1988 (10) TMI 161 - AT - Central Excise

Summary

Issues:
- Confiscation of seized goods and imposition of penalty
- Requirement of license for manufacturing activity
- Time limitation for demand of duty
- Suppression and mis-statement allegations
- Confiscation of specific fabrics and duty demand
- Duty computation for job workers
- Reduction of redemption fine and penalty

Detailed Analysis:
1. The case involved the confiscation of goods and imposition of penalties on the appellants for processing fabrics without obtaining a license. Central Excise Officers seized fabrics from the appellants' factory, leading to a show cause notice for confiscation and penalty. The Collector of Central Excise confirmed the duty demand for a specific period and ordered confiscation of the seized goods, with an option for redemption on payment of a fine. The Central Board of Excise and Customs later reduced the penalties imposed by the Collector.

2. The main issue was whether the appellants were required to obtain a license for their manufacturing activity of processing cotton fabrics. The appellants argued that dyeing did not amount to manufacturing before a specific ordinance, but the court referenced the Empire Dyeing case, stating that dyeing was considered a manufacturing process even before the ordinance clarified it.

3. Another critical issue was the time limitation for demanding duty. The lower authorities argued that since the appellants did not have a license, a longer period of limitation applied. However, the appellants contended that they had filed a declaration seeking exemption under a specific notification, indicating their awareness of the manufacturing activity. The court held that the demand for duty should be limited to a six-month period.

4. The case also involved allegations of suppression and mis-statement by the appellants. The appellants relied on a declaration and advice received from the Department to refute these allegations. The court found that the advice given by the Department should not be disregarded, and the normal limitation period should apply due to the information provided by the appellants.

5. Regarding the confiscated fabrics, the court confirmed the confiscation of cotton fabrics seized, noting that duty was not payable on the dyeing of man-made fabrics. The appellants argued against duty on redyed fabrics, claiming duty had been demanded twice on the same fabrics, which the court stated should be addressed if proven.

6. Duty computation for job workers was also discussed, with the appellants arguing that duty should depend on the value of fabrics provided by customers. The court directed the Department to indicate the basis for quantifying duty on seized fabrics before enforcing the demand.

7. Finally, the court addressed the reduction of redemption fine and penalty by the Board, concluding that no further reduction was necessary based on the circumstances. The appeal was allowed to set aside the demand for duty under a specific notice, with modifications to the lower authorities' orders and directions for quantifying duty on seized goods.