1997 (4) TMI 242 - AT - Central Excise

Summary

Issues: Alleged clandestine removal of man-made fabrics and cotton fabrics without payment of duty, calculation of duty, admissibility of discount claimed, deduction of element of duty in calculation, quantum of penalty imposed.

Analysis:
1. The case involved the appellants being accused of clandestinely removing man-made fabrics and cotton fabrics without paying duty. The jurisdictional Central Excise Officers conducted a check and found evidence suggesting duty evasion on a significant quantity of fabrics. The Collector confirmed the duty demand, ordered confiscation of seized goods, and imposed a penalty of Rs. 5 lakhs on the assessees. The appeal challenged this order.

2. The appellant's advocate contested the duty calculation for certain lots of goods, arguing that they were actually cotton fabrics attracting lower duty, contrary to the Department's classification as man-made fabrics. The advocate presented a certificate from Matulya Mills Ltd. indicating the fabric types. However, the tribunal found discrepancies in the documentation and lack of evidence to support the claim that the goods were cotton fabrics. Consequently, the tribunal upheld the Collector's finding that the goods were indeed man-made fabrics, affirming the duty calculation.

3. The appellant claimed a 1% discount was uniformly given to buyers, seeking a deduction based on this discount. However, the tribunal noted that the discount was not claimed in the price list submitted, and no evidence suggested buyers or the department were aware of it. Therefore, the tribunal ruled the claimed discount inadmissible.

4. The appellant argued that the duty calculation did not consider the deduction of the duty element. The Revenue contended that since the duty was not paid at all, no deduction could be claimed. The tribunal referred to Section 4(2) of the Central Excises and Salt Act, which excludes duty from the value of excisable goods. Citing precedent, the tribunal agreed with the appellant that if duty is found payable, the deduction must be allowed, contrary to the Revenue's argument.

5. Regarding the quantum of penalty imposed, the appellant highlighted that a significant portion of the duty demand comprised Additional Duty of Excise. They argued that the law at the time did not provide for penalties under the relevant Act. However, the tribunal disagreed, citing the maximum penalty provision under the Central Excise Rules. Despite acknowledging the appellant's early duty payment, the tribunal only marginally reduced the penalty from Rs. 5 lakhs to Rs. 4 lakhs, maintaining the duty calculation but allowing for the deduction of the duty element.