1997 (7) TMI 421 - AT - Central Excise

Issues Involved:
1. Clandestine receipt and clearance of fabrics by SSI and five suppliers.
2. Validity of documentary evidence and need for corroborative evidence.
3. Determination of assessable value of clandestinely cleared goods.
4. Imposition of penalty under the Central Excise Act for evasion of additional duty of excise.

Detailed Analysis:

1. Clandestine Receipt and Clearance of Fabrics by SSI and Five Suppliers
The appeals challenge the Order-in-Original No. 19/MP/90, which involved the confiscation of processed man-made fabrics from M/s. Mukund Silk Mills (P) Ltd. and M/s. Shree Shantinath Silk Industries, along with the demand for excise duty and imposition of penalties. The Collector found that SSI, as a job worker, processed grey fabrics supplied by the other appellants and cleared them without payment of central excise duty. The common premises of the five suppliers were searched, revealing unaccounted processed fabrics and concealed documents. Statements and seized documents indicated that the suppliers used fake bills and a dummy concern "H.T." to cover illicit receipts from SSI. The Collector concluded that there was deliberate suppression and illicit clearance of fabrics by SSI to evade duty.

2. Validity of Documentary Evidence and Need for Corroborative Evidence
The appellants argued that the evidence of clandestine activities consisted only of certain accounts and statements without independent corroborative evidence. They cited decisions in C.B.I. v. V.C. Shukla and Chiranjilal Steel Rolling Mills v. C.I.T. to support their contention that entries in books of account alone cannot fix liability without independent evidence. The Tribunal, however, observed that the documents seized from the suppliers, including entries in the "Avak" book and yellow cards, indicated receipt of processed fabrics by "H.T." from SSI. The explanation that "H.T." stood for "Hand Tatting" was rejected. The Tribunal found that the documents were genuine and provided ample independent corroboration, distinguishing the case from the cited precedents.

3. Determination of Assessable Value of Clandestinely Cleared Goods
The appellants contended that the assessable value of the clandestinely cleared goods was erroneously determined based on the price at which the suppliers sold the fabrics to wholesale dealers. They argued that as a job worker, SSI's assessable value should be determined based on the principles laid in the Ujagar Prints clarificatory order by the Supreme Court. The Tribunal agreed that the assessable value and the amount of duty payable needed to be re-determined afresh.

4. Imposition of Penalty under the Central Excise Act for Evasion of Additional Duty of Excise
The appellants challenged the imposition of penalties under Rule 173Q of the Central Excise Rules, 1944, arguing that the duty evaded was additional duty of excise under the Additional Duties of Excise (Goods of Special Importance) Act, 1957. They cited the decision in Pioneer Silk Mills Pvt. Ltd. v. Union of India, which held that the provisions relating to penalty in the Central Excise Act could not be invoked for additional duty of excise. The Tribunal set aside the penalties imposed on the appellants.

Conclusion:
The Tribunal set aside the impugned order and remanded the case to the jurisdictional Adjudicating Authority for re-determination of the additional duty of excise payable by SSI, considering the findings in the impugned order. The order of confiscation of seized fabrics was upheld, but the redemption fine was to be quantified afresh. The penalties imposed on the appellants were set aside, and the appellants were to be given an opportunity of hearing.

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