TaxTMI 
TaxTMI 
2002 (1) TMI 65
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....after, a show cause notice was issued on 11th May, 1993 in respect of the violations of the provisions of the Act and the Rules and the appellant was called upon to pay duty of Rs. 52,717.00 and also to show cause as to why penalty should not be levied under various Central Excise Rules mentioned therein. 2.1The violation of the Rules entailing imposition of penalty was alleged on the ground that the assessee had evaded central excise additional duty by removing the fabrics without payment of such duty. In the show cause notice dated 11-5-1993, issued to the assessee by the Collector, Central Excise and Customs, it was alleged that the assessee had removed man-made fabrics measuring 50,446 Mtrs. after processing without payment of central excise duty and without issue of GP 1s. It was alleged that the authorised signatory of M/s. Ashok Fashions Ltd., in his statement, had not disputed this fact. The additional duty to the tune of Rs. 52,717.00 was thus evaded. The acts of contraventions of various provisions referred to in the show cause notice constituting wilful and deliberate suppression of facts and misdeclaration of quantities in statutory central excise documents with an i....
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....on 3(3) of the Additional Duties of Excise Act had a restricted meaning in view of the use of the words 'including those relating to refunds and exemptions from duty'. The Delhi High Court held that Chapter II of the Central Excise Act, 1944 entitled "Levy and Collection" contained provisions for penalties, but the heading of that Chapter itself was not a guiding factor. The Court held that, "the argument that various sections falling in Chapter II of the Central Excises Act, which has the heading 'Levy and Collections' would also be construed as provisions for levy and collection of additional duty as well, is of no avail to the revenue ………". In paragraph 39 of the judgment, the Delhi High Court held as under : "We have given our considerable thought to various arguments raised by the parties. We find there is no mandate in the Additional Duties Act for levy of penalty and the Central Excises Act and the Rules made thereunder cannot be imported in the Additional Duties Act for the purpose of levy of penalty. We have spent anxious moments as the interpretation we have put has grave consequences for the revenue as similar terminology as used in Section 3(3) of the Additiona....
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....ll as its quantification and assessment. (a(i)) The question that arose before the Supreme Court was, whether the provision of Section 3(3) of the Additional Duties of Excise Act was sufficient to attract Section 2(f) of the Central Excise Act defining 'manufacture'. In paragraph 29 of the judgment, the Supreme Court held that, it was clear that what applied to the main levy, applied to the additional duty as well, and that there was no substance in the contention which proceeded on the pre-supposition that processing did not amount to manufacture under Section 3(1) of the Additional Duties Act. In the concurring judgment, justice Ranganathan held that the words 'Levied and Collected' used in Section 3(1) of the Additional Duties Act were the same as the words used in Article 265 of the Constitution, which have been interpreted as comprehending the entire process of taxation commencing from the imposition of the tax by enacting a statute to the actual taking away of money from the pocket of a citizen it was held that, they take in every stage in the entire process of taxation. It was then held that the words 'Levy and Collection' in sub-section (3) of Sec....
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....Goods of Special Importance) Act, 1957 was enacted to provide for levy and collection of additional duties of excise on certain goods and for the distribution of a part of the net proceeds thereof among the States in pursuance of the principles of distribution formulated and the recommendations made by the Finance Commission in its second report. 'Additional duties' is defined to mean the duties of excise levied and collected under sub-section (1) of Section 3. 6.1Section 3 of the said Act, which falls for our consideration, reads as under : Levy and"3. collection of Additional Duties :- (1) There shall be levied and collected in respect of the goods described in Column (3) of the First Schedule produced or manufactured in India and on all such goods lying in stock within the precincts of any factory, warehouse or other premises where the said goods were manufactured, stored or produced, or in any premises appurtenant thereto duties of excise at the rate or rates specified in Column (4) of the said Schedule. (2) The duties of excise referred to in sub-section (1) in respect of the goods ....
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....e. all the provisions of the Central Excise Act, 1994 and the Rules made thereunder, which are expressly adopted by reference in relation to the levy and collection of additional excise duty and made applicable in the same way as they applied to these very goods for the levy and collection of excise duties applicable to them under the Act of 1944 and the Rules made thereunder. The provision of Section 5A in Chapter II of the Central Excise Act, 1944 relates to power to grant exemption from duty of excise and of Section 11B, also contained in Chapter II, relates to claim for refund of duty. It is, therefore, obvious that the word 'including' used in the expression 'including those relating to refunds and exemptions' has only explicitly reckoned in, what is already comprised in the provisions of the Central Excise Act and the Rules framed thereunder. The word 'including' is, therefore, not used in any restrictive sense, and, given its full play sub-section (3) of Section 3 will make applicable all the provisions of the Central Excise Act, 1944 and the Rules made thereunder, to the levy and collection of additional duties of excise, in such manner as is prescribed under the rules, to ....
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.... the liabilities which are attached to violation of the excise regulations contained in the Rules. The provisions clearly satisfy the ratio of the decision of the Supreme Court in M/s. Khemka & Co. (Agencies) Pvt. Ltd. v. State of Maharashtra, reported in (1975) 2 SCC 22, on which reliance was placed by the Delhi High Court in Pioneer Silk Mill's case (supra). 9.The Levy and collection of duties of excise under Section 3 of the Central Excises Act, 1944 is to be done in such a manner as may be prescribed, which means prescribed by the Rules under that Act. By virtue of Section 3(3) of the Additional Duties Act, levy and collection of additional duties of excise will therefore have to be done in the manner prescribed by the Rules framed under the Central Excise Act, 1944, because, that Act and the Rules made thereunder are generally adopted by reference for the purpose of the Additional Duties Act. 9.1Chapter VI of the Central Excise Act, relates to 'Adjudication of Confiscation and Penalties'. Under Section 33, it is provided that, where by the rules made under this Act, anything is liable to confiscation or any person is liable to a penalty, such confiscation or penalty may ....