Customs, Excise and Gold Tribunal - Mumbai
Neminath Fabrics Pvt. Ltd. vs Commissioner Of Customs And Central ... on 12 July, 2004
ORDER Moheb Ali M., Member (T)
1. The stay application is directed against the order of the Commissioner (Appeals) who in the impugned order modified the order of the original authority inasmuch he set aside the order imposing penalty on one Shri Arun N. Trivedi, director of the applicant company, and set aside the order on one Shri V.K. Doda, proprietor of M/s. Dheeru Fashions.
2. Briefly the facts are that the appellant company is engaged in the manufacture of manmade fabrics falling under chapter heading 54.06 of the Central Excise Tariff Act, 1985, working under the compounded levy scheme. The officers of Central Excise visited the factory premises of the applicants and noticed that though one stenter was got sealed and shown as closed in the sealing register, the same was found to be working in contravention of the provisions of Rule 96ZQ. Therefore, an offence case was booked against them and a show cause notice was issued. The original authority (Assistant Commissioner, Surat-I) who adjudicated the case, determined a duty amount of Rs. 8,00,000/- leviable on the stenter for the period 1.5.2000 to 31.5.2000 under Rule 96ZQ(3) & (5) of the Central Excise Rules read with Section 11A(2) of the Central Excise Act; he ordered confiscation of certain number of pieces of manmade fabrics; imposed a penalty of Rs. 8,00,000/- on the appellant company under Rule 96ZQ(5) & (6) and Rule 173Q(1); ordered payment of interest at the rate of 24% per annum under Sub-rule (i) of Rule 96ZQ(5). In appeal, the Commissioner (Appeals) upheld the order of the lower authority to this extent. Hence this application for waiver of pre-deposit of duty and penalty above mentioned.
3. The plea of the applicants is that confiscation of the manmade fabrics and penalty is not sustainable when Rule 3 of the Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 1998 has been held to be ultra vires. The evidence brought out by the department to sustain the allegation of clandestine manufacture and clearance of goods is not sufficient so as to warrant demand for duty; that the department has not established that the appellant has procured excess raw material to manufacture the excisable goods which were supposed to have been cleared without payment of duty and that the Commissioner (Appeals) in a similar matter of delay in payment of duty under Rule 96ZQ has reduced the penalty to 10% of the duty not paid by stipulated time. The prayer was that the pre-deposit of duty and penalty should be dispensed with and recovery thereof stayed.
4. Heard both sides.
5. We observe that it is a case of violation of the Central Excise Rules which led to the conclusion that duty to the tune of Rs. 8 lakhs is payable by the applicant. In regard to the contention of the applicant that the Hon'ble High Court of Madras in Beauty Dyers case reported in 2002 (52) RLT 636 held that the Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 1998 is unconstitutional. The learned DR pointed out that the same court in the case of same assessee reported in 2002 (52) RLT 644 did not hold it to be so. In view of this position, he argued that the applicant be directed to deposit the duly in the interest of revenue. The evidence suggests prima facie that the stenter which is supposed to have been closed was actually working at the time of the visit of the officers to the factory. All the issues raised by both the parties will have to be gone into in detail at a later stage. Presently, we observe that the applicant has not made out a strong prima facie case in their favour so as to warrant dispensation of the requirement of pre-deposit under Section 35F of the Central Excise Act. We, therefore, direct the applicant to deposit Rs. 2 lakhs by way of duty by 31.8.2004 and report compliance on that day. Upon such deposit, further deposit of duty and penalty shall stand waived and recovery stayed. Failure to comply with this direction shall result in dismissal of the appeal itself without any further notice.
6. Compliance on 31.8.2004.
(Operative part pronounced in court),