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1990 (6) TMI 147
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....ector of Central Excise, Bombay appealed against the four orders under Section 35L of the Central Excises and Salt Act. The Supreme Court allowed the appeals and reversed the decision of the Tribunal. However the Supreme Court in their common order dated November 22,1988 recorded that "we, however, need not go into the question of penalty as well as the question of limitation which have been left open by the Tribunal by its order. It will be open to the parties to urge these points before the Tribunal. We express no opinion on these aspects". 3. We, therefore, heard the appellants in all the four matters on the limited questions of penalty and limitation. 4. At the outsset Shri Ganesh, the learned Advocate clarified that appeals No. 411/81 and 412/81 relate only to classification lists and there is neither any demand made nor penalty imposed, in these two matters. Therefore, while this order relate to all the four appeals in view of the judgment of the Supreme Court, in effect it would be applicable only to appeals No. 943/85-D and 787/80-D. 5. Common arguments were advanced in both appeals. 6. Pleading that both the demands are not sustainable under Rule 10 being su....
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....luded inter alia flavouring powder for making beverages. This was taken note by the Tribunal in para 7 of their order. 6. The opinion of Dr. Rege was given to the appellants. 7. The definition in the prevention of Food Adulteration Act which supports the appellants' view (however, the Tribunal in their order agreed with the lower authorities that the definitions in the said Act are of no avail in the present context because the object of that act is different). 8. The next proposition advanced by Shri Ganesh was that the appellants acted bona fide and therefore, there should be no penalty. He submitted that they did not obtain L4 licence nor followed other requirements of Central Excise law as they were under the bona fide belief that their product was exempt. In this context the learned Advocate advanced the following arguments: (1) the show cause notice having been issued on 16-10-1979 (and 29-6-1979) limitation should be according to Rule 9 (2) as on that date read with Rule 10. To support this argument the learned Advocate referred to para 5 of the Supreme Court's judgment in Mysore Rolling Mills Private Ltd. v. Collector of Central Excise reported in 1987 (28) E.L.....
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.... being misguided by the said notice. He further submitted that for the periods of demand 1-3-1975 to 15-4-1979 and 18-6-1977 to 15-10-1978 the appellants did not show whether they had the requisite knowledge and if so since when. 11. Referring to the two appellate orders Shri Chakraborty argued that these orders dealt with flavouring agents whereas the product of the appellants was non-alcoholic beverage bases. Therefore, there could be no ground for misunderstanding on account of these two appellate orders. He further pointed out that the Appellate Collector's order was passed on 4-2-1976 and there could be no misunderstanding prior to this date. He also submitted that the appellate orders were for other assessees and the appellants did not show as to when they came to know of this order. He also made light of the appellants' plea of the interim order passed by the Gujarat High Court submitting that this order was passed after the period of demand and, therefore, could not have retrospective effect or misguide the appellants. He opposed the reference to CCCN submitting that this was not before the Collector. The Import Policy 1981-82 referred to by the appellants was also beyon....
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....e country. Referring to the show cause notices Shri Ganesh submitted that the notices merely listed the rules which were alleged to have been violated and did not allege dishonesty, conscious/wilful evasion or such. He submitted that in such cases the show cause notice cannot be sustained for the extended period and relied on a judgment in British India Corporation (supra). He denied that the allegations made amounted to suppression of facts, etc. 14. We have considered the submissions of both sides. The two questions before us relating to justifiability of the extended period of limitation and of penalty are interrelated. Only when there is a deliberate attempt to evade duty through resorting to suppression of facts and misstatement1 can there be demand of duty for extended periods. By and large it is such circumstances which would warrant an imposition of penalty. 15. The seven circumstances listed by Shri Ganesh as justification for bona fide belief on the part of the appellants were examined by us. We also note the objections and oppositions to these points ably put forward by the learned DR Shri Chakraborty. We have also perused the Tribunal's order especially the first ....
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....under Section 6 of CES Act, 1944, read with Rule 174 of C. Ex. Rules 1944, goods not elsewhere specified and falling under Item No. 68 of 1st schedule to the Central Excises & Salt Act, 1944 viz. Non-alcoholic beverage bases (hereinafter called "said goods"). (ii) they cleared the said goods without payment of central excise duty (as per annexure B) as required under Rule 9 (i) read with Rule 173PP (i) of Central Excise Rules, 1944. (iii) they cleared the said goods without filing list of goods manufactured, as required by Rule 173PP (3) of Central Excise Rules, 1944. (iv) they cleared the said goods without preparing gate passes as required under Rule 173PP (6) of Central Excise Rules, 1944. (v) they cleared goods without maintaining account as required under Rule 53 of Central Ex. Rules, 1944. 2. The said M/s. Parle (Exports) Pvt. Ltd. are required to show cause to the Assistant Collector of Central Excise Division 'K' Bombay as to why duty amounting to Rs. 3,50,963.22 (See Annexure I & II) should not be recovered from them and why a penalty should not be imposed on them under Rules 9(2), 173Q and 210 of C. Ex. Rules, 1944 for contravening the provisions of Rules 9....
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....rlier, about exempted units not having to obtain licence and follow other central excise formalities the ratio of this judgment does not appear to be applicable to the facts of the case. Besides a reading of the judgment in British India Corporation shows that there was some deliberate action on the part of the appellants therein, in the matter of filing S3 intimations, which lead the Tribunal to take the viewa it did. We have also to keep in mind the ratio of the Madras High Court in Murugan and Company (supra). In this judgment the High Court held, inter alia that "mere non-payment of duty under a bona fide impression that the goods are not excisable cannot lead to a finding that the goods have been cleared from the factory contrary to Rule 9(1) especially when there has been no specification of time, place and the manner when the duty is to be paid ......" That Rule 9(2) could be invoked only in a case where the goods manufactured had been brought in for central excise levy and the time, place and the manner for payment of excise duty and for clearance of the goods had already been fixed by the Collector and the petitioner cleared the goods contrary to the said procedure prescri....