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Venkateswara Steels (P) Ltd. Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Judge
Reported in(1983)LC1825DTri(Delhi)
AppellantVenkateswara Steels (P) Ltd.
RespondentCollector of Central Excise
Excerpt:
.....by the lower authorities that the appellants did not properly account for certain quantities of steel ingots purchased by them and that they removed mild steel rounds manufactured out of such ingots without paying duty thereon and without accounting for them in the prescribed r.o. 1 account during the period from october, 1971 to august, 1972. accordingly, demand of duty of rs. 47,515.17 has been confirmed against them under rule ida of the central excise rules, 1944. a penalty of rs. 100/- has also been imposed on them under rule 173q for non-maintenance of raw material accounts.3. the appellants' first plea is that the demand for duty was time-barred under rub 10 since the show cause notice was issued to them four years later, in august, 1976. in support of their plea, they state.....
Judgment:
2. In this case, it has been held by the lower authorities that the appellants did not properly account for certain quantities of steel ingots purchased by them and that they removed mild steel rounds manufactured out of such ingots without paying duty thereon and without accounting for them in the prescribed R.O. 1 account during the period from October, 1971 to August, 1972. Accordingly, demand of duty of Rs. 47,515.17 has been confirmed against them under Rule IDA of the Central Excise Rules, 1944. A penalty of Rs. 100/- has also been imposed on them under Rule 173Q for non-maintenance of raw material accounts.

3. The appellants' first plea is that the demand for duty was time-barred under rub 10 since the show cause notice was issued to them four years later, in August, 1976. In support of their plea, they state that the Central Excise officers were fully aware of the working of the appellants' unit. When repeatedly asked by us to substantiate this point, the appellants could only cite the letter dated 16.9.71 sent to them by the Superintendent, of Central Excise, M.O.R I, Shahdara. All that this letter states is that the appellants were required under Central Excise Rules to obtain central excise licence before their mill started functioning even if they manufactured iron or steel products which were at that time exempted from the payment of duty. This letter does not say that the appellants' products were exempt from duty or that they need not maintain any statutory records or submit statutory returns. We find from the records as well as on questioning the appellants during the hearing that the appellants did not submit any classification list or R.T. 12 returns or gate pass to the Department during the material period. In other words, there is no evidence to the effect that the appellants disclosed the relevant facts of their working to the Department. Their plea that the Central Excise officers were having full knowledge of the working of their factory is, therefore, not sustainable. This is a case of suppression of facts on their part to which Rule 10A, and not Rule 10, was applicable (CC Industries v. H.N. Jay 1980 ELT 442 (Bom). We hold that Rule 10A has been correctly applied by the lower authorities to the facts of this case and the demand was not time-barred under Rule 10.

4. Coming to the merits of the case, the appellants state that they were entitled to exemption from duty under notification No. 206/63-CE inasmuch as the steel ingots were purchased by them from mini steel plants who enjoyed total exemption from duty on such ingots during the relevant period and that such exempted ingots have to be deemed to have paid the appropriate amount of duty leviable thereon (which was 'nil' in this case). They state further that the management of their unit changed hands three times and because of this they were not able to produce all the relevant evidence before the lower authorities. The required evidence is now available with them and, if given another opportunity, they would be able to satisfy the lower authorities. On this point we directed them to file an affidavit as to how the vouchers and other documents which were earlier claimed by them to be either not available or to have been damaged by white ants have now become available. Regarding the lower authorities' objection that there was no evidence to show that the steel ingots purchased by them were cut and broken into shapes resembling those of semis before using them for rolling into his rounds, the appellants state that at the earlier stage itself they filed technical opinion of an engineer saying that the machinery installed in their factory was rot capable of rolling the whole ingot and that it had necessarily to be cut before being rolled and that this fact is further proved from their ledger showing payment of cutting charges to the labour. The Department's representative states that the capability of their machinery is a question of fact which can be verified and he, too, suggested a remand of the case for this purpose.

5. We have carefully considered the matter. We find the request for remand of the case quite reasonable and fair. Accordingly, while we hold that Rule 10A was applicable in this case, we vacate the impugned Order in so far as it relates to confirmation of the demand and imposition of penalty and direct the Appellate Collector to consider this matter afresh after verifying the machinery, and equipment etc.

available in the appellants' unit during the relevant time as well as the other evidence which the appellants say put before him regarding their entitlement to exemption under notification No. 206/63-CE. The appeal is disposed of accordingly.


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