1984 (7) TMI 270 - AT - Central Excise

Summary

Issues Involved:
1. Whether the clearances from Unity were by or on behalf of Shri Rasheed, proprietor of Quality.
2. Whether the two units were independent for the purposes of Notification No. 80/80-CE.
3. Whether the demands for duties pertaining to the period 1980-81 and 1981-82 were time-barred.
4. Whether the confiscation of Steel Furniture was correct in law.
5. Whether the penalty imposed was sustainable.

Summary:

1. Clearances from Unity by or on behalf of Shri Rasheed:
The Tribunal examined whether the clearances from Unity were by or on behalf of Shri Rasheed, the proprietor of Quality. The evidence, including a General Power of Attorney given by Smt. Inayathunnisa (wife) to her husband Shri Rasheed, indicated that Shri Rasheed was the real person managing Unity. Statements from Smt. Inayathunnisa and Shri Rasheed corroborated this. The Tribunal concluded that the clearances from Unity were indeed by or on behalf of Shri Rasheed.

2. Independence of the Two Units:
The Tribunal considered whether the two units, Unity and Quality, were independent for the purposes of Notification No. 80/80-CE. Despite separate registrations for Sales Tax and Income Tax, the Tribunal held that these registrations did not establish independence for the purposes of the notification. The evidence showed that Shri Rasheed was managing both units, and thus, the clearances from both units should be clubbed for the purposes of the notification.

3. Time-barred Demands for Duties:
The Tribunal addressed whether the demands for duties for the periods 1980-81 and 1981-82 were time-barred. It was argued that there was no clandestine removal of goods, and thus, the extended time limit of 5 years u/s 11A of the Central Excises & Salt Act could not apply. The Tribunal agreed, holding that the demand for duty should be confined to the normal time limit of six months provided u/s 11A of the CES Act.

4. Confiscation of Steel Furniture:
The Tribunal examined the legality of the confiscation of Steel Furniture. The appellant argued that the combined clearances of the two units did not exceed the prescribed exemption limit at the time of seizure. The Tribunal found that the Collector did not provide sufficient evidence or justification for the confiscation and thus set aside the confiscation.

5. Sustainability of the Penalty:
The Tribunal considered the sustainability of the penalty imposed on the appellant under Rules 9(2), 173Q(1), and 226 of the Central Excise Rules. It was held that Rule 9(2) was not applicable, and there was no suppression of facts as the appellant had maintained accounts. The Tribunal found no justification for imposing a penalty and thus set it aside.

Conclusion:
The Tribunal ordered that the production of both units, Quality and Unity, should be clubbed for the purposes of Notification No. 80/80. Any demand as a consequence will be limited to the normal time limit u/s 11A of the CES Act. The confiscation of the goods and the penalty imposed on the appellant were set aside. The appeal was thus partly allowed.