1. The factory premises of the appellants M/s. Ashoka Dyeing and Finishing Mills was raided by Central Excise Officers on 20-11-1980 and a search was conducted. Following the said search a show cause notice was issued pointing out various contraventions of the Central Excise provisions on the part of the appellants. After due adjudication the Collector of Central Excise, Chandigarh under his order dated 24-12-1981 ordered confiscation of 39 pieces of dyed man-made fabrics giving an option for redemption on payment of fine of Rs. 20,000/- and also demanded duty under Rule 9(2) of the Central Excise Rules on - (1) 10 pieces of man-made fabrics measuring 490 Sq. mtrs. relating to lot No. 562 valued at Rs. 4,655.00; (2) 33 pieces of man-made fabrics measuring 1616 Sq. mtrs. relating to lot No. 465 (15 pieces) and No. 599 (18 pieces) valued at Rs. 30,623.20.
and further imposed a penalty of Rs. 1 lakh. On appeal the Central Board of Excise and Customs under order dated 24-6-1982 reduced the redemption fine to Rs. 10,000/- and the penalty to Rs. 15,000/- but confirmed the order of the Collector otherwise. This appeal is against the said order.
2. Shri G.S. Bhangoo, Advocate, appeared for the appellants and the respondent was represented by Shri J.P. Anand, Junior Departmental Representative. It is not disputed that the godown of Vijaya and Company was being made use of by the appellants who had opened an entrance also thereto unauthorisedly into their factory. In respect of the pieces found in that godown it is submitted that the processed fabrics found therein were such as had been brought by the customers for reprocessing for the reason that the earlier processing had not been to their satisfaction. It is submitted that as they were received late they were being kept there for checking whether they had been earlier processed by the appellants or somewhere else so that in respect of goods earlier processed by them they may make the necessary adjustments. The said explanation has been rejected by the Collector and even now there are no grounds shown for accepting the said defence.
In respect of other pieces which had been processed but were found without lot numbers it is submitted that the lot numbers must have been erased during the processing. Such an explanation is also totally unacceptable since lot numbers were in fact found on other processed materials and it is not probable that lot numbers would be erased during processing. The absence of lot numbers on the seized processed fabrics would only suggest no numbers had been allotted in order to evade payment of excise duty. 10 pieces pertaining to lot No. 562 were found to have been removed without payment of duty. The explanation here is that this would be part of the 70 pieces found without lot numbers. This explanation is also merely fanciful and without basis. In these circumstances the findings of the Collector upheld by the Board regarding contraventions of several excise provisions are to be upheld.3. But Shri Bhangoo contends that the orders relating to confiscation, with option for redemption, were in any event not valid. He points out that the additional duty of excise, which alone is in issue in the present proceedings, was payable under the Additional Duties of Excise (Goods of Special Importance) Act, 58/1957. Section 3(3) thereof reads as follows :- "The provisions of the Central Excises and Salt Act, 1944, and the rules made thereunder, including those relating to refunds and exemptions from duty, shall, so far as may be, apply in relation to the levy and collection of the additional duties as they apply in relation to the levy and collection of the duties of excise on the goods specified in Sub-section (1)." 4. The contention of Shri Bhangoo is that under the said provision it is only the provisions of the Central Excises and Salt Act and the rules made thereunder relating to levy and collection of duties of excise that became applicable in relation to the levy and collection of the additional duties payable under the said Act and that therefore the provisions of the said Central Excises and Salt Act and the rules made thereunder relating to confiscation would be applicable in relation to the additional duties of excise. This contention had been raised by the appellants before the Collector as well as the Board but both authorities had rejected the same. The Collector held that the expression "in relation to" used in Section 3(3) of the Act 58/1957 has wide implications and would cover confiscation of goods, imposition of penalty etc., as being incidental and ancillary to levy/collection of duties of excise. This reasoning has been accepted by the Board in paragraph 26 of its order.
5. No authority has been cited by either side as dealing with the contention as raised by Shri Bhangoo. But I find that assistance in resolving this dispute would be available from the observations of the Supreme Court in Commissioner of Income Tax, Andhra Pradesh v. Bhikaji Dadabhai Company 6. Section 13(1) of the Finance Act, 1950 (so far as it is material) provided - "If immediately before the 1st day of April, 1950, there is in force in any part B State...any law relating to income-tax or super-tax ... that law shall cease to have effect except for the purposes of the levy, assessment and collection of income-tax and super-tax in respect of any period not included in the previous year for the purposes of assessment under the Indian Income-tax Act, 1922..." The question at issue in the said decision was whether on the repeal of the Hyderabad Income-tax Act by the Finance Act, 1950 the power to impose a penalty under section 40 of the Hyderabad Income-tax Act in respect of years preceding the date of appeal had been lost. The High Court had held that imposition of penalty was not a necessary concomitant or incident of the process of assessment, levy and collection of tax. But the Supreme Court referred to its earlier decision in C.A. Abraham v. Income-tax Officer, Kottayam 1961 (2) S.C.R. 765 where it had been held as follows: "The expression 'assessment' used in these sections (provisions of Ch. IV of the Indian Income-tax Act) is not used merely in the sense of computation of income and there is in our judgement no ground for holding that when by section 44 it is declared that the partners or members of the association shall be jointly and severally liable to assessment. It is only intended to declare the liability to computation of income under section 23 and not to the application of the procedure for declaration and imposition of tax liability and the machinery for enforcement thereof. By section 28, the liability to pay additional tax which is designated penalty is imposed in view of the dishonest or contumacious conduct of the assessee." It was observed that the Supreme Court regarded penalty as an additional tax imposed upon a person in view of his dishonest or contumacious conduct. It was therefore held that the words "assessment levy and collection" would also cover proceedings under which penalty could be levied.
7. It appears to me that following the same reasoning the provisions of the Central Excises and Salt Act relating to confiscation for contravention of the provisions of the Excise Law would also be within the ambit of the phrase "Levy and collection" as mentioned in Section 3(3) of the Act 58/1957. The contention to the contrary of Sri Bhangoo is therefore rejected. So far as the quantum of redemption fine and penalty imposed they had been suitably reduced by the Board and I am satisfied there is no ground made out for any modification thereof.
8. In the result the orders of the Board are confirmed and this appeal is dismissed.