TaxTMI 
TaxTMI 
2013 (10) TMI 1303
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....onsignment as 2538.77 kgs of terry towels in 117 cartons valued at Rs. 3,80,815/-. The consignor's name and address was given as M/s. Santosh Textile Mills Ltd., Chakala, Andheri (East), Mumbai and the consignee's name and address was shown as M/s. Professional Textiles, Lokhandwala Complex, Andheri, Mumbai. The tempo along with goods was detained under a panchnama, dated 28-9-1996 for further enquiry. Simultaneously, the factory premises of M/s. Santogen Exports Ltd., Khopoli, Pen Road, District Raigad, the appellant herein and their registered office at Andheri (East) were searched apart from the premises of M/s. Professional Textiles and M/s. Santogen Silk Mills Ltd., situated at the same address as the appellant. The premises of M/s. Shantilal Nemichand & Co., Kalbadevi, was also searched since as per the version of the driver, the goods were to be delivered at Mangaldas Market, Kalbadevi. The search resulted in recovery of incriminating documents. A shortage of 35 MTs of terry towels were recorded at the factory premises of the appellant. Shri Mane, driver of Tempo, in his statement recorded under Section 14 of the Central Excise Act, 1944 admitted that 117 cartons of terry to....
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.... value of the terry towels varied from Rs. 120/- to Rs. 200/- per kg. depending upon the quality. 2.4 Shri U.J. Khadilkar, Commercial Manager, in his statement dated 27-9-1996 admitted that they had cleared terry towels into DTA without payment of duty and without cover of Central Excise invoice and without accounting for their production and clearance in the statutory registers and Shri Rangilal Hada, President of the appellant firm, is solely responsible for the entire affairs of the company including Central Excise matters. He also confirmed that the permission to clear the goods into DTA from the Development Commissioner had expired in March, 1995 and in spite of such expiry, they cleared terry towels into DTA during April, 1995 to February, 1996 on payment of Central Excise duty. In February, 1996 they noticed that they had not applied for renewal of the permission and they started removal of the excisable goods into DTA from the middle of April, 1996 onwards without issue of Central Excise invoice and without payment of excise duty and during the period April to September, 1996 they had cleared about twenty consignments of terry towels. In his further statement dated 29....
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....Mills Ltd., and the rates varied from Rs. 180/- to Rs. 350/- per kg. and they were receiving terry towels in cartons weighing 14 to 18 kgs. 2.9 Shri Ramnaresh Shubhkaran Deora, Vice-Chairman of the appellant firm, in his statement dated 18-10-1996 admitted that he was fully responsible for the entire affairs of the company including production, clearance and marketing and the statements given by Mr. Hada and Khadilkar were true and binding on the appellant. 2.10 Scrutiny of the note books seized revealed that the appellant had cleared 3796 cartons of terry towels during June, 1996 to September, 1996 including the one cleared by vehicle No. MH-19-2944. 2.11 On conclusion of the investigation, a show cause notice dated 21-3-1997 was issued to the appellant alleging clandestine production and removal of 3796 cartons weighing 69,267.31 kgs of terry towels without payment of duty involving a duty liability of Rs. 67,84,507/-. The show cause notice also proposed to demand duty on the inputs such as yarns, dyes and chemicals and furnace oil used in the manufacture of terry towels amounting to Rs. 22,47,360/-. The notice also sought to demand differential duty on terry to....
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....anam v. NCC Blue Water Products Ltd. - 2010 (258) E.L.T. 161 (S.C.) and the order of this Tribunal in the case of CCE, Thane v. Global Wool Alliance Pvt. Ltd. - 2012 (278) E.L.T. 249 (Tri.-Mumbai) wherein it has been held that clearances effected without obtaining prior permission of the Development Commissioner would be liable to excise duty in terms of the main provisions of Section 3 of the Central Excise Act, which provides for levy of excise duty equal to those leviable on like goods produced/manufactured in India. It is further argued that even though the appellant had cleared the goods without obtaining prior permission from the Development Commissioner, they had subsequently obtained permission from the Development Commissioner for clearance into DTA and the permission so granted would include not only the clearances made on payment of duty but also clearances alleged in the show cause notice as having been made without payment of duty and without following Central Excise procedures. Since the permission granted (though later) covers the quantity of goods cleared, the appellant would be eligible for the benefit of Notification No. 2/95-C.E. Accordingly, he submits that the ....
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....9-11-1996, has admitted that in most of the cases (where goods were cleared clandestinely) the rates charged were Rs. 250/- per kg. The appellant has not adduced any evidence to prove that the value was Rs. 150/- per kg. Therefore the adjudicating authority has rightly taken the value at Rs. 250/- per kg. 4.4 As regards the rate of duty applicable on the quantity of goods cleared clandestinely, the appellant has taken the plea that rate of duty applicable in respect of clandestinely removed goods will be as per main Section 3(1) of the Central Excise Act, 1944 and not as per the proviso to Section 3(1). It is the appellant's contention that proviso to Section 3(1) is applicable only when goods are allowed to be sold in India whereas in their case, as there was no permission to sell the goods in India, proviso (ii) to Section 3(1) is not attracted and duty has to be charged as per main Section 3(1). Reliance has been placed on the following decisions :- (a) CCE, Visakhapatnam-II v. NCC Blue Water Products Ltd. reported in 2010 (258) E.L.T. 161 (S.C.) (b) SIV Industries Ltd. v. Commissioner - 2000 (117) E.L.T. 281 (S.C.). 4.5&e....
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.....10 Accordingly it is pleaded that the impugned order be upheld except that part of dropping of demand in respect of duty involved on inputs used in the manufacture of goods clandestinely cleared for which the Deptt. has filed the appeal. 5. We have carefully considered the submissions made by both the sides. 5.1 As regards the quantity of goods cleared, the Revenue has arrived at a figure of 69,269.21 kgs., and this is based on the entries made in the register maintained at the security gate which indicated the number of cartons cleared, the quantity of goods cleared and the numbers of the vehicles in which the goods had been cleared. The appellant itself has admitted to a clandestine clearance of about 35 to 40 MTs in the statements of its various officials and it has been admitted that such production and clearance were not accounted for in the statutory records. A shortage of 35 MTs of terry towels were recorded during the stock taking done on 28/29-9-1996 and the appellant has not been able to satisfactorily explain the shortage and the reasons therefor. Since the 35 MTs of clandestine clearance has not been accounted for in the statutory records, they could n....
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....oms duty applicable on like goods imported into India. The appellant has contended that in view of the decision of the Hon'ble Apex Court in the case of NCC Blue Water Products Ltd. (cited supra), the rate prescribed in the main Section 3(1) of the Central Excise Act, 1944 that is, the rate applicable to a DTA manufacturer should be adopted. 5.4 We have carefully considered this contention and also the decision of the Hon'ble Apex Court in the aforesaid case. This decision was based on the earlier decision of the Court in the case of SIV Industries Ltd. and the Circular of the Board, dated 13-2-2002. The fact that the said circular was subsequently withdrawn in 2004 was not brought to the notice of the Hon'ble Court. The SIV Industries case decided by the Hon'ble Apex Court did not deal with a situation wherein the goods were cleared without obtaining the necessary approval from the Development Commissioner but dealt with a situation of removal of goods on de-bonding of the EOU. It was in that context it was held that on de-bonding, since the unit is no longer a 100% EOU, the goods would be liable to duty at the rate applicable to a DTA unit prescribed in main Section 3(1). T....
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....rent procedure was carved out and a separate Chapter VA was inserted in Central Excise Rules relating to removal of goods from free trade zone and 100% EOU for home consumption and many provisions of the Central Excise Rules were made inapplicable. Even exemption notifications issued under Rule 8 were made inapplicable unless notification itself said so. The intention of the Legislature and the purpose of introducing proviso to Section 3(1) and Notification 125/84 is therefore very evident that 100% EOUs are to be treated differently from other domestic units. We are therefore in agreement with the plea raised by the Revenue that no interpretation which would have the effect of defeating the very statutory provision shall be given. It has also been observed by Supreme Court in British Airway's case that while interpreting the statute, Courts are required to keep in mind, the consequences which are likely to flow up on the intended interpretation that it is the duty of the Court to give a harmonious construction of a statute and that such a construction shall suppress the mischief and advance the remedy. Further as observed by the Supreme Court in the case of Ispat Industries it is ....
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....f the Larger Bench that the decision of the Supreme Court in SIV Industries case is distinguishable for the reason stated therein, as in that case the main thrust was that whether on the date of removal the 100% EOU ceased to be 100% EOU and therefore the provisions relating to 100% EOU could not have been applied to them. For the same purpose we hold that exemption under Notification 125/84 shall not be applicable in respect of goods manufactured by 100% EOU but sold in India. 16. As regards the dismissal of the Revenue's appeal in the Modern Denim case, we find that though the Larger Bench in S. Kumar case has held that when a civil appeal is dismissed even though without resigning reasons, it will have an effect of binding precedent unlike in the case of dismissal of a Special Leave Petition. The facts in Modern Denim case are little different. In the case of Modern Denim, the allegation was that the 100% EOU had surreptitiously removed goods to adjoining unit working under EPCG scheme and its production was shown as that of other unit working under EPCG Scheme and accordingly duty was sought to be demanded in respect of goods clandestinely removed. Tribunal held that clan....
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....gical situation where the clandestine clearances would attract a lower duty rate (10%) when compared to the duty rate applicable on licit clearances (19.175%). Such an interpretation and application of law would promote tax evasion and not tax compliance and would be completely contrary to the object of the legislation. 5.6 It is a settled principle of statutory construction that the law should be interpreted in a sense which best harmonizes with the object of the statute. Excerpts from Justice G.P. Singh's Principles of Statutory Interpretation (12th Edition p. 119) would clarify the position : 'As stated earlier and as approved by the Supreme Court : "The words of a statute, when there is doubt about their meaning, are to be understood in the sense in which they best harmonize with the subject of the enactment and the object which the Legislature has in view. Their meaning is found not so much in a strict grammatical or etymological propriety of language, nor even in its popular use, as in the subject or in the occasion on which they are used, and the object to be attained". The courts have declined "to be bound by the letter, when it frustrates the patent purposes of the ....
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....ble on like goods when imported into India. Therefore, if we undertake a purposive construction with a view to suppress the mischief and advance the remedy, the confirmation of duty demand by the adjudicating authority at a rate equal to the aggregate of each of the customs duties is correct and sustainable in law and accordingly, we uphold the same. 5.8 It is also a settled position in law that a wrong decision or order in favour of a particular person will not entitle any other person to claim the same benefit as held by the Apex Court in the case of Fuljit Kaur v. State of Punjab - 2010 (262) E.L.T. 40 (S.C.). This position has been lucidly explained by the Hon'ble Apex Court in the case of Chandigarh Administration v. Jagjit Singh [AIR 1995 SC 705 = 1995 SCC (1) 745] as follows :- "Generally speaking, the mere fact that the respondent authority has passed a particular order in the case of another person similarly situated can never be the ground for issuing a writ in favour of the petitioner on the plea of discrimination. The order in favour of the other person might be legal and valid or it might not be. That has to be investigated first before it can be directed to be ....
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....permitted to clear terry towels of quantity not exceeding 43,402 kgs. of value not exceeding Rs. 81.77 lakhs during the period 7-4-1997 to 30-9-1997. The permission granted will operate from the date of issue of the permission and not for the earlier period and this is what is envisaged under the Export and Import Policy 1992 to 1997. In other words, the permission granted is not for the clearances already effected but for the clearances to be effected subsequently. Thus there is no merit in this contention and accordingly, we uphold the duty demand of Rs. 67,87,507/- confirmed against the appellant in respect of the clandestine removal of 69,267.21 kgs. of terry towels during April to September, 1996. 5.9 The next issue relates to demand of differential excise duty of Rs. 9,21,795/- on clearance of 78,562.09 kgs. of terry towels, fents & rags and waste yarn valued at Rs. 47,89,652.67 effected during 1995-96 on payment of excise duty but without the permission of the Development Commissioner. The department has denied the benefit of Notification No. 2/95-C.E., dated 4-1-1995. From the records it is seen that the Development Commissioner vide permission dated 18-10-1996 had al....
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.... 57AH and Rule 173Q), if any manufacturer, producer, registered person of a warehouse or a registered dealer, - (a) removes any excisable goods in contravention of any of the provisions of these rules; or (b) does not account for any excisable goods manufactured, produced or stored by him; or (bb) takes credit of duty in respect of inputs or capital goods used in the manufacture of final products or in respect of capital goods for use in the factory of manufacture of final product, as the case may be, wrongly or without taking reasonable steps to ensure that appropriate duty on the said inputs or capital goods has been paid as indicated in the invoice or any other document approved under these rules evidencing the payment of excise duty or the countervailing duty, as the case may be, accompanying thereof, or takes credit of duty which he knows, or which he has reason to believe, is not permissible under these rules, or does not utilise the inputs or capital goods in the manner provided for in these rules or utilises credit of duty in respect of inputs or capital goods in contravention of any of the provisions of these rules, ....
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....icate, the person availing of credit of duty shall retain such certificate for production before the proper officer on demand." The appellant has violated the provisions of clauses (a), (b) and (d) of the above Rule and therefore, penalty under the said Rule is clearly attracted. The penalty of Rs. 75 lakhs imposed on the appellant is within the limits prescribed as the differential duty demand confirmed is of the order of Rs. 77.09 lakhs. The appellant has sought to evade this duty by indulging in fraud by way of issuing fake invoices and without accounting for the goods in the statutory records. Thus the intention to evade duty is clearly manifest and therefore, no leniency in imposition of penalty is merited or warranted. Accordingly, we uphold the above imposition of penalty on the appellant firm. 5.12 As regards the confiscation of goods valued at Rs. 7.23 lakhs seized on 1-10-1996, the confiscation is sustainable inasmuch as the goods were cleared without payment of duty and under the cover of bogus documents. An option to redeem the same on payment of a fine of Rs. 2 lakhs has been given by the adjudicating authority and we find that the fine is not excessive and ther....