1979 (3) TMI 60 - CGOVT - Central Excise

Issues:
1. Mis-declaration of goods and duty liability.
2. Seizure of goods and penal action against the petitioner-firm.
3. Confiscation of seized fabrics and penalty imposed by the Collector.
4. Demand for duty short-paid on the fabrics.
5. Responsibility for declaration of fabric composition and ownership.
6. Fine and penalty amount imposed on the petitioner-firm.
7. Evidence of mens rea on the part of the petitioner-firm.
8. Justification for penalty, fine, and duty liability.

Detailed Analysis:
1. The petitioner-firm, a processing unit, faced issues regarding mis-declaration of goods and duty liability when Central Excise officers found discrepancies in the classification of fabrics received from weaving mills. Samples indicated that the goods were misclassified as cotton fabrics, leading to higher duty rates as per the Central Excises and Salt Act.

2. The Collector of Central Excise observed mala fides on the part of the petitioner-firm, ordering the confiscation of seized fabrics and imposing a penalty of Rs. 50,000 under rule 173Q. The petitioner-firm argued that they were not the owners of the fabrics and hence not responsible for mis-declaration, challenging the legality of the seizure.

3. In the appeal, the petitioner-firm contended that there was no misclassification of goods and raised concerns about the confiscation of goods without proper notice to the weaving mills. The Board acknowledged the advantage of declaring wool content above 54% for lower duty rates and observed that the petitioner-firm would be deemed the owner of the goods under Rule 3 of the Central Excise Rules.

4. The revision application questioned the harsh punishment of a total fine and penalty of Rs. 30,000, emphasizing that the petitioner-firm only had a processing interest and had agreements with the fabric owners regarding declaration responsibilities. The petitioner-firm denied responsibility for mis-declaration and challenged the duty demand for short-paid fabrics.

5. During the hearing, the petitioner-firm presented evidence of precautions taken for accurate declarations, including agreements with fabric owners and clear stipulations in bills regarding duty liabilities. The counsel argued against the penalty, citing lack of evidence of mens rea and referring to relevant judgments on quasi-criminal proceedings.

6. The government noted that the petitioner-firm relied on declarations by textile mills for fabric composition and had no ownership interest in the fabrics. There was no evidence of collusion with the textile mills for benefits from mis-declaration. The government remitted the penalty but maintained the fine and duty liability, as the petitioner-firm had been reimbursed by the textile mills as per agreements.

7. The government's decision was based on the petitioner-firm's lack of knowledge about fabric composition, their processing role, and the absence of evidence showing collusion for benefits from mis-declaration. The government remitted the penalty but upheld the fine and duty liability due to reimbursement by the textile mills as per agreements.

8. The revision application was disposed of accordingly, with the government remitting the penalty but maintaining the fine and duty liability based on the circumstances and agreements between the parties involved.

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