1999 (7) TMI 396 - AT - Central Excise

Summary

Issues Involved:
1. Liability to confiscation and penalty.
2. Confirmation of duty demand.

Summary:

1. Liability to Confiscation and Penalty:

The assessees manufactured processed man-made fabrics. Officers intercepted a vehicle carrying such fabrics valued at Rs. 36,274.50 without duty paid and without a valid gate pass. These goods and the vehicle were seized. A show cause notice dated 13-2-1985 sought to recover duty on clandestinely cleared fabrics and duty evaded on fabrics processed and cleared during September 1979 to August 1984. The Collector ordered confiscation of the seized textiles, plant, machinery, etc., and imposed penalties. The Delhi High Court in Pioneer Silk Mills v. U.O.I. - 1995 (80) E.L.T. 507 held that the provisions of the Central Excises and Salt Act, 1944 relating to confiscation and penalties were not incorporated in the Additional Duties of Excise (Goods of Special Importance) Act, 1957. Therefore, the orders of confiscation and penalty were not sustainable. The Gujarat High Court in Maheshwari Mills - 1988 (35) E.L.T. 252 did not address the issue of confiscation and penalties. The Tribunal held that the Pioneer Silk Mills judgment would continue to apply, thus the orders of confiscation and penalty were made without a basis in law and were set aside.

2. Confirmation of Duty Demand:

The Collector confirmed a duty demand of Rs. 47,98,752.65, which included Rs. 15,97,629.07 for the period July 1983 to August 1984, based on private registers and documents indicating surreptitious production and clearance of dutiable goods. The remaining Rs. 32,01,123.57 was based on the consumption of electricity as a single parameter to determine normal production for the period September 1979 to June 1983. Rule 173E prescribes multiple parameters for determining normal production, including installed capacity, raw material utilization, labor employed, and power consumed. The Tribunal found that the determination based solely on electricity consumption was not sustainable. The demand for Rs. 32,01,123.57 was set aside, while the demand for Rs. 15,97,629.07 was upheld. The orders of confiscation and penalties were also set aside.