1994 (2) TMI 169 - AT - Central Excise

Summary

Issues Involved:
1. Allegation of clandestine removal of excisable goods without obtaining a Central Excise license.
2. Classification of printed plastic films and printed laminated films under the Central Excise Tariff Act, 1985.
3. Applicability of the extended period under Section 11A for demand of duty.
4. Confiscation of seized goods and imposition of penalties.
5. Rejection of Chartered Accountant's certificate and its implications on the case.

Detailed Analysis:

1. Allegation of Clandestine Removal:
The appellants were accused of manufacturing and clearing dutiable goods without obtaining a Central Excise license and without filing the necessary classification and price lists as required under Rules 173B and 173C. The Directorate of Anti-Evasion seized documents and goods from the appellants' premises and issued a Show Cause Notice alleging evasion of Central Excise duty amounting to Rs. 18,64,619. The appellants denied these charges, contending that a large part of their clearances consisted of non-laminated printed films made from duty-paid plain films, which were not subject to duty.

2. Classification of Printed Plastic Films:
The appellants argued that printed plastic films should be classified under Chapter 49 of the Central Excise Tariff Act, 1985, as per Note 2 to Section VII, since printing was not merely incidental to the primary use of the films. They cited Circular No. 41/89 and Trade Notice No. 140/89, which indicated that the Department had doubts about the classification of printed plastic sheets before 31-7-1989. The Collector, however, held that the laminated printed films were correctly classifiable under Headings 39.20 and 39.23, rejecting the appellants' contention that the goods were not marketable.

3. Applicability of Extended Period under Section 11A:
The Collector invoked the extended period under Section 11A, citing deliberate omission by the appellants in providing complete information in their declaration filed under Rule 174A. The appellants contended that the entire demand was time-barred as there was no suppression or misrepresentation with the intention of evading duty. They relied on case laws such as Brakes India Limited v. Collector of Central Excise and Padmini Products v. Collector of Central Excise to support their argument.

4. Confiscation and Penalties:
The Collector ordered the confiscation of seized goods valued at Rs. 1,87,250, giving the appellants the option to redeem the goods on payment of a fine of Rs. 20,000 and duty leviable thereon. Additionally, a penalty of Rs. 1,00,000 was imposed on the appellants. The appellants argued that there was no case for confiscation or penalty as they were under a bona fide belief that no duty was payable and the Department itself was in doubt about the classification of the goods.

5. Rejection of Chartered Accountant's Certificate:
The appellants submitted a certificate from their Chartered Accountant detailing the quantum of printed films cleared during the relevant period. The Collector rejected this certificate, stating that it could not be correlated with the details furnished in the Show Cause Notice and that it lacked evidence of sales of non-laminated printed polyester films. The appellants contended that the rejection was baseless and that the certificate was based on records that could have been produced if requested.

Conclusion:
The Tribunal found merit in the appellants' contention that the adjudicating authority did not make a serious effort to verify the details provided in the Chartered Accountant's certificate. The impugned order was deemed not to be a reasoned and speaking order, lacking proper application of mind. The matter was remanded to the adjudicating authority for de novo consideration, with instructions to give the appellants an opportunity for a personal hearing and to produce all relevant records.

Judgment:
The appeal was allowed by way of remand for fresh adjudication by the competent authority.