9911796707
TMI Blog1994 (2) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... occupants who were the employees of Syntex Processors revealed that the Malador had left the factory premises of Syntex Processors the same morning after loading the fabrics which were seized in the absence of any accompanying gate passes. The Matador was also seized after recording the statements of the driver and the other occupants. The Department conducted physical verification of the entire balance stock of fabrics in the factory premises of Syntex Processors from 8-5-1987 to 11-5-1987 and found a shortage of 12757 metres of fabrics. They also seized 216 pieces of man-made fabrics found in excess of the statutory balance. Statements of Partners of Syntex Processors were recorded. On the same date the Departmental officers visited the premises of one M/s. Rami Tex where they recorded the statement of its partner to the effect that M/s. Rami Tex had sent grey fabrics under the challan dated 25-4-1987 to Syntex Processors through M/s. Simplex Trading Company, a sister concern of Syntex Processors and that some processed man-made fabrics found in the premises of Rami Tex were out of the fabrics sent to Syntex Processors which had been returned after processing without cover of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the statement of Pawan Mehra Partner of Syntex Processors and that the fabrics had been accounted for in the statutory grey fabrics receipt register and, therefore, were not liable to confiscation. She contends that the entire case of the Department is based upon statements of Partners of M/s. Rami Tex and M/s. Amrit Lal Subhash Chander which are not corroborated in material particulars by any other independent evidence. She submits that the shortage and excess was due to certain inadvertant mistakes and was not a real shortage and that the bulk of the fabrics seized as excess and unaccounted for were still in a semi-processed condition and had not reached the stage for entry in RG-I register. She further submits that the inability of M/s. Simplex Trading Co. to prove the duty paid character of goods seized from its premises cannot be made the basis for a finding of clandestine removal as there is no requirement in law for a trading concern to maintain any accounts for co-relation of gate passes to establish the duty paid character of the goods stored by it or dealt with by it. Regarding Pawan Kumar, learned Counsel submits that no duty is cast in law upon the driver of the ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority has given reasons in paragraphs 7.7 and 7.8 for confirming the duty demand and we see no reason to interfere with the same. We also reject the contention that there has been a duplication of demand in respect of goods covered by lot No. 20 as not substantiated. We, therefore uphold the duty demand. 8. Regarding confiscation and penalty, we find that the Hon ble Delhi High Court has held in the case of Pioneer Silk Mills (supra) that there is no mandate in the Additional Duties Act for levy of penalty and the CESA and the Rules made thereunder cannot be imported in the Additional Duties Act for the purpose of levy of penalty. The petitioners before the High Court challenged the show cause notice issued by the Collector of Central Excise proposing confiscation of plant and machinery, etc., and proposing imposition of penalty alleging contravention of Rules and proposing levy of Additional Duties of Excise and Cess payable on processed man-made fabrics. The claim of the petitioners was that invoking of the penal provisions of the Central Excise Rules by the respondents under the show cause notices was illegal and void and unconstitutional as under Section 3 of the Additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , etc. This distinction, to our mind, does not appear to be based on any sound reasoning. The object of the maintenance of records and for doing other acts as per rules is only to collect proper amount of tax and within the prescribed period and the object for levying penalty for non-payment or late payment, etc. is also the same. Confiscation or forfeiture of property is also a form of penalty. To appropriate the property of the assessee of the value equal to an amount of taxes due from him is one thing but to confiscate his property for contravening certain provision of the Rules is another and partakes the form of penalty. It is not that there are no teeth for levy and collection of additional duty of excise under the Additional Duties Act inasmuch as under Section 11 of the Central Excises Act the officer authorised to levy excise duty may deduct the amount so payable from any money owing to the person from whom such sums may be recoverable or due which may be in his hands or under his disposal or control, or may recover the amount by attachment and sale of excisable goods belonging to such person; and if the amount payable is not so recovered he may prepare a certificate sign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct has been used in various Finance Acts and other enactments, but then Article 265 of the Constitution mandates that no tax shall be levied and collected except by authority of law. There being no such authority of law to levy penalty, we have to held so." 9. The above decision of the Hon ble Delhi High Court is, in our view, applicable on all fours to the facts of the present appeal. From a reading of the show cause notice it is clear that contravention of the Rules is in respect of levy and collection of additional duties of excise under the Additional Duties of Excise (Goods of Special Importance) Act, 1957 as applicable by virtue of Section 3 thereof. There is no allegation of contravention of the Rules regarding levy and collection of basic excise duty apparently because processed fabrics were admittedly wholly exempt from such levy during the relevant period. The show cause notices allege contravention of Rules 9.1, 52A, 53, 173B, 173C, 173F, 173G and Rule 226 and invokes Section 173Q for confiscation of goods seized from the van as well as business premises of M/s. Rami Tex, M/s. Simplex Trading Co. and M/s. Amritlal Subhash Chander. In the case of Pioneer Silk Mills (sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is not merely consequential to assessment. It is not merely machinery. Penalty is in addition to tax and is a liability under the Act . 14. Referring to a decision of the Federal Court in Chatturam v. Commissioner of Income Tax, 15 ITR 302 = (AIR 1947 FC 32), Ray, C.J. had observed that there must be a charging section to create liability, and that there must be first a liability created by the Act." 15. The important thing to be noted is that by majority opinion the Hon ble Supreme Court has considered penalty as an imposition in addition to tax and Hon ble Justice Beg has in fact observed that provisions relating to penalty were special and specific provisions in each Act . Therefore, in my opinion it was required to be seen as to what was the position in the relevant Act(s). [In Central Excises and Salt Act, 1944 (as also under the Customs Act, 1962), there are specific provisions for penalty; and these are not in the nature of additional tax or as an adjunct to tax for consequential to it but in the nature of distinct liability created under the Act]. 16. In the instant case however, as rightly observed by the Hon ble Delhi High Court in the case of M/s. Pioneer Si ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
