ORDER
R. Jayaraman, Member (T)
1. For hearing the applicants appeal on merits, they are required to deposit a sum of Rs. 39,82,917.80 p towards duty and Rs. 5.00 lacs towards penalty and their plant and machine have been ordered confiscation but allowed the same to be redeemed on payment of fine of Rs. 25,000/-.
2. Shri Willingdon Christian, the Ld. Adv. on behalf of the applicants, pleaded that they are processing cotton fabrics without the aid of power but with the help of the machines manually operated. During the visit of the officers, it was noticed that the electric motor with arrangements for coupling with the mercerising machine was found and the photograph was taken and on that basis the goods processed and lying in the factory were seized and the adjudication proceedings were initiated. The aforesaid demand is for the period from 1987-88 to 1989-90. The electric motor of 3 H.P. was no doubt kept near the mercerising machine to be used on the machine for removing the jamming of the machine. With a 3 H.P. electric motor, mercerising machine of this size cannot be operated on a commercial run. In any case, there is absolutely no evidence to show that during the aforesaid period of demand, fabrics have been manufactured with the aid of power by using the motor and such processed fabrics were cleared. They have filed regular declarations and the officers also have been visiting the unit for verification of declarations. Hence based on the position noticed on one day, a conclusion cannot be drawn for alleging evasion of duty for the past period of two years. Hence they have a prima facie case on merits. Moreover, their financial position is not sound. They have incurred a loss of Rs. 1.20 lacs for the year ending March, 1991 and their carried forward loss is Rs. 2.42 lacs and their share capital is wiped away by this loss. Their liquidity position is also not sound, inasmuch as their current liability is more than their current assets.
3. Mrs. Lipika Majumdar Roy Choudhury, the Ld. SDR, on the other hand, stated that they have not revealed in advance of the fact that they have brought the electric motor for removing the jamming of the machine. Since they have filed the declaration that they are going to operate the machines without the aid of power, they should have intimated about the position in advance, which they have not done. Hence it can be reasonably concluded that the applicants, by filing a false declaration have been manufacturing and clearing the goods with the aid of power even during the past. She requested that the duty amount should be secured.
4. After hearing both the sides, we, prima facie, find that the Ld. Advocate seems to have a point in their favour in the argument that noticing a motor near the mercerising machine on one day cannot lead to a conclusion that over the past period of two years, goods have been processed only with the aid of power. However as regards the goods seized and duty involved on such goods, the issues are debatable. We also find that the financial condition of the appellants is not sound to the extent of meeting the demand. Taking all these aspects into consideration we direct the applicants to furnish a bond covering the entire duty amount. We also direct the applicants to deposit a sum of Rs. 50,000/- (Rupees Fifty thousand only) in cash, within a period of eight weeks from the date of communication of this order and report compliance within nine weeks, failing which their appeal is liable to be rejected. On compliance with the direction, there shall be stay and waiver of recovery of the balance of duty and penalty amounts. The plant and machinery ordered confiscation should not be disposed of by the Department and normal process of production need not be interfered with.