1993 (5) TMI 102 - AT - Central Excise

Summary

Issues Involved:
1. Liability of past dues on the new entity.
2. Reliance on statements and evidence.
3. Confiscation of goods.
4. Classification of woollen fabrics.
5. Penalty imposition under Rule 209A.
6. Provisional release and confiscation.

Detailed Analysis:

1. Liability of Past Dues on the New Entity:
The appellants argued that M/s. Abhinav Dyeing & Finishing Mills Pvt. Ltd., which took over M/s. SRFW, should not be liable for past dues. However, the Tribunal held that under Rule 230(2) of the Central Excise Rules, duty can be recovered even after the transfer of business. The business was a continuing entity, not an outright purchase by an independent third party, and thus the liability for past dues remains.

2. Reliance on Statements and Evidence:
The appellants contended that the Collector's reliance on the statement of Chuni Lal Vohra, who was 82 years old and claimed to be mentally depressed, was misplaced. However, the Tribunal found the statement credible and corroborated by other evidence, including the statement of Ranjan Vohra and the collection of documents by Chuni Lal Vohra himself. The Tribunal also noted that the Collector's findings were based on detailed material data, not just the statement.

3. Confiscation of Goods:
The confiscation of 5420 mtrs of woollen serge Battle Dress from M/s. SRFW was upheld because the appellants failed to submit price and classification lists, leading to short payment of duty. However, the confiscation of 579.20 mtrs from Chuni Lal Vohra's cattle shed was overturned due to the old and moth-eaten condition of the fabrics, extending the benefit of doubt to the appellants.

4. Classification of Woollen Fabrics:
The appellants argued that the fabrics, being 100% wool, should not be classified under Item 21 CET but under Item 68 CET. The Tribunal rejected this argument, stating that the appellants failed to provide substantial evidence, such as test reports or authoritative literature. The Tribunal referred to a similar case, Gaekwar Mills v. Collector of Central Excise, Baroda, which held that "predominates in weight" means over 50% and includes 100%.

5. Penalty Imposition Under Rule 209A:
The appellants argued that penalties under Rule 209A, which came into effect in April 1986, should not apply to periods before that date. The Tribunal agreed, reducing the penalties due to the advanced age of Chuni Lal Vohra and the lack of evidence for certain periods. The penalties were reduced as follows:
- M/s. SRFW-Proprietor Abhinav Dyeing & Finishing Mills Private Limited: Rs. 5 lakhs
- M/s. Shalloo Fabrics Pvt. Ltd. & M/s. Vohra Textile Mills: Rs. 50,000/- each
- M/s. Ram Hukam Textile Mills: Rs. 5,000/-
- Chuni Lal Vohra: Rs. 50,000/-

6. Provisional Release and Confiscation:
The Tribunal noted that the goods seized from Ram Hukam Textiles should have been returned due to the failure to issue a show cause notice within six months. However, the Tribunal referred to a Full Bench decision of the Karnataka High Court, which held that failure to issue notice within six months does not preclude the continuation of proceedings for confiscation and penalty.

Conclusion:
The appeals were disposed of with directions to redetermine the duty demanded in light of the findings and to provide consequential relief to the appellants.