1990 (10) TMI 235 - AT - Central Excise

Summary

Issues: Misdeclaration of width of fabrics leading to evasion of Central Excise Duty, Clerical error defense by the appellants, Applicability of Section 4 of the Central Excises & Salt Act on valuation for duty calculation, Evidence based on packing slips, Need for physical verification of fabrics, Assessment of value for duty calculation, Imposition of penalty.

The judgment pertains to a case where the appellants, engaged in manufacturing textile yarns and fabrics, were accused of misdeclaring the width of certain fabrics to evade Central Excise Duty. The Department alleged that the appellants deliberately declared the width as 91 cms instead of the actual 88/89 cms to benefit from a lower duty rate. Investigations revealed discrepancies in the width declarations on packing slips, leading to an evasion amounting to Rs. 2,46,509.02. The appellants claimed clerical error in preparing the slips, denying wilful misdeclaration. The Department issued a show cause notice demanding the duty amount.

The appellants contested the notice, arguing that the fabrics were actually 91 cms wide, attributing the error to clerical mistakes on packing slips. They relied on orders received for 91 cms width fabrics and documents showing the width as 91 cms. They also cited the absence of physical verification to support their position. Additionally, they invoked Section 4 of the Central Excises & Salt Act, contending that duty should not be included in the value of goods under exemption notifications, thereby affecting the duty calculation.

During the proceedings, the appellants emphasized the lack of concrete evidence supporting the Department's claims and the failure to conduct physical verification of the fabrics. The Department argued that misdeclaration of width led to duty evasion, but the Bench questioned how width discrepancies affected duty calculations based on square meter rates. The judgment highlighted the importance of the value of fabrics in duty assessment and the applicability of Section 4 of the Act, emphasizing that duty paid should be deducted from the value for assessment purposes.

Ultimately, the Tribunal upheld the finding of misdeclaration but set aside the valuation aspect, directing the Collector to reassess the value considering the Supreme Court's judgment and the appellants' arguments. The penalty was revoked pending the reassessment of value and potential imposition based on the revised duty liability. The appellants were granted an opportunity to present their case on valuation and penalty before a final decision was made, leading to the disposal of the appeal.