1992 (1) TMI 233 - AT - Central Excise

Summary

Issues Involved:

1. Illicit removal of Acrylic Fibre and evasion of duty.
2. Imposition of penalty under Rule 209 of Central Excise Rules, 1944.
3. Confiscation of land, building, plant, and machinery.
4. Compliance with Notification No. 225/86-C.E., dated 3-4-1986.
5. Adherence to the procedure laid down in Trade Notice No. 126/81.
6. Time-barred demand of duty.
7. Interpretation of exemption notifications and procedural requirements.

Issue-wise Detailed Analysis:

1. Illicit Removal of Acrylic Fibre and Evasion of Duty:
The appellants were accused of illicitly removing Acrylic Fibre and evading duty amounting to Rs. 3,02,67,299.90 for the period from October 1989 to August 1990. The Department alleged that the appellants debited the entire duty amount from RG 23A Part-II account, instead of paying proportionate duty from PLA, thereby evading duty.

2. Imposition of Penalty under Rule 209 of Central Excise Rules, 1944:
A penalty of Rs. 1 crore was imposed under Rule 209 of Central Excise Rules, 1944. The Collector held that the appellants committed mis-statement and suppression of facts, which amounted to fraud, thus warranting penal action.

3. Confiscation of Land, Building, Plant, and Machinery:
The Collector ordered the confiscation of the appellants' land, building, plant, and machinery used in the manufacture, production, storage, and removal of Acrylic Fibre. However, the appellants were granted redemption of the same by imposing a fine of Rs. 1 lakh.

4. Compliance with Notification No. 225/86-C.E., dated 3-4-1986:
The appellants contended that they followed the procedure as per Notification No. 225/86-C.E., which did not specify any ratio for input and output. They argued that the entire quantity of Acrylonitrile removed on full payment of duty was used in the manufacture of Acrylic Fibre.

5. Adherence to the Procedure Laid Down in Trade Notice No. 126/81:
The Department alleged that the appellants did not maintain the 'set off' register as required by Trade Notice No. 126/81. The appellants countered that they were not informed about this Trade Notice and that the officials did not insist on maintaining such a register.

6. Time-Barred Demand of Duty:
The appellants argued that the demand was time-barred as the factory was under physical control, and all activities were supervised by Central Excise officers. They contended that the Collector's finding of fraud was not substantiated in the Show Cause Notice, and hence, the extended period of limitation could not be invoked.

7. Interpretation of Exemption Notifications and Procedural Requirements:
The Tribunal examined various rulings on the interpretation of exemption notifications. It was held that the contemporaneous exposition by administrative authorities is a relevant guide to interpretation. The Tribunal found that the procedure followed by the appellants was within the knowledge and approval of the Department, and there was no statutory requirement to maintain a 'set off' register as per Notification No. 225/86-C.E.

Conclusion:
The Tribunal concluded that the appellants had not violated the procedure as laid down in Notification No. 225/86-C.E., and the demand for duty was time-barred. The penalty and confiscation orders were set aside. The Tribunal emphasized that the interpretation of exemption notifications should be liberal once the applicability is established, and procedural lapses of a technical nature should not disentitle the benefit of set off.