Customs, Excise and Gold Tribunal - Delhi
Bharat Woollen Mills vs Collector Of Central Excise on 5 September, 1995
Equivalent citations: 1996(88)ELT60(TRI-DEL)
ORDER Jyoti Balasundaram, Member (J)
1. In April, 1978, the Assistant Collector of Central Excise visited the premises of the appellants herein and drew representative samples of goods purchased by the appellants from M/s. Swadeshi Polytex Ltd. under cover of Gate pass No. 0289, dated 21-10-1973. On chemical examination, the goods were found to contain characteristics of polyester tow and could not be considered as uncut waste as claimed by the appellants. 180 bags containing 2850 kgs. of alleged polyester fibre tow were seized on the ground that they had been cleared to the appellants without payment of appropriate duty leviable thereon by mis-declaration , as Polyester waste entitled to concession under Notification No. 53/72, dated 17-3-1972. The Dy. Collector of Central Excise, Kanpur issued a show cause notice dated 7-10-1978 proposing confiscation of the entire quantity of polyester tow. The defence of the appellants inter alia was that the seizure of 2850 kgs. comprising 1789 kgs. bought from M/s. Swadeshi Polytex and 1061 kgs. of old stock lying in their godown was based entirely upon presumptions and assumptions and that they were only bona fide purchasers for value and in the absence of any allegation regarding any connivance with M/s, Swadeshi Polytex, no duty could be demanded from the appellants. The Adjudicating Authority ordered confiscation of 1789 kgs. of polyester tow with an option to the appellants to reedeem the same on payment of a fine of Rs. 40,000/-. However, no duty was demanded on this quantity as duty demand had already been confirmed against M/s. Swadeshi Polytex by Order No. 18/84, dated 19-11-1984 passed by the Collector of Central Excise, Meerut. He also ordered confiscation of 1061 kgs. of polyester tow holding that since the appellants did not produce any evidence to show that this quantity was duty paid, they have connived with M/s. Swadeshi Polytex in removing the goods without payment of appropriate duty. The option to redeem these goods was extended on payment of a fine of Rs. 20,000/- together with duty at the rate leviable on the addition a penalty of Rs. 5 lakhs was also imposed on the appellants. Hence this appeal.
2. Shri Pradeep Kumar, learned Counsel for the appellants contends that out of the total quantity of 2850 kgs. seized by the Department, 1061 kgs. represented old stock which had been lying with the appellants who use the same in the manufacture of shoddy wool and in the face of the admitted position that this quantity was purchased from M/s. Swadeshi Polytex, duty can be demanded only from the manufacturer viz. M/s. Swadeshi Polytex and not from the appellants herein. On the penalty aspect, he submits that since the show cause notice does not seek to initiate any penal action, the penalty is not sustainable.
3. Shri P.N. Das, learned SDR submits that the finding that the goods seized were actually polyester fibre tow as per the Chemical Examiner's report has nowhere been challenged by the appellants and hence the duty demand has been rightly confirmed against the appellants who had conspired with M/s. Swadeshi Polytex in removing the goods without payment of duty at the appropriate rate. He submits that the plea that this quantity of 1061 kgs. represents old stock has been taken for the first time in the appeal before the Tribunal and, therefore, merits rejection. He next contends that Rule 173Q of the Central Excise Rules, 1944 has been invoked in the show cause notice and, therefore, the appellants cannot claim that they were not called upon to show cause against imposition of penalty. Lastly he contends that the seized goods having been found to be polyester fibre tow confiscation has been rightly ordered and the redemption fine has been rightly imposed.
4. We have carefully considered the submissions of both sides. There is no dispute as to the nature of the goods viz. that they are polyester fibre tow as borne out by the report of the Chemical Examiner and hence, confiscation is justified. However, the appellants who are not manufacturers of polyester fibre tow and who only use the same for manufacture of shoddy wool cannot be held liable to pay duty on this quantity as they are only bonafide purchaser for value and the Department has not been able to establish any link between the manufacturer i.e. M/s. Swadeshi Polytex and the appellants. Hence, we set aside the demand for duty on 1061 kgs. of polyester fibre tow. The penalty also is not sustainable in view of the fact that the show cause notice does not contain any proposal for taking penal action against the appellants. Having regard to the fact that the appellants have all along been claiming that they had purchased the goods from M/s. Swadeshi Polytex at the rate of Rs. 15/- per kg. (See reply to the show cause notice), we reduce the quantum of redemption fine to Rs. 30,000/-. The impugned order is modified to the above extent. The appeal is disposed of in the above terms as already announced in the Court.