9911796707
TMI Blog1990 (10) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... can be stated as below: 3. The appellants are manufacturers of excisable yarn classifiable under Tariff Item No. 18 III(ii) and 18E of the First Schedule to the Central Excises Salt Act, 1944. They are holding licence for the manufacture of the different varieties of yarn. The appellants obtained advance licence for the import of polyester fibre under the DEEC Scheme on 3-5-1983. The appellants informed the concerned jurisdictional Supdt., Central Excise, Range III, Ankleshwar vide their letter dated 18-6-1983 enclosing a copy of the import licence and intimated that they were expecting to receive the imported polyester fibre against the said licence at any time. Thereafter on 20-6-1983 they wrote another letter to the said Supdt. intimating the details of advance licence, DEEC book, quantity and description of goods and description of export products. In this letter they also stated that they proposed to convert the imported polyester fibre into yarn in their factory at Ankleshwar and this yarn would be converted into fabrics in their weaving unit at Bombay and accordingly requested for permission to work under Rule 191B of the Central Excise Rules, 1944. Thereafter on 24-6-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of the removal after 16-10-1983, vouchers bearing the seal of the Customs Supdt. have been used. It is also alleged that the condition of the advance licence and also as per the Scheme enumerated in Appendix 19 of the Import Export Policy AM 1984-1985 does not contemplate any exemption from payment of excise duty on yarn manufactured by the appellants and cleared without gate passes. The Excise Rules contemplate a particular procedure in respect of the goods to be exported out of India under the claim for rebate and none of the procedures have been followed. On the basis of these allegations duty has been demanded on a quantity of 1,91,500 kgs. The appellants in their reply to the Assistant Collector concerned denied the allegations and requested for dropping the proceedings. This was followed by another demand notice from the same Supdt. on 25-3-1985. A third one on 6-4-1985 and the replies to the show cause notices were also sent by them on 12-12-1985. Shri K. Srinivasan, the Ld. consultant, took us through the said demands and replies sent by them. After issue of these notices, the Assistant Collector (Preventive) Headquarters, Baroda, visited the factory and after searc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for advancing his arguments as below: 5. The main issue for decision in the appeal is whether there is any attempt at clandestine removal and wilful suppression of facts and fraud to evade payment of duty justifying imposition of penalty and demanding duty beyond a period of six months and whether Rule 9(2) of the Central Excise Rules can be invoked in such a case, where clearances have been effected on the basis of pre-authenticated Customs Voucher, copies of which were also submitted along with the RT-12 Returns and the quantities of such removals have also been indicated in the RT-12 Returns. 6. Apart from the aforesaid main issue, he also identified the other issues before advancing his arguments :- (i) When the case already adjudicated on the basis of a show cause notice issued by the department is remanded back to the Collector for the only requirement of compliance of the observance of the principles of natural justice, whether the Collector is justified in issuing an addendum to the show cause notice, thereby seeking to expose the party to a liability for greater penalty by proposing afresh confiscation of plant and machinery, (ii) Whether the show cause notice date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e lying in the bonded store room. They are also found to be accounted for. This is evident from the panchnama drawn on 3-6-1985. These goods have been seized only because they were the left over quantity of the yarn manufactured out of the imported fibre and huge quantity of yarn so manufactured has been cleared under the Customs vouchers without payment of excise duty and without preparing Central Excise gate passes. Only on this ground, the goods have been treated as offending goods and seizure has been effected. On the question of confiscation of plant and machinery, he contended that this was not the allegation in show cause notice dated 29-11-1985. By way of an addendum issued after the case was remanded back for de novo consideration only for the limited purpose of complying with the principles of natural justice, this addendum has been issued and on that basis plant and machinery has been confiscated. He, therefore, contended that since the addendum itself is illegal, confiscation of plant and machinery ordered on the basis of this addendum is required to be set aside. 9. Coming to the main issue, the Ld. Consultant Shri K. Srinivasan contended that he has elaborately deal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that they will be governed by the procedures prescribed under Ministry s Circular No. 59/79 CEX dated 11-12-1979. Hence their application for working under Rule 191B was not acted upon. Having done this, the department cannot turn round and say that the prescribed procedure for export of goods under rebate or under bond has not been followed by the appellants. In view of the mass of correspondences exchanged with the department it would be evident that nothing has been suppressed away from the department and the cross-examination proceedings of the concerned officers also reveal that the departmental officers were not clear about the procedures to be followed. Hence in the context of the aforesaid factual position, allegation of suppression or clandestine removal cannot be sustained. He also contended that invoking Rule 9(2) of the Rules for confirming the demand by the Collector is not legally sustainable because the clearances were within the knowledge of the department. In the context of his submissions he also cited a number of decisions to urge that the extended period is not applicable and the demand is hit by time bar. Since there is no mala fide, no penalty can be imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n superseded. 12. Regarding confiscation of 43 bags of yarn, he contended that had this seizure not been effected, they would also have been removed in the same manner by the appellants, contrary to the provisions of the Rules. He thus supported the order. 13. After hearing both the sides and after perusal of the documents, through which, we were taken, we would first propose to deal with the main issue, namely, whether there is any attempt on the part of the appellants at clandestine removal or wilful suppression of facts and fraud has been committed to evade payment of duty justifying imposition of penalty and demanding duty beyond a period of six months. 14. For this purpose, we identify the following documents, which are required to be reproduced for proper appreciation and also read these documents in the context of the Collector s findings :- (i) Letter dated 20-6-1983 from the appellant reproduced as below: We are manufacturing CELLULOSIC/NON-CELLULOSIC SPUN YARN" at our factory. We have entered into an agreement with the Customs Authorities at Bombay and obtained Advance Licence No. 2956010 dated 3-5-1983 and Duty Exemption Entitlement Certificate No. 004781 dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hey stated about supply of Yarn from Ankleshwar factory to Bombay unit without payment of duty , it could only mean without Customs duty. As the letter gave no context or background whatsoever of central excise duty, the expression without payment of duty in the aforesaid context of advance licence and DEEC could not in any way convey, deal or mean without payment of central excise duty. Advance licence has nothing to do with central excise duty liability and it granted no exemption from central excise duty and procedure. Their cryptic request in this letter for permission to work under Rule 191B of Central Excise Rules, 1944, was also a part of such mis-representation of facts and deliberate twisting of legal provisions because Rule 191B of Central Excise Rules, 1944, applies to a manufacturer who obtains excisable goods on which excise duty has not been paid for the manufacture of articles which are exported and it also permits the manufacture in bond of articles for export subject to the prescribed conditions and limitations. Party s elliptical request for permission under Rule 191B was totally misleading and it conveyed an intention to export yarn from their Ankleshwar fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of imported fibre) attracts central excise levy and they have to be governed by Central Excise Rules. We also had a look at the letter of the Assistant Collector, Baroda, Division V, addressed to the Supdt. This letter is dated 20-8-1983. In this letter, reference is made to the appellants letter dated 20-6-1983. From this letter, it is evident that the Assistant Collector has presumed, on his own, that the appellant intends to manufacture yarn and fabrics in customs bond and they will be governed by the Ministry s circular dated 11-2-1979 and hence the question of relaxation of Rule 191B does not arise in this case. It is also an undisputed fact that the appellant was holding the central excise licence during the material period and continued to hold the same. It is also a known fact to the central excise officers that the appellants were removing the goods made out of indigenous fibre on payment of central excise duty. It is also not disputed that RT-12 returns have been filed showing the quantity of yarn cleared on payment of duty as also the quantity of yarn manufactured out of imported fibre without payment of duty. It is also not in dispute that the copies of customs transp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8-1983 does not give an impression to us that their intention was to mislead the department.There appears to be an apparent confusion in the minds of the dealing officers, who are central excise officers, possibly not being conversant with the advance licence scheme. It appears to us that they have mistaken the advance licensing scheme as one of 100% export oriented scheme, where the units are required to work under the customs bond. This appears to be the plausible reason for the direction issued by the concerned officers of the department. In this view of the matter, we hold that if a wrong procedure has been followed on account of which the goods have been removed without gate passes or without following the prescribed procedure for export of goods under bond, the department also has to bear due share of the blame for this. However, the one pertinent argument of the Department, which appeals to us is that all these clearances have been effected under the ostensible declaration of the appellants as meant for export purposes. Even the RT-12 Returns declare that these are goods for export and cleared at nil rate in relaxation of Rule 191B. Hence it is necessary and incumbent on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, where the said yarn is stated to have been utilised in weaving of fabrics and export of such fabrics co-related with the export documents. The appellants should produce such acceptable evidences before the Collector within two months from the date of receipt of this order, who, thereupon, should consider the same. In case any verification is called for on such evidences produced, the Collector is at liberty to cause such enquiry in regard to the evidences so produced and thereafter pass final order in accordance with the law. Hence, on this main question, we remand the case back to the Collector with these observations and hence set aside the demand and penalty, for determination afresh in the light of our above observations. 16. As regards confiscation of 43 bags of yarn, it is observed that the seizure has been effected from the bonded store room. There is no allegation that this has not been accounted for. The only allegation is that this is part of the remaining quantity, where yarn has been removed without gate passes and without payment of duty. We are unable to appreciate the legality of such an order. When the goods are yet to be cleared and they are also duly accounte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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