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of <h1>Tribunal upholds Collector's decision on art silk fabrics, emphasizes natural justice principles</h1> <h3>SHRI GANESH DYEING AND TEXTILE PROCESSING COMPANY, SURAT Versus COLLECTOR OF CENTRAL EXCISE, BARODA</h3> SHRI GANESH DYEING AND TEXTILE PROCESSING COMPANY, SURAT Versus COLLECTOR OF CENTRAL EXCISE, BARODA - 1986 (23) E.L.T. 257 (Tribunal) Issues:1. Seizure of art silk fabrics with incorrect composition.2. Confiscation, duty difference, and penalty imposition.3. Dispute over fabric composition and brand name.4. Interpretation of 'manufacture' under Central Excises and Salt Act, 1944.5. Application of Section 5(3) of the Ordinance.6. Violation of principles of natural justice in withholding evidence.Analysis:1. The case involved the seizure of art silk fabrics by the appellants, initially declared as viscose X viscose but later found to be nylon X viscose, leading to higher tariff values and central excise duty. The fabrics were seized at Surat and Ahmedabad, with irregularities noticed in the appellants' factory.2. The Collector confiscated the fabrics, demanded differential duty, and imposed a penalty under Rule 173Q of the Central Excise Rules. The Central Board of Excise & Customs upheld the Collector's decision, citing mala fides on the appellants' part.3. The appellants contested the fabric composition at Ahmedabad, arguing that the seized fabrics were viscose X viscose, not nylon X viscose. They claimed the department withheld crucial evidence, violating natural justice principles.4. The appellants invoked a Gujarat High Court judgment regarding the definition of 'manufacture,' seeking the benefit of an Ordinance that exempted penalties for past processing duties. However, the Tribunal referred to a Supreme Court judgment, ruling that processing of fabrics constituted manufacture, justifying the penalty imposition based on violations.5. The Tribunal found the penalty justified due to proven mis-declarations and violations, despite the appellants' arguments regarding the Ordinance's provisions on penalties for past processing duties.6. Notably, the Tribunal highlighted the department's failure to disclose crucial test reports and traders' statements regarding the fabrics seized at Ahmedabad, deeming it a violation of natural justice. Consequently, the Tribunal set aside the confiscation and duty demand for the fabrics seized at Ahmedabad, emphasizing the importance of upholding principles of natural justice in legal proceedings.In conclusion, the Tribunal confirmed the Collector's and Board's orders, except for the modifications regarding the fabrics seized at Ahmedabad, emphasizing the significance of transparency and adherence to natural justice principles in legal proceedings.
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