TaxTMI 
TaxTMI 
2001 (2) TMI 731
X X X X Extracts X X X X
X X X X Extracts X X X X
....oviso to Section 11A(1). (ii) Land, Building, Plant, Machinery, etc. should not be confiscated under Rule 173Q (2). (iii) Penalty should not be imposed on the under Rule 9(2), 52A & 173Q (1). (iv) Penalty should not be imposed on M/s. Madhu Tyre Service a dealer of the appellant under Rule 209A. 2. The Collector found -   "I have carefully gone through the records of the case, reply to the show cause notice and proceedings of the personal hearing. The main issue in this case relate to eligibility of exemption envisaged in Notification No. 188/86-C.E., dated 3-3-1986 (as amended) in respect of 79.800 Nos. of inner tubes of rubber of sizes 500-19, 16-4, 600-16 TF manufactured and cleared by M/s. Sunshine Tubes (P) Ltd., Mangalore during the period 1-1-1987 to 15-10-1991. For the reasons that no prominent and durable markings of letters 'ADV' were made on the above said inner tubes of rubber it would appear that the assessee is not entitled for exemption. Therefore, it was alleged that the said 79,800 inner tubes of sizes 500-19, 16-4 and 600-16 TF were removed without payment of Central Excise D....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ficers were not having any 'ADV' markings on them, and all but one also confirmed that inner tubes of rubber supplied by M/s. Sunshine Tubes (P) Ltd., Mangalore were without 'ADV' markings.   I also find that Shri Shekhar Shetty in his statement dated 27-11-1991 has stated that the 'ADV' letter were got engraved in their factory subsequently by their workers of Balakrishna he has changed his version and stated that the letters 'ADV' were got engraved by out side workers. However, he was not able to furnish details regarding by whom and when he got moulds engraved with letters. Thus it can be concluded that there is no basis in the version of Shri Shekhar Shetty in stating that moulds were engraved with letters 'ADV', which were subsequently wornout because of usage. Even assuming for a moment that moulds were engraved with 'ADV' letters and worn out subsequently, in that case it is not convincingly explained as to how only 'ADV' letters were wornout and not other descriptions. Therefore the contention of the party in saying so is not at all acceptable. Likewise, the retraction letters of Shri Balakrishna is also not acceptable as the same is not based on any sound reas....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g to assessment and classification matters. Therefore, the Supreme Court decision cannot be made applicable to this case as the circumstances of the present case are different. Further it is on record that the unit is availing the exemption contained in Notification No. 188/86-C.E., dated 3-3-1986 in respect of inner tubes of the size 800-19 on whose surface the markings of 'ADV' were being done. Therefore the party was in full knowledge that the 'ADV' markings are required to be made on the inner tubes before availing the exemption under the said notification. But the party availed the concession under this notification without fulfilling the requirements contained in the said notification and suppressed this misuse of notification from the knowledge of the Department. In the light of the above, I find that proviso to Sec 11A (1) is rightly invokable to demand duty beyond a period of six months as it is established that M/s. Sunshine Tubes (P) Ltd. have suppressed the fact of non-marking of 'ADV' letters on the above said inner tubes of rubber whereas such marking 'ADV' on the tubes is stipulated under the notification for availing the exemption vide Notification No. 188/86-C.E., ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct, 1944; confiscated the 72 Nos. of inner tubes siezed from the premises of M/s. Madhu Tyre Services under the provision of Rule 173Q and allowed them to be redeemed on a payment of fine of Rs. 1,000/-, A penalty of Rs. 10,000/- only was imposed on the appellants under Rules 9(2) and 173Q(1) of the Central Excise Rules. No case was found to involve Rule 173Q(2). 3. The present appeal, is, against the invoking of the extended period of limitation under the proviso to Section 11A(1) of the Central Excises and Salt Act, 1944 and confirming the demand for the period beyond six months from the date of receipt of the Show Cause Notice by the appellants and the imposition of penalty of Rs. 10,000/- under Rule 173Q(1) on the grounds - "The Collector of Central Excise has erred in placing reliance on the statement of Shri Balakrishna Shetty and Lingappa coming to the conclusion that the inner tubes of rubber of the sizes 500-19, 16-4 and 600-16 (TF), sold by the appellant did not have any 'ADV' markings right from 1-1-1987 onwards, as Shri Balakrishna Shetty in his retraction letter dated 30-10-1991, had categorically stated that his statement dated 21-10-1991 as well as the sta....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... appellant was clearing sizes of inner tubes of rubber without payment of duty by availing the exemption under the said notification and were also satisfied on physical verification of the said three sizes that they were actually bearing 'ADV' markings, the charge of suppression of facts and wilful mis-statement on the part of the appellant is unsustainable. Therefore, the learned Collector has erred in invoking the extended period of limitation under the proviso to Section 11A (1) of the Central Excises and Salt Act, 1944 and in confirming the demand for the period beyond six months from the date of receipt of the show cause notice by the appellant." 4. We have heard learned Advocate for the appellants and the learned SDR for the Department and after considering the submission and the material in the paper book find - (a) Notification 188/86, grants exemption to inner tubes of rubber for Tyres of a kind used on animal drawn vehicles or hand carts, provided the conditions in the notification are fulfilled. The condition as they appear from the table to the notification read as follows - "Provided that a durable prominent marking of the letters "ADV" has been made....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h he knew got obliterated. This indicates not only total negligence on the part of the assessee to comply with an effect the intention undertaken, when he got the classification list approved. It also indicates a pre-determined set mind to not to make "durable and prominent" markings; knowing fully that "each tube" is not marked, the assessee kept on compounding his guilt by continuing removal of tubes without the letters "ADV" under the notification rate, which he knew, he was not entitled; thus evading the duty. The assessee knowingly took no steps to rectifying the position to have proper markings to be properly etched on the moulds with intention to evade duty, this would justify the invoking of the longer period of proviso to Section 11A (1). (c) We have no hesitation to uphold the application of the extended period of proviso Clause to Section 11A(1), also on the grounds, arrived at by the learned Collector, who arrived at the same, on factual findings based on the enormous evidence in the show cause notice. (d) As submitted by the learned DR, RG. 1 stage for tubes is unpacked stage and not packed in polythene bags, which could not be rebutted by the Advocate.....