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Issues Involved:
1. Applicability of penal provisions under the Central Excise Act, 1944 to additional duties of excise under the Additional Duties of Excise (Goods of Special Importance) Act, 1957. 2. Legality of penalty imposition for evasion of additional duties of excise on man-made fabrics. Issue-wise Detailed Analysis: 1. Applicability of Penal Provisions: The primary issue was whether the provisions relating to confiscation and imposition of penalty under the Central Excise Act, 1944, and the Rules made thereunder, apply to man-made fabrics liable to additional duty of excise under the Additional Duties of Excise (Goods of Special Importance) Act, 1957. The Tribunal had set aside the penalty imposed on the appellant, relying on the Delhi High Court's decision in Pioneer Silk Mills v. Union of India, which held that there was no provision under the Additional Duties of Excise Act for confiscation of goods and imposition of penalty. The Delhi High Court interpreted Section 3(3) of the Additional Duties of Excise Act, concluding that it did not create a charge for penalty and that the term 'Levy and Collection' had a restricted meaning. 2. Legality of Penalty Imposition: The appellant was found to have evaded additional duty of excise by removing processed man-made fabrics without payment of duty and without issuing GP 1s, as per the show cause notice dated 11th May 1993. The Collector confirmed the demand of Rs. 52,717.00 and imposed a penalty of Rs. 10,000.00 under Rule 173Q(1) of the Central Excise Rules. The Tribunal upheld the duty demand but set aside the penalty, relying on the precedent set by the Delhi High Court. Detailed Legal Reasoning: Interpretation of Section 3(3): The High Court examined Section 3(3) of the Additional Duties of Excise Act, which states that the provisions of the Central Excise Act, 1944, and the Rules made thereunder, including those relating to refunds, exemptions from duty, offences, and penalties, shall apply to the levy and collection of additional duties. The Court emphasized that the expression 'so far as may be' would exclude only those provisions inconsistent with the Additional Duties of Excise Act, while all other provisions are adopted by reference. Referential Legislation: The Court referred to the Supreme Court's judgment in M/s. Ujagar Prints v. Union of India, which held that Section 3(3) of the Additional Duties of Excise Act expressly made the provisions of the Central Excise Act apply to the levy and collection of additional duties. The Supreme Court had clarified that the term 'levy' includes both imposition and quantification of tax, and that Section 3(3) covers the entire gamut of Section 3(1). Ancillary Powers: The Court highlighted that the power to levy a penalty for proper enforcement of the taxing statute flows from the power to impose a tax, as an ancillary power to ensure proper realization of taxes. This principle was supported by the Supreme Court's rulings in Khazan Chand v. State of Jammu & Kashmir and Commissioner of Income Tax v. M/s. Bhikaji Dadabhai & Co., which established that penalty provisions are integral to the assessment and collection of taxes. Conclusion: The High Court concluded that all the provisions of the Central Excise Act, 1944, and the Rules made thereunder, including those relating to confiscation and imposition of penalty, are applicable to the levy and collection of additional duties of excise under Section 3(1) of the Additional Duties of Excise Act, 1957. The Court held that these provisions ensure that excise regulations are enforced and the recovery of excise dues is secured, thereby protecting revenue against evasion. Final Judgment: The Court answered the referred question in favor of the Revenue and against the assessee, holding that the provisions relating to confiscation and imposition of penalty under the Central Excise Act, 1944, are applicable to man-made fabrics liable to additional duty of excise. The appeal was thus decided in favor of the Revenue, with no order as to costs.
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