid down the ceiling of the amount of penalty and did not carry any mandatory minimum penalty to be imposed. As regards the penalty imposed upon the partners, his plea was that knowledge of the goods being liable to confiscation which is a necessary ingredient for Rule 209A was not there and clearances had been made, as stated above, under a bona fide belief about the continued applicability of the exemption notification.
4. Shri Shah's plea regarding the confiscation of the goods and the imposition of fine in lieu of confiscation, was that the goods were still in the factory premises and there was no attempt to remove them without payment of duty. In this connection, he submitted that it has been held by the Tribunal in several decisions that no confiscation was warranted in such cases. By way of illustration, he referred to the Tribunal decision in the case of Garden Silk Mills v. Collector of Central Excise 1991 (51) E.L.T. 373.
5. Shri Nunthuk, learned DR strongly opposed the arguments advanced by the learned Counsel and pleaded that the impugned order may be upheld and the appeal dismissed. He referred to the relevant portion of the stay order and pointed out that the fact that the appellants had not filed classification list and had not removed the goods after payment of duty showed that the offence has been committed which would justify the decision taken by the Collector. The longer time period was also justified on the above ground. As regards the penalty imposed on the partners of firm under Rule 209A, he referred to the relevant finding of the Collector in the impugned order that the removal of the goods without payment of duty would not have taken place without the knowledge of the concerned partners. He therefore, pleaded that the appeal may be dismissed.
6. We have taken note of the rival submissions. We have perused the submissions as also the Tribunal decision cited above. The plea taken that the appellant was not aware of the change in the relevant notification which had the effect of denying exemption to their products namely, switches and kitkat fuses, is sought to be supported by the relevant entry in a popular publication. They had also taken up the matter with the departmental authorities who should have reacted promptly and advised the appellants about the correct position. We are saying this not by way of absolving them of their own responsibility in the matter as a change in the Tariff or Notification should have been taken note by them on their own without their being guided by the officers. However, when they had approached the departmental officers and there is correspondence addressed to the departmental officers, it was incumbent on the part of the later to have taken follow up action. This would entitle the appellants to the benefit of doubt as regards the allegation of suppression or any of the other factors provided for under proviso to Section 11A(1) of Central Excise Act to prohibit the longer period of limitation. We accordingly hold that the notice issued on 22-12-1988 will be beyond the period of six months for the clearances made during the period 1-3-1988 to 31-5-1988, applying the relevant date as the date on which the appellant was required to file the RT 12 return. That would leave the clearances made in June, 1988 within the permissible period of limitation for the show cause notice as RT 12 for such clearance should normally have been filed before 5th July, 1988. The impugned order, as pointed out during the arguments by the learned Counsel, does not specify the amount of duty but that task was left to be completed by the Assistant Collector. We are not in a position to assess the actual duty that would be leviable in respect of such clearances in the absence of the relevant data in the impugned order. It is reported by Shri Shah that it has not been worked out. Since the full data has not been made available about the duty to be recovered from the appellants for the clearances made in the month of June, 1988, we have no alternative but to remit the case to the jurisdictional Assistant Commissioner for carrying out the assessment. We order accordingly.
7. We accept the plea of the learned Counsel as regards the confiscation and fixing of the redemption fine of the goods which have been confiscated. The appeal is allowed to that extent.
8. As regards the plea regarding imposition of penalty, we find that the application of Rule 209A in respect of the partners of the firm was not justified. The Collector had observed in his order that the clearance without payment of duty could not have been made without the knowledge of the partners. This is not a permissible presumption in the facts of the case. Moreover, the relevant Rule requires knowledge on the part of the person that the goods in question were liable to confiscation. In the facts of the present case, it cannot be taken that the concerned partners had that knowledge or reasonable belief about such liability in this regard. Accordingly, we set aside the penalty imposed under Rule 209A on the partners of the firm. That leaves us with the penalty imposed on the firm itself. The quantum of penalty is grossly disproportionate. Though the amount of duty amount mentioned in the show cause notice was above Rs. 5 lakhs, the Collector was fair enough to accept -the plea of the appellants to grant the benefit of exemption Notification 175/86 available to small scale industries. After grant of such relief, he had not, however, quantified the actual amount of duty due from them but relegated that task to the domain of the Assistant Collector. The appellants had made a deposit of Rs. 85,000/- approximately in the course of proceedings before the issue of show cause notice, out of which their claim for refund of Rs. 24,841 /- had been found to be admissible. That would drastically scale down the stakes involved. In the circumstances of the case which have been referred to earlier and in view of the provisions of Rule 173Q(1)(a) about which it was contended that what the rule provides for is the ceiling on the quantum of penalty but not the minimum penalty imposable, we set aside the penalty imposed. The appeals are allowed as above. The matter will go to the Assistant Collector for quantifying the amount of duty due.