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TMI Blog1983 (5) TMI 229X X X X Extracts X X X X X X X X Extracts X X X X ..... lars of their sales to the Asstt. Collector through their two letters dated 2-5-1981 and 13-5-1981 but when directed to produce their connected records for verification of those figures, they again failed to do so. Since it appeared from the figures that the appellants had manufactured and cleared dutiable goods without paying the duty thereon and had violated Rules 9(1), 47, 52A, 53, 173B, 173F, 173G, 174 and 226 of the Central Excise Rules, 1944 by not taking out a Central Excise licence, not maintaining the prescribed central excise accounts and not submitting the prescribed classification lists, price lists and returns etc., adjudication proceedings were started against them by the show cause notice dated 16-5-1981. After hearing them, the Collector passed the impugned Order-in-Original in which he held that the appellants had suppressed the facts of their clearances wilfully and with the intention to evade payment of duty. He further held that the violation of various Rules by them stood established. He confiscated the seized goods valued ₹ 49,900/-, allowed their redemption on payment of fine of ₹ 20,000/-, demanded central excise duty of ₹ 2,71, 012.58 for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... correct. They had no documentary proof to show that their earlier impression had the approval of the Department or that the Department was aware of what they had been doing. They maintain that the Department s knowledge and/or implied approval were proved by circumstantial evidence. The circumstantial evidence, according to them, was two-fold. First, they maintained that the Department s summons dated 12-11-1979 to them were prompted by their contacts and discussion with the Central Excise officers. Secondly, even after they replied to these summons in November 1979 itself, the Department took no action against them for nearly one year which showed that the Department accepted their view-point that they were entitled to clear closing stocks free of duty. In November 1979, they applied for and obtained a central excise licence also. In view of the Department s silence till the seizure in their factory in November 1980, they felt reassured that their interpretation of the law was correct. After replying to the summons and after taking out a licence in November 1979, they submitted themselves to full central excise control, they presented the classification list, submitted R.T. 12 ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellants was Notification No. 111/78-C.E. which was subsequent to Notification No. 31/76-C.E. and which required the manufacturer to submit a declaration to the Department. Exemption from the requirement of taking a central excise licence and following other excise formalities was given to such a manufacturer after his declaration had been checked and approved by the Department. The appellants never gave such a declaration. The appellants did not start paying duty during 1979-80 when their clearances exceeded the free slab of ₹ 15 lakhs. They were not entitled to any exemption in 1980-81 since their clearances in the preceding financial year 1979-80 had exceeded the stipulated ceiling of ₹ 30 lakhs. Yet, they went on clearing their goods without paying any duty, without taking out a licence and without submitting any declaration, classification list, price list or return to the Department. Thus, there was complete suppression of facts on their part throughout the material period. Even after the seizure, they never cooperated with the Department. The Department wanted to verify the figure furnished by them but they never produced their records for this purpose even th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 31/76-C.E. The appellants made no declaration under Notification No. 111/78-C.E. Another condition of Notification No. 176/77-C.E. was that the exemption contained therein was in relation to a particular financial year. As soon as one financial year closed, the exemption quota for that year lapsed and the quota for the new financial year began. There was no question of any unutilised exemption quota of one financial year being carried over to the next financial year. The question of any pre-Budget stocks could not, therefore, arise in such a situation. Further, the exemption quota for each financial year was limited to a value ceiling of ₹ 30 lakhs. As per the figures furnished by the appellants themselves to the Collector during May 1981, they cleared goods free of duty to the tune of ₹ 27.75 lakhs during 1977-78. During 1978-79, they cleared goods of the value of ₹ 29.78 lakhs. Thus, in both these financial years there was only a marginal short-fall in their utilisation of the exemption quota. We do not understand from where the so-called pre-Budget stocks of ₹ 18.49 lakhs came as on 1-4-1979, i.e., at the beginning of the new financial year 1979-80. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Department was aware of, or had given their implied approval to, what the appellants were doing in 1979-80 in the name of pre-Budget stocks. With effect from 1-12-1979, there was a short interlude during which, in the wake of the Department s summons, the appellants submitted a classification list on 10-12-1979, cleared goods on payment of duty and submitted R.T. 12 returns. In one of these R.T. 12 returns, submitted on 5-2-1980, they showed a small quantity of goods cleared free of duty as closing stocks. But bulk of the so-called closing stocks or pre-Budget stocks had already been unauthorisedly removed earlier. We find from the records that the Collector has already allowed them full relief in respect of the duty paid by them from December 1979 to March 1980. Not only that, the Collector was also generous enough to allow the appellants full exemption from duty on first 15 lakhs and 50 per cent exemption from duty on the next 15 lakhs worth of clearances during 1979-80 in accordance with the provisions of Notification No. 89/79-C.E. in spite of lapses on the part of the appellants. He has held the appellants guilty of suppression of facts only for the earlier period from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hey were essentially manufacturing textile machinery parts and the nickel scrap sold by them must have only been the remnant of duty paid nickel purchased by them from outside. We direct that this sale of nickel scrap be excluded from the clearances of 1979-80 and the demand for duty for that year be reduced correspondingly. No other relief in respect of the duty demanded by the Collector is called for. 8. Since we have already held that the appellants had suppressed the facts of their clearances wilfully and with the intention to evade payment of duty and worse still they deliberately concealed their books and records from the Department even after the seizure in their factory in November 1980 and left no choice for the Department except to proceed on the basis of the figures which they themselves chose to reveal to the Department by means of their letters, we find no justification to interfere with the fine in lieu of confiscation (Rs. 20,000/-) and the penalty (Rs. 6 lakhs) adjudged by the Collector. The penalty is even otherwise not excessive when viewed in the light of the amount of duty evaded and the numerous provisions of the Central Excise Rules violated. 9. Accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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