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TMI Blog2007 (1) TMI 309X X X X Extracts X X X X X X X X Extracts X X X X ..... cessed fabric. This is not a case of payment of appropriate duty as is being made out by the appellants. On the contrary there is a specific requirement that the duty should have been paid on the unprocessed tyre cord fabric @ Rs. 4/Kg. and therefore the appellants were clearly not entitled the exemption and the imposition of penalty for mis-declaration cannot therefore to be faulted with. However this penalty cannot be more than Rs. 1 Lakh which was imposed in the first round of proceedings and the same cannot be enhanced in the remand proceedings. We accordingly reduce the penalty from Rs. 7.5 Lakhs to Rs. 1 Lakh only. As regards show cause notice dated 22-1-1998, 28-3-1998 and 14-7-1998 where penalty aggregating to Rs. 80 Lakhs have been imposed, we hold that since in the earlier cases no penalty has been imposed on the ground that the matter was of legal interpretation, the same holds goods for the present show cause notices also as the facts are no different. These penalties are accordingly set aside. As regards three show cause notices dated 29-11-2001, 3-7-2002 and 5-5-2000 we find that neither any notice of hearing has been issued in respect of them nor they were cove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... September 1997 was confirmed by a separate order of Commissioner of Customs vide Order-in-Original No. 01/Commr.Goa/CX/98 dated 20-2-1998 confirming the amount of Rs. 1,40,93,760/- but without imposing any penalty. 2. Aggrieved by the above Order-in-Original passed by the Commissioner, appellants filed appeal before CESTAT contending that DTCWS manufactured by them was not marketable and what was being manufactured was rubberized tyre cord warp sheet which is classifiable under Chapter Heading 5906 of the Central Excise Tariff and on the same no additional duty is leviable. The Tribunal vide its Order No. 170-1378/98 dated 20-7-1998 held that the product DTCWS is correctly classifiable under Chapter Heading 5906 and is exempted from Additional Excise Duty. 3. The above order of the CEGAT was appealed against by the Revenue in the Supreme Court and the Supreme Court has remanded the matter back to the Commissioner for fresh determination in accordance with law after examining the claim of M/s MRF about the marketability and excisability of the product in question. 4. These 13 show cause notices have now been decided by the Commissioner vide his impugned order. Apart from these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In respect of three show cause notices dated 29-11-2001, 3-7-2002 and 5-5-2001, Commissioner demanded duty amounting to Rs. 78,81,890/- with a penalty of equivalent amount, duty of Rs. 46,63,141/- with a penalty of equivalent amount and Rs. 8,57,33,623/- with a penalty of Rs. 50 Lakhs. In respect of the other show cause notices varying amounts of duty was demanded and penalties imposed as reflected in the impugned order. 6. The learned advocate for the appellant at the out set submitted that though they have serious reservation regarding the marketability of the goods DTCWS having limited shelf life when preserved in a special packing, for the present they are not disputing the demand of the duty which has already paid by them and for which they shall not be claiming any refund thereof. They are only contesting the penalties imposed in respect of all the show cause notices adjudicated by the present Commissioner. 7. It was submitted that out of the 26 show cause notices six show cause notices as detailed in preceding para have been dropped by the Commissioner as during the relevant period processed tyre cord fabric was exempted from Additional Excise Duty. In respect of three ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal not even before the Supreme Court but the Supreme Court in Impression did say In any event the adjudication had taken place in 1998 at which time Section 11AC was on the book . It was submitted that even if it is held that Section 11AC applies (by reason of fraud, collusion, willful misstatement or suppression of facts or contravention of any rules with intent to evade payment of duty), finding of the Commissioner that MRF has suppressed its activities of manufacture of DCTWS from the Excise department and was therefore liable to penalty is not borne our from the record because the jurisdictional Commissioner of Goa was fully aware of the entire process at all points of time. In fact in the proceeding in Writ Petition 28 of 1983 [1985 (22) E.L.T. 5 (Bom.)] filed by MRF against Union of India in which it was categorically stated that the first basic step in the manufacture of tyre is to rubberize the tyre cord warp sheet in order to absorb the tyre cord into the rubber structure of tyre. For this purpose the tyre cord warp sheet is dipped in a rubber latex solution which contains adhesives to the extent of about 5% of the solution. The adhesive is in the form of resole which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osed by order-in-original of Commissioner dated 31-10-1997 was Rs. 1 Lakh only and therefore enhancement of penalty to Rs. 7.5 Lakhs is without jurisdiction. 12. As regards three show cause notices dated 22-1-1998, 28-3-1998, 14-7-1998 for the period October 1997-December 1997, January 1998, February 1998, March 1998, December 1998, it was submitted that the Commissioner has imposed penalties aggregating to Rs. 80 Lakhs even though show cause notice was for the normal period. It was submitted that it is well settled legal position that imposition of penalty goes in hand with the invocation of the longer period of limitation for raising duty demand. It was further submitted that Rule 173Q permits the imposition of penalty only if there is a contravention of the rule with intent to evade payment of duty. The Commissioner had admitted in the first round of proceedings that this was a issue of interpretation and therefore it would not be appropriate to impose penalty. The Apex Court has remanded the matter to the original authority to determine whether dipped tyre cord warp fabric is independent product in terms of manufacture and marketability and has observed that it seems that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the Tribunal or before the Apex Court. In view of the same penalties cannot be imposed in the remand order and they are accordingly set aside. 16. As regards imposition of penalty amounting to Rs. 2,93,68,768/-in concerned, we find that that the appellants have taken a plea before the Commissioner that there has been no suppression on their part inasmuch as the entire process of manufacture was declared in the Writ Petition No. 28 of 1983 [1985 (22) E.L.T. 5 (Bom.)] filed by MRF to which counter affidavit was filed by revenue and further that the factory was under physical control and therefore the matter was in full knowledge of the department and therefore there cannot be any suppression. The Commissioner has not given any finding on these two pleas. The learned D.R. has submitted that the physical control was during the period upto 31-3-1993 and not during the period March 1995 to September 1995 is also of no help as once the unit was under physical control even upto 31-10-1993 the department was in the know of their activity of manufacture and captive consumption of DTCWS and accordingly cannot allege suppression on the part of the appellants. Besides penalty has in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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