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Hind Cement Products Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1983)(14)ELT1860TriDel
AppellantHind Cement Products
RespondentCollector of Central Excise
.....under section 35p of the central excises and salt act, 1944), the appellants have been paying excise duty on their annual production till the issuance of notification no.71/78-c.e., dated 1-3-1978 whereunder they claim to have become eligible for total exemption from duty by fulfilling the conditions of the said notification ; namely, their clearances not exceeding rs. 5 lakhs from year to year.2. it is stated that this unit is owned and managed by a proprietary concern ; namely, hind ceramics limited, situated in the same premises and that the said proprietary concern are manufacturing excisable goods of considerable value, all covered by tariff item 68, and since both the units are located in the same compound, the local excise officers have been paying regular visits and had.....
1. The appellants stated to be manufacturers of asbestos cement pipes, classifiable under Tariff Item 23C of the Central Excise Tariff, are having their unit in Rampur. According to the facts, as set out in the grounds of revision petition, (now being disposed of as an appeal having been received by transfer under Section 35P of the Central Excises and Salt Act, 1944), the appellants have been paying excise duty on their annual production till the issuance of Notification No.71/78-C.E., dated 1-3-1978 whereunder they claim to have become eligible for total exemption from duty by fulfilling the conditions of the said Notification ; namely, their clearances not exceeding Rs. 5 lakhs from year to year.

2. It is stated that this unit is owned and managed by a proprietary concern ; namely, Hind Ceramics Limited, situated in the same premises and that the said proprietary concern are manufacturing excisable goods of considerable value, all covered by Tariff Item 68, and since both the units are located in the same compound, the local Excise Officers have been paying regular visits and had knowledge of the fact that the appellant's unit was being owned by the other Concern and as to what was the total value of their turnover. But according to the appellant, nothing was ever pointed out to them as to their diseatitlement for exemption, and no action was taken even when they failed to renew their licence which expired in 1980, nor were they called upon to maintain excise records and documents, with the result that they continued to avail of the total exemption, from duty, during all this period but on 26-3-1981 a surprise raid was conducted by officers of the Preventive Unit of the Central Excise and it was then pointed out to them that their eligibility to exemption under Notification No. 71/78-C.E., had become conditional, by virtue of an amending Notification having been issued on 30-3-1979, effective from 1-4-1979, being Notification No.141/79-C.E., whereunder exemption could be availed of only if the total clearances of all excisable goods from all the fact ones, owned by the same manufacturer did not exceed Rs. 20 lakhs in the preceding financial year. The petitioner claimed that this came as a total surprise to them and that uptill that time they had no knowledge of this amending Notification nor the same was pointed out to them by the local Excise Officers. They pleaded that this was a clear case, where the notification was neither in the knowledge of the appellants nor of the local departmental officers.

3. The departmental action, however, ensued as a sequel to this raid, to the effect that the goods having been seized, a Notice to show cause was issued as to why duty for all the clearances made in wrongfully availing of exemption should not be levied. This notice was eventually confirmed by an order dated 7-9-1981, passed by the Collector of Central Excise, Meerut whereby he determined the duty liability at Rs. 65,817.63 and confirmed the demand thereof and also holding it to be a case of deliberate evasion of duty, imposed a penalty of Rs. 5 lakhs.

The seized goods were also ordered to be confiscated, though an option was given to redeem the same on payment of fine of Rs. 20,000.

4. The appellant feeling aggrieved by this order went in appeal to the Central Board of Excise and Custom but the appeal was dismissed by order dated 20-3-1982 holding that appellant's plea about ignorance of Notification No. 141/79-C.E. or that of subsequent Notification No.80/80, could not be accepted. Thus, the finding of the Collector, about there being intentional evasion to pay duty was upheld. The confirmation of the duty demand, and the amount quantified thereby was also upheld, and so was the order of confiscation of the goods, and amount of redemption fine, in lieu thereof. However, the amount of penalty of Rs. 5 lakhs was considered to be on the high side' and the same was reduced to Rs. 1,5G,000/- only.

5. The appellant went up in revision against this Order-in-Appeal, passed by the Board, which is now being disposed of as an appeal. The same plea is reiterated; namely, that the appellant had no knowledge of the withdrawal of the exemption conferred by Notification No.71/78-C.E., and that the amendment by means of Notification No. 141/79 or subsequent Notification No. 80/80 never came to their notice and this was so because it was not issued along with the Budget papers but subsequently, and was also never pointed out to them by the local Officers. It was pleaded that the Board's observation that the appellants have deliberately not declared true facts to the authorities was not justified on record and that the remarks were uncalled for, and that theirs was a genuine case of bona fide ignorance of the amending Notification on their part. It was thus contended that there being no clandestine removal inasmuch as appellants themselves had been inviting visits of the local Excise Officers, and to that extent there was no attempt at concealment on their part, at the most the duty liability for six months, preceding the notice could be enforced and that the rest of the duty demanded was time-barred. The imposition of penalty was assailed on the plea of lack of mala fide on their part.

6. Shri J. Banerjee, Advocate appeared at the time of hearing, and reiterated all these pleas. He very fairly conceded that the duty liability itself was not disputed, and that the sole plea is that there has been no deliberate evasion nor any concealment on the part of the appellant. In support of this plea, he invited our attention to the declaration filed by the appellants, copy whereof was at page 29 of the Paper Book, which seems to be dated 17-4-1979, and made pointed reference to Column I which had shown the proprietor of this unit to be "Hind Ceramics Ltd.". He contended, on the basis of this declaration, that they had very much shown as to who was the proprietor, and that both the units being in the same compound, which was being visited regularly by the local officers, this fact that the same manufacturer was owning more than one unit was within their knowledge, and that this was a clear case where even the local departmental officers were not aware of the amending Notification; otherwise they would have pointed out to them the need to file fresh statistics. He pleaded that in any case, there was no lack of bona fide on their part, so as to justify imposition of penalty, even of the reduced amount of Rs. 1.5 lakhs, and concluded by saying that although the duty liability could not be disputed in view of the subsequent notification but there being no concealment on their part, Rule 9(2) could not be invoked and at the most duly for the period of six months prior to the date of the notice; namely, 5-5-1981, could be enforced. He repeatedly stressed that there was no deliberate evasion of duty on their part, and that it was a case only of venial default, and could not be characterised as venal.

7. The department was represented by Shri K.D. Tayal, SDR who made a short but emphatic reply repudiating the plea that there was no deliberate concealment of facts and contended that the appellants could not plead ignoranee of the Notification, which was a statutory notification, and as a manufacturer was bound to come to their notice.

He further pointed out that the Declaration to which the learned counsel for the appellants had made reference was ambiguous and vague, inasmuch as that though the name of the proprietor was shown but the address was not indicated, nor was there any declaration about the other goods being manufactured by the said proprietary unit, and consequently the appellants could not plead lack of mala fide intention or that the lapse was due to genuine failure on their part to acquire knowledge of the amending Notification.

8. We have given earnest thought to the matter and have gone through the records very carefully, as well as the papers relied upon by the learned counsel for the appellants. We find that the existence of the duty liability is not disputed, and rightly so, because the previous Notification No. 71/78 was amended with effect from 1-4-1979 by means of Notification No. 141/79 issued on 31-3-1979. We, however, do not feel impressed with the plea of the appellants that the failure to furnish fresh figures so as to be subjected to excise duty was on account of this notification not having come to the appellant's knowledge because apart from the fact that this notification is a statutory notification and the principle that ignorance of law was no excuse would apply to such type of notifications also ; otherwise also, the appellants are admittedly a manufacturer of standing, and apart from this proprietary unit at Rampur, they are also having their factories at Calcutta and Gauhati. It is thus not possible to put credence in their plea that for more than two years, they did not come to know of this change of position. It is obvious that they conveniently ignored the notification till the raid on 26-3-1981. We also find substance in the contention of the learned SDR that at no stage they revealed complete particulars in writing of the manufacturer, under whom they were also operating, and that the said manufacturer was having more than one factory, producing excisable goods, and they went on clearing goods without payment of excise duty, after becoming liable to pay the same and did not discharge their duty liability for two years, and on their own showing would have continued to do so, but for this surprise visit by the officers of the Preventive Unit of Central Excise.

9. We are, thus, constrained to consider it to be a case of clearances having been effected without placing true facts before the Excise authorities and to that extent it has to be considered to be a case of clandestine removals, and in view of the standing of the appellants inasmuch as they were not new in the field nor confined to only one small place, their plea that they were ignorant of the notification, does not sound convincing. The authorities cited by the learned counsel for the appellant; namely, that of Madras High Court in the case of Murgan & Company, Pudukottai v. Deputy Collector of Central Excise, Tiruchirapalli (1977 ELT J193) and that of Government of India, in the case of M/s. Dabur (Dr. S.K. Burmari) Private Ltd., Calcutta (1980 CENCUS 29-D)--1980 ELT 117 would not apply to the facts of the present case, and the period of demand cannot be restricted to six months. The case of Mis. Hindustan Steel Ltd. v. State of Orissa reported as AIR 1970 SC 253 on which also the learned counsel placed reliance does not seem to have any bearing on this issue. We are, therefore, of the considered view that this being a case of suppression of information and clearances having -been effected without revealing true facts, Rule 9(2) has been rightly invoked and that whole of the duty has been rightly demanded and confirmed. To the extent, it relates to the duty demanded, we therefore, dismiss the appeal. The quantum of redemption fine having not been questioned, the same also becomes a concluded issue.

10. The only aspect remaining to be considered is that of penalty.

Although we feel that the plea of lack of mens rea does not carry conviction, in the light of the facts discussed above; namely, Declaration filed by the appellants was conveniently vague, and the plea of ignorance of the notification fails to impress, and the lower authorities have rightly considered it to be a fit case for imposition of penalty also, but considering the amount of duty liability to be only Rs. 65,817.63, the penalty imposed to the tune of Rs. 1.5 lakhs seems to be little out of proportion. The appeal is, therefore, allowed only partly to the effect that the amount of penalty shall also stand reduced, to equal to the amount of duty; namely, Rs. 65,817.63.

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