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TMI Blog2005 (5) TMI 197X X X X Extracts X X X X X X X X Extracts X X X X ..... e said Rules read with Section 11AC of the said Act; and also ordering M/s. Samir Textiles (P) Ltd. and M/s. Shree Hem Fabrics (P) Ltd. to pay the interest @ 20% per annum on the delayed payment of duty. The impugned order confiscating the land, building, plant, machinery, etc., belonging to M/s. Shree Hem Fabrics (P) Ltd. and used in the manufacture/production, storage and removal of offending excisable goods under Rule 173Q(2)(a) of the said Rules, giving an option of redemption by payment of Rs. 5,00,000/- to be exercised in three months, is also challenged. Penalty of Rs. 5,00,000/- which was also imposed upon Shri Dinesh Jayantilal Shah, Director of both the appellants, M/s. Shree Hem Fabrics (P) Ltd. and M/s. Samir Textiles (P) Ltd., and Rs. 1,00,000/- upon Shri Nathubhai Shagwanji Patel, authorised signatory of both the appellants, M/s. Shree Hem Fabrics (P) Ltd. and M/s. Samir Textiles (P) Ltd., under Rule 209A of the said Rules, has also been challenged in their respective appeals. 2. It appears that during physical verification of the central excise records, it was found that two vertical type automatic shuttle embroidery machines of "ZANGS" brand were installed in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abric was being embroidered on the lower roller and another piece of fabric was being embroidered on the upper roller. In view of the manufacture of embroidery on two rollers at a time, it was held that 27.80 linear metres of fabrics was being embroidered on each machine at a time. He further held that for calculating the "metre length" of a machine, the distances between the points provided for first and the last needles of both the rollers should be taken into consideration and not of only one roller, as had been done by the assessee. Thus, the metre length of the machine would be 27.80 linear metres. The Commissioner held that in the application for permission, the assessee had declared the length of machine as 13.90 liner metres, while the correct length of embroidery machine being 27.80 linear metres. The assessee had therefore, misstated the length with intent to evade the Central Excise Duty. The Commissioner took into account the statement of Shri Nathubahi Bhagwanji Patel, authorised signatory of the assessee, and his defence reply in which he had confessed that he had declared the length of machine as 13.90 linear metres and not 27.80 linear metres, which should be the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of 'metre length' under Rule 96-ZI(6) was in consequent to the Budget proposal of 1998-1999. Quoting the proposal contained in para 58.2 in para 5 of the order, it was held that this was a clarificatory amendment. The Budget proposal stated that, the definition of 'metre length' was being amended to clarify that "metre length" in relation to an embroidery machine means the distance between the points provided for the first and the last needles of only one roller of such machine and that if that embroidery machine has two rollers, which normally is the case, 'metre length' is taken to be the 'length' of one roller only and not two times such length. (b) The decision of the Tribunal in the case of Doshi Industrial Corporation v. CCE, Bombay-III, 2002 (150) E.L.T. 1211 (T), was cited for the proposition that it was well established that the Department cannot take a stand contrary to what itself told to the assessee in the Trade Notice and, therefore, it was the length of one roller distance between the points of the needles of one roller that was to be considered. (c) The decision of the Tribunal in the case of Commissioner of Central Excise, Mumbai-II v. Vadila ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d since that sub-rule defined for the first time 'metre length', the earlier Trade Notice of 1969 which was issued before the expression 'metre length' was defined, could not apply to the said definition of 'metre length'. He pointed out that for the period from 2-1-1966 to 20th March, 1971, the provisions of Rule 96ZI did not contain such definition of the expression 'metre length', though the expression 'metre length' occurred in that provision. This Trade Notice No. 289/69 dated 18-9-1969 was required to be issued to clarify that two rollers or frames of an embroidery machine could not be treated as two machines and the duty liability of the manufacturer was, therefore, to be calculated on the basis of the length of one roller or frame of the embroidery machine. He further pointed out that the definition of 'metre length' was added by sub-rule (6)(a) in Rule 96ZI as per which 'metre length', in relation to a machine meant the distance between the points provided for the first and the last needles of the rollers on such machine. He argued that this definition operated during the period from 20th March, 1971 to 1-6-1998 and, therefore, these matters should be decided in the conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fixed by issuing Notification in the Official Gazette and can be varied from time to time. Different rates can be fixed for such machines employed in the manufacture of different varieties of the embroideries or base fabrics. Under this special procedure, payment, before the commencement of any shift, of a sum calculated according to such rate amounts to full discharge of liability for duty leviable on the production of the embroidery during the shift, as provided by Rule 96 ZI(1). 5.1 It will be seen that the rate of duty under the Special Procedure is machine specific for the purpose of the compounded levy. The manufacturer is required by sub-rule (5) of Rule 96ZI to furnish a statement showing the brand name and other identifying particulars of each of the machines employed, its month and year of installation, its maximum revolutions and the metre length of each machine. Thus, the rate of duty is fixed per each machine on the basis of the relevant factors, average production of embroidery being the dominant factor. The particulars of the machine shown in the statement would indicate, whether the machine contained one roller or two rollers. The embroidery machine containing tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 96ZI(6) in the definition of 'metre length' which was made on 2-6-1998 would ordinarily be applicable from the date it was introduced. This would mean that metre length in relation to a machine would be the distance between the points provided for the first needle and the last needle of only one roller of such machine. It appears that simultaneously with this amendment, the duty rate which was earlier Rs. 30/- per metre length was raised to Rs. 60/- per metre length. However, the Department has not been able to show, as to whether the earlier Notification of Rs. 30/- per metre length issued under Rule 96ZI(1) by the Central Government did or did not take into account the fact that the embroidery machines ordinary have two rollers. If that Notification was issued after taking into consideration the factor of production capacity of two rollers in such machine, then obviously, the Trade Notice which required metre length of one roller to be considered and not two, was justified. It appears from the record that in the past, the C AG had raised an audit objection which came to be dropped [Audit Para No. 3.27(iii)/91-92]. The Government of India, Ministry of Finance, Department of Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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