2005 (2) TMI 632 - AT - Central Excise

Summary

Issues:
- Central Excise law compliance for manufacturing and export of Terry Towelling Fabrics and Towels
- Confiscation liabilities and duty demands for non-compliance
- Evidence of export and supply of goods
- Benefit of exemption notification for 100% EOU
- Failure to maintain accounts and duty payment for Terry Towelling Fabrics
- Confiscation and penalty determination
- Reduction of redemption fine and penalty

Central Excise Law Compliance:
The Appellants, a profit center of a company, were engaged in manufacturing Terry Towelling Fabrics and Towels for export and domestic sale without following Central Excise law procedures. They were issued show cause notices for non-compliance, leading to confiscation liabilities and duty demands. Despite obtaining registration under Central Excise Law in 1994, demands and penalties were imposed, resulting in the appeal.

Evidence of Export and Supply:
The Appellants presented evidence of export through Shipping Bills and relevant documents, demonstrating the transfer of Terry Towels from Nagpur to Mumbai for export. Declarations to the Central Excise department and claims of exemption for 100% EOU were made, refuting the limitation plea due to clear diversion of Terry Towelling Fabrics for sale in the domestic market.

Benefit of Exemption Notification:
The Appellants relied on various Circulars, Instructions, and Court decisions to argue that as an SSI unit, they were not required to obtain Central Excise registration or follow procedures if they exported 100% of the material. However, since some Terry Towelling Fabrics were sold domestically, duty liabilities were upheld, emphasizing the need for compliance with Central Excise Rules.

Failure to Maintain Accounts and Duty Payment:
Due to the Appellants' failure to keep proper accounts of Terry Towelling Fabrics and subsequent removal without duty payment in the domestic market, confiscation of the goods was justified. However, considering the high export percentage, the redemption fine was reduced to Rs. 1,00,000 to mitigate penal consequences.

Confiscation and Penalty Determination:
The judgment upheld the confiscation of Terry Towelling Fabrics and imposed a reduced redemption fine of Rs. 1,00,000. The penalty under Central Excise Rules was also reduced to Rs. 5,000 due to the Appellants' declarations, registration, and evidence of eventual export of goods, thereby partially allowing the appeal.

In conclusion, the appeal was allowed with the recovery of duty for Terry Towelling Fabrics sold domestically, along with reduced redemption fine and penalty, after confirming the exports and addressing the non-compliance issues related to Central Excise law procedures.