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TMI Blog1971 (12) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... excise duty payable on the cotton fabrics stated to have been manufactured on behalf of the appellant firm in the factories situated at Ichalkaranji, mentioned in the annexure to the notice of demand, at normal rates in respect of the production for the period from July 1, 1956 to April 30, 1957. The appellant represented to the Assistant Collector, Central Excise, Kolhapur against this demand notice. But the same was confirmed by him on September 30, 1957. An appeal was then taken by the appellant to the Collector of Central Excise, Bombay. But the same was not entertained on account of non-compliance with the condition precedent of depositing the duty demanded. Prayer for waiver of this condition precedent was declined by the Collector. The appellant thereupon approached the Central Board of Revenue, which, as a special case, agreed to convert the demand on the basis of compounded levy if the appellant undertook to honour the same. The appellant gave written undertaking as desired and a revised demand for Rs. 52,290 was then served upon the appellant by Superintendent, Central Excise, Ichalkaranji. This demand was also objected to and the matter went up to the Assistant Collector ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Collector, by his order dated July 20, 1964, declined to interfere with the order of the Assistant Collector. 3. On further revision the Central Government made the following order on April 15, 1966, affirming the order of the Collector : "The Government of India have carefully considered all the points made in the revision application as well as at the time of the personal hearing given to them at Bombay on 4-4-1966. They are convinced that the applicants acted as master weaver during the material time and therefore, their duty liability under the Central Excise Rules was correctly determined. They, however, observe that the duty paid by M/s. Kallashwar Mill at compounded rate was not adjusted while determining the applicant's duty liability. The Government of India, therefore, directed that the demand for duty made in this case shall be reduced to the extent of the duty paid by Messrs. Kalleshwar Mill at compounded rate. Subject to this modification of the order in appeal, the revision application is rejected." 4. It is this order which is challenged before us in the present appeal. 5. In this Court the appellant's learned counsel Mr. P.R. Mirdul, contended that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, but also any person who engages in their production or manufacture on his own account :" 7. The expression "excisable goods" defined in clause (d) of this section means "goods specified in the First Schedule as being subject to a duty of excise and includes salt". "Cotton fabrics" is one of the items specified in the said Schedule. Section 3 of the Act provides for the levy on all excisable goods other than salt manufactured or all excisable goods other than salt manufactured in or imported into any part of India at the rates set forth in the First Schedule. The Central Government framed the Central Excise Rules, 1944, in exercise of the powers conferred on it by Sections 6, 12 and 37 of the Act. Under Rule 8(1) the Central Government is empowered by notification in the Official Gazette to exempt, subject to such conditions as may be specified, any excisable goods from the whole or part of duty leviable on such goods. On March 1, 1956, the Central Government under this power issued Notification No. CRE-8 (10) 56 which modified its earlier notification and which so far as relevent for our present purpose, reads :- "In exercise of the powers conferred by rule 8 of the Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... behalf of the said weavers. This submission being essentially one of fact requires examination of the evidence on the record. Since this is a special leave appeal under Art. 136 of the Constitution we have to see what are the conclusions of the departmental authorities, on this point, for, if there is evidence on the record on which those conclusions can be based, then, adequacy or sufficiency of that evidence would not be open to debate in this Court. In the absence of serious legal infirmity vitiating these conclusions they must be accepted as final. The Assistant Collector in his order dated September 30, 1957 dealt with this question at considerable length and observed : Enquiries have revealed that in the past, before entering into business with M/s. Shree Agency, these powerloom factory owners were purchasing yarn from the local dealers and sometimes from Bombay merchants, and were getting credits not exceeding Rs. 5,000 to 6,000 at any time and that too on definite understanding of interest to be paid on yarn received on credit. All the factory owners during those transactions were very particular about the rate of yarn, rate of interest to be paid and maintenance of their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed them that the accounts of sale of yarn to them and purchase of cloth from them will be adjusted by Messrs Shree Agency in such a way that they would get Ans. 2/6 to Ans. 2/9 per yard of cloth woven. Calculations show that generally the amounts paid to the powerloom factories and the quantity of cloth received from them has certain relation. The amounts paid generally vary from 2.1 to 3.0 annas per yard of cloth received. Taking all the above facts together I have no doubt that Messrs Shree Agency had actually engaged themselves in production of cotton fabrics in question at the different factories and paid them weaving charges on weekly basis for the cloth received from them. Their main consideration was to supply yarn to the powerloom factories and receive the cloth woven from them and pay manufacturing charges to the factory owners. 14. Later, in his order the Assistant Collector observed :- "From the above facts, I am convinced that the plea of a commission agency is not at all genuine, I have no doubt that actually Messrs Shree Agency continued to engage themselves in production of the cotton fabrics on their own account, but in order to evade the excise levy, the bills w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s background, observed : "I have very carefully considered the various points raised by you in your representation dated 28-11-1959 against the present demand. I have also given due thought to the points raised during the course of personal hearing granted to you on 28-11-1959". 18. During the personal hearing you contended that you would not press for the points raised in paragraphs 5 to 10 of your representation if the contentions in the first 4 paragraphs were conceded by the Department. In other words you have undertaken by pay duty on the basis of compounded levy provided the demand is restricted to the period ending December, 1956. It has been contended by you that you have not purchased a single yard of cloth from any of the 16 powerloom factories after December, 1956 and that the looms employed and the cloth manufactured in these factories from December, 1956 to April, 1957 should be excluded from the calculation of compounded levy demanded from you. 19. In this connection your attention is invited to last para on page 5 of my predecessor's order dated 28/30 September, 1957 in which he has elaborately dealt with this issue and has concluded that the looms in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... your account books it was seen by me during the course of personal hearing that you supplied yarn on various dates between July, 1956 to April, 1957 (even after December 1956) of the total value of Rs. 54,776-2-9 to M/s. Chintamani Wvg. Mills. In addition cash advances were made on different occasions between these dates amounting to Rs. 12,875,00. The total payments made by the factory to your firm amount to Rs. 60,211-3-6. It will be seen that there was always an excess balance advanced to the factory. This was avowedly done to finance the manufacture of cloth. The nature of transactions from December, 1956 onwards are not different from those of the prior dates. The difference is only that the cloth was not purchased back directly by your firm but it was sold to other firms. As against the financial advances made by you, a very ingenious method had been devised to appropriate the bulk of the profits, from the various manufacturing units. Your accounts reveal that there was a two-way traffic to absorb the profits from employing these looms. In the first place the price of yarn supplied to the manufacturing units was adjusted at a rate higher by 8 as per 11b. than the prevailing ..... 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