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TMI Blog1986 (5) TMI 166X X X X Extracts X X X X X X X X Extracts X X X X ..... ecords and removing the processed fabrics from their factory without issue of gate passes and without payment of Central Excise duty leviable thereon. They were, therefore, asked to explain why penalty should not be imposed on them under Rule 173-Q of the Central Excise Rules and why Central Excise Duty on the processed canvas and duck cotton fabrics mentioned above, at the appropriate rate should not be demanded under Rule 9(2) of the Central Excise Rules, 1944. In reply to the show cause notice, the appellants stated, inter alia, that they had not used power in the process of the Cotton Fabrics and their Jigger and padding mangle were manually operated. They also stated that the Central Excise Officers visited the factory on 18-2-1974, 5-3-1974 and 23-4-1974 but, they did not notice the use of power in the processing of fabrics in the appellants factory. Two electric motors fitted on trolleys with their accessories, and grey and processed stock of cotton fabrics detained on 19-4-1974 and then seized on 23-4-1974 belonged to M/s. JaJmau Calanders, which is a separate firm. As they had processed cotton fabrics without the aid of power, they were not required to observe Central Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Order of the Collector, the appellants filed an appeal before the Central Board of Excise and Customs, New Delhi, which was dismissed, subject to reduction of penalty from Rs. 50,000/-to Rs. 25,000/-. 4. In the Order-in-appeal, the Board has held that provisions of Notification No. 195/72, which was issued to amend the Notification No. 88/69, are applicable only to the fabrics falling under Tariff Item 19-I(2), but the canvas, which was processed by the appellants, fell under Tariff Item 19-I(1). The Board has also held that for the purpose of assessment of processing duty on fabrics falling under Tariff Item 19-I(1) the provisions of Notification No. 128/70-CE would be applicable. For items attraching Notification No. 128/70-CE no concession similar to that provided in the Notification No. 193/72-CE was available, and the Central Excise duty was leviable for\the processing carried out by them since they admittedly used steam in the processing. 5. The present appeal (which was originally filed as a Revision Application before the Government of India) is directed against the aforesaid Order-in-appeal passed by the Board. 6. During the hearing before us, Shri B.B. Gujral, lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring that no statement of Mohd. Idris was recorded in Urdu on 20-4-1974. One statement dated 20-4-1974 and another on 23-4-1974 were recorded from Mohd. Idris and both the statements were in Hindi. Smt. Saxena has further stated that steam was used by the appellants for the processing of cotton fabrics. Even if steam was used, duty was payable under Notification No. 128/70-CE for processing of fabrics falling under Tariff Item 19-I(1). The appellants have not proved that power was not used by them. The seized register listed at serial No. 5 of Panchnama showed that the production of the firm stopped on some days in December, 1973 due to failure of power. This shows that power was used by the appellants in the processing of fabrics. 8. During the hearing before us, conflicting claims were made by the learned Advocate and the learned S.D.R regarding the statement dated 20-4-1974 of Mohd. Idris. The contention of the learned Advocate was that the statement dated 20-4-1974 of Mohd. Idris was in Urdu and was given in his capacity as Manager of M/s. Jajmau Calanders, in support of which he has filed an Affidavit of Mohd. Idris along with photocopy of the carbon copy of statement writt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken by the appellants is that the processing of fabrics was carried on by them without the aid of power. Dyring personal hearing before the Collector, Shri Motilal Jain, authorised representative of the appellants stated that steam had been used by the appellants for heating of colour solution and wax solution in jiggars. At the stage of appeal before the Board as well as before us, they have stated that dye solution was boiled with the aid of steam, but no power was used for operation of the machines. They have pleaded that the two electric motors with trolleys, which were seized by the Department, belonged to M/s. Jajmau Calanders, which is a different firm. The detention memo and the panchnama show that the motors were detained and subseguently seized from M/s. Jajmau Calanders. The remarks found in a seized register to the effect that the processing work stopped due to power failure on 12-12-1973, 15-12-1973 and 24-12-1973 have also been satisfactorily explained by them. There is no evidence before us to conclusively prove that the appellants used power processing the fabrics although the detection of electric motors fitted on the trolleys may raise suspicion. In the circumsta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lling under Item 19-I(2). 13. The next question which is required to be determined by us is whether the appellants processed only canvas and duck falling under Item 19-I(1) or they processed fabrics falling under both the items 19-I(1) and 19-I(2). We find that the appellants, in their letter dated 12-3-1974 addressed to the Superintendent (Technical), Kanpur stated that they got grey dedsuti, Khaddar and canvas for dyeing and wax-proofing. During personal hearing before the Collector, they stated that the fabrics processed were Dedsuti and sheeting, generally. Sometimes canvas and duck were also processed. In the detailed statements of stock submitted by them to the State Bank of India while pledging them for loan, the appellants declared the stock as Grey Canvas. From paragraph-6 of the Show Cause Notice it appears to us that the registers at serial Nos. 2, 4, 5, 7, 8, 11, 12 and 14 of the Panchnama relate to the appellants and those registers indicated receipt and processing of canvas and duck fabrics. At the time of personal hearing, the appellants submitted before the Collector that both coarse cloth and canvas were processed by them. The Collector has, however, stated tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were enclosed in Annexure-A to Annexure A. 33. In the reply to Show Cause Notice, copy of which has been placed at Annexure-I, Page 40-42 of the Paper Book filed by the appellants, they did not dispute these facts. They could not also produce any evidence before the Collector to prove that any coarse fabrics had been processed by them. In paragraph 3 of the order-in-appeal it has been stated by the Board that there was no account with the appellants to show whether they were actually processing Dedsuti or shirting. Even at the stage of second appeal before us, the appellants have not taken pains to produce any records to prove that they had processed any fabrics falling under Tariff Item 19-I(2) or that the charge of their having processed 3,87,997.28 meters of canvas and duck cotton fabrics valued at Rs. 23,27,983.68 Paise during the period from 1-4-1973 to 31-3-1974 was wrong. In view of these facts, we are unable to be guided by the affidavit dated 6-12-79 of Mohd. Anis of M/s. New India Water-Proof Stores, a copy of which has been filed by the appellants at page 35 of the Paper Book. This affidavit cannot obliterate the statements submitted by the appellants to their Bank and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l)]. The plea of time-bar was not taken by the Appellants before the Collector who adjudicated the case as well as before the Board who decided the first appeal of the appellants. This plea has been taken for the first time at the stage of Revision Application (Now appeal before us). The contention of the learned Advocate is not tenable. We find from paragraph 12 of the Show Cause Notice that the appellants were asked to explain why duty on the aforesaid processed Canvas and Duck cloth at the appropriate rate should not be demanded under Rule 9(2) of the Central Excise Rules, 1944. Duty was demanded in this case under Rule 9(2) of the Central Excise Rules. At the relevant time, there was no time limit for demanding duty under Rule 9(2) of the Central Excise Rules, 1944. Secondly, we find from the show cause notice that the facts were clearly narrated in the Show Cause Notice alleging that the appellants processed canvas and duck cloth without applying for a Central Excise licence as required under Rule 174 of the Central Excise Rules. They did not submit classification list and price list in respect of cloth processed in their factory, as required under Rule 173-B and 173-C; they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of duty and as such, his order is null and void. We are to consider the facts and circumstances in which the Collector has not quantified the amount of duty and left it to be calculated by the Assistant Collector. This was done by the Collector because he wanted to give maximum benefit to the appellants as permissible under law. He has stated in the order-in-original that processing duty at different rates was payable depending upon whether the basic fabric was of powerloom or handloom. The fact whether cloth processed by them were of handloom or powerloom was best known to the appellants. No doubt, the Collector could determine the duty payable by the appellants by applying the highest rates of duty, but he did not adopt such a course with a view to giving maximum benefit to the appellants and allowing them an opportunity to produce evidence before the Assistant Collector that they were liable to pay lower rate of duty. This being the position, it will be taking an extreme view to say that the Collector s order was null and void because he did not quantify the duty. The learned Advocate has relied upon the decision of Bombay High Court in the case M/s. J.B.A. Printing Ink L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Therefore, the conclusion drawn by this Tribunal in that case will not be relevant in the present case. In the case of Sindhu Ganesh Bali this tribunal held that evidence before the Collector was insufficient to sustain findings that goods were furnishing fabrics and therefore, demand for duty and penalty deserved to be set aside. In the present case, there is clear evidence to prove that the appellants processed (Dyed and Wax-proofed) canvas and duck, as discussed in this order. On the other hand, the appellants could not produce any documentary evidence to prove that they did not process such fabrics or that such processed fabrics fell under Item 19-I(2). So, the above decision of the Tribunal is not applicable in the present case. In the case of Swan Mills Limited and Another, it was held by the Hon ble Bombay High Court that burden of proof is primarily on the assessing authority to establish whether a particular product fell under one Tariff Item or other. In the present case before us, the burden of proof that the appellants processed canvas and duck fabrics with the aid of steam without observing the provisions of Central Excise Rules and removed the processed fabrics from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in existence. The appellants did not bring to the notice of the Central Excise authorities that they were processing canvas and duck with the aid of steam and the Central Excise authorities had no occasion to entertain any doubt about excisability of the goods or to object to their clearance without payment of duty. 20. We have discussed all the points which were argued before us by the learned Advocate for the appellants and we have given our findings thereon. 21. In the light of our discussions, we do not find any justification to interfere with the order-in-appeal passed by the Central Board of Excise and Customs, New Delhi. The same is, therefore, upheld and the appeal is hereby dismissed. We have held that the appellants processed 3,87,997.28 Meters of canvas and duck cotton fabrics valued at Rs. 23,27,983. 68 paise which they removed from the factory without payment of central excise duty. The appellants are liable to pay Central Excise duty thereon. In this regard, we uphold the view taken by the Board. We, however, direct that if the duty calculated on the basis of this order at the rate applicable to Canvas and Duck on the entire quantity of 3,87,997.28 meters valued ..... X X X X Extracts X X X X X X X X Extracts X X X X
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