1990 (10) TMI 217 - AT - Central Excise

Issues Involved:

1. Clandestine removal and wilful suppression of facts.
2. Issuance of an addendum to the show cause notice.
3. Supersession of earlier show cause notices.
4. Confiscation of 43 bags of yarn.
5. Confiscation of plant and machinery and imposition of redemption fine.

Issue-wise Detailed Analysis:

1. Clandestine Removal and Wilful Suppression of Facts:

The main issue revolves around whether the appellants attempted clandestine removal and wilful suppression of facts to evade duty, justifying the imposition of penalty and demand for duty beyond six months under Rule 9(2) of the Central Excise Rules. The appellants argued that they followed the procedure as advised by the Central Excise and Customs authorities, maintaining records and filing RT-12 returns with copies of transport vouchers. The Tribunal found that the appellants had informed the department at every stage and followed the instructions provided. The Tribunal concluded that the misunderstanding was partly due to the department's own misinterpretation of the advance licensing scheme, mistaking it for a 100% export-oriented scheme. However, the appellants were directed to produce evidence showing the accountal of yarn removed without payment of duty in the production of export goods and the export of such goods. The case was remanded back to the Collector for fresh determination based on this evidence.

2. Issuance of an Addendum to the Show Cause Notice:

The appellants contended that issuing an addendum to the show cause notice proposing confiscation of plant and machinery was unjustified, especially after the case was remanded for compliance with the principles of natural justice. The Tribunal agreed, citing the decision in M/s. Banshi Dhar Lachhman Prasad and Another v. Union of India and Ors., and held that the appellants could not be subjected to a higher penalty through de novo adjudication. The addendum was deemed unjustified, and the confiscation of plant and machinery was set aside.

3. Supersession of Earlier Show Cause Notices:

The appellants argued that the show cause notice dated 29-11-1985 should be construed as superseding earlier notices. The Tribunal noted that the notice dated 29-11-1985 included references to earlier notices, indicating they were not superseded. The Tribunal found that the cause for demand was directly related to the non-export of yarn cleared under the declaration for export purposes. The appellants were directed to provide evidence of export to substantiate their claims.

4. Confiscation of 43 Bags of Yarn:

The Tribunal observed that the 43 bags of yarn were seized from the bonded store room and were duly accounted for in statutory records. The seizure was deemed unjustifiable as the goods were yet to be cleared and were not removed without payment of duty. The order of confiscation was set aside, and the yarn was directed to be released in accordance with Central Excise Law provisions.

5. Confiscation of Plant and Machinery and Imposition of Redemption Fine:

The Tribunal found that the extreme penalty of confiscation of plant and machinery was not justified, especially when it was not alleged in the original show cause notice and was only introduced through an addendum during de novo adjudication. The Tribunal noted that the wrong procedure followed by the appellants was partly due to the department's misunderstanding. The confiscation order was set aside.

Conclusion:

The appeal was disposed of with the main issue remanded back to the Collector for fresh determination based on the evidence of export provided by the appellants. The orders of confiscation of 43 bags of yarn and plant and machinery were set aside. The Tribunal emphasized the need for the department to consider the misunderstanding that led to the wrong procedure being followed by the appellants.

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