ORDER
Jyoti Balasundaram, Member (J)
1. The above reference application by the Revenue (respondent in Appeal No. E/615/94-NRB) has been filed for reference of the following questions of law purporting to have arisen out of Final Order No. A/421 /94-NRB, dated 25-4-1994 of the Tribunal:
(i) Whether confiscation and penalty under Central Excises and Salt Act and Central Excise rules can be sustained where it is clear that the contravention of the provision of law in respect of levy and collection of additional duties of excise under the Additional Duties of Excise (Goods of Special Importance) Act, 1957?
(ii) Whehter M/s. Motley Industries (P) Ltd. Faridabad are entitled to any consequential relief?
2. The facts leading up to the filing of the reference application are that the respondents herein are processors of cotton fabrics and man-made fabrics. Certain quantity of man-made fabrics seized from the premises of the respondents on 24-7-1992 were confiscated with option to redeem the same on payment of a fine of Rs. 1 lakh and a penalty of Rs. 50,000/- was also imposed upon them, mainly on the ground that the man-made fabrics were declared as cotton fabrics resulting in short-levy of duty, and that false entries had been made in the respondents’ statutory records in contravention of the provisions of the CESA, 1944 and the Rules made thereunder. The differential duty was paid by the respondents vide PLA entry No. 301, dated 27-7-1992, leaving only the question of imposition of fine and penalty to be decided in the appeal before the Tribunal. The Tribunal set aside the confiscation and penalty following the judgment of the Hon’ble Delhi High Court in the case of Pioneer Silk Mills P. Ltd. v. Union of India, reported in 1991 (4) Delhi Lawyer 75 wherein the High Court had held that there is no mandate in the Additional Duties of Excise (Goods of Special Importance) Act, 1957 for confiscation or levy of penalty [the High Court judgment has since been followed by the Tribunal in the case of Shri Pawan Kumar and
Ors. v. Collector of Central Excise, Chandigarh reported in 1994 (1) RLT 33.
3. Learned DR, Shri Satish Shah submits that ] (3) of Section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 makes all the provisions of the Central Excise Act and the Central Excise Rules, including those relating to refund and exemption from duty applicable, so far as may be, to the Act. He submits that the expression “apply in relation to that levy and collection of additional duties as they apply in relation to the levy and collection of duties of excise on the goods specified” is wide enough to make all provisions in the Central Excise Act and Rules applicable, and, therefore, since confiscation and penalty necessarily flow out of levy and collection of duty, the provisions relating to confiscation and penalty contained in the CESA will necessarily get attracted even to cases where the levy and collection is that of additional duty. Shri Naveen Mullick draws our attention to the relevant paragraph of the judgment of the Delhi High Court supra wherein the very same argument had been advanced by the Union of India and negatived by the Court, holding that a penal liability cannot be created by implication or intend-ment and provisions levying penalty must be explicit and there being no authority of law to levy penalty under the Additional Duties Act, penalty cannot be levied for contravention of the Additional Duties Act. He, therefore, submits that there is no substance in the Revenue’s application for reference to the Delhi High Court, as the issue has been settled by the very same Court.
4. We have heard both sides and carefully considered their submissions. We find that all aspects had been considered by the Delhi High Court including the plea raised before us by the learned DR and that the Supreme Court decision in Ujagar Prints had also been discussed and analysed by the Delhi High Court while coming to its conclusion. The High Court referred to the decision of the Hon’ble Supreme Court in the case of Ujagar Prints – AIR 1989 SC 516 (which is pressed into service by the learned DR before us) and held that the Ujagar Prints decision did not aid the Court in deciding the controversy in the petition before the High Court as the question before the High Court was never in consideration before the Supreme Court. The High Court held that “no doubt the Additional Duties Act makes the provision of Central Excises Act apply in relation to levy and collection of additional duties, but the question in Ujagar Prints case was whether this provision was sufficient to attract section 2(f) of the Central Excises Act which defines “manufacture”. This in turn depended upon what the expression “levy” connotes and carries with it. The term “levy”, it is held, is an expression of wide import. It includes both imposition of a tax as well as its quantification and assessment…In Jain Brothers v. Union of India – 77 ITR 107 (also AIR 1970 SC 778) the Supreme Court said that penalty was not a continuation of assessment proceedings and penalty partook all the character of the additional tax. Considering the ratio of the decisions aforesaid we are of the opinion that there is no provision in the Additional Duties Act which creates a charge in the nature of penalty. We further said that the term “levy” and collection in Section 3(3) of the Additional Duties Act has a restricted meaning in view of the use of the words “including those relating to refund and exemptions from duty”. Otherwise these words were rather unnecessary… “The High Court further held that there was no substance in the argument of the Revenue that Chapter II of the Central Excises Act deals with levy and collection of duty and all Sections under that Chapter would be applicable as that Chapter contains provisions for offences and penalties and all the sections can hardly be said to be related to levy and collection of duty of excise. The High Court also relied upon the Supreme Court decision in the case of Dr. Partap Singh and Anr. v. Director of Enforcement, Foreign Exchange Regulation Act and Ors. reported in AIR 1985 Supreme Court 989 which construed the expression “so far as may be” and held that the expression had always been construed to mean that those provisions may be generally followed to the extent possible and it is not that those provisions have been incorporated by pen and ink (like in Section 3(3) of the Additional Duties Act. The Court held that the expression therefore, negatives any plea that the whole of provisions of the Central Excises Act have been incorporated by virtue of Section 3(3) of the Additional Duties Act. We also note that this Section has been amended by virtue of the Finance Act, 1994, dated 13-5-1994 to include the penal provisions of the CESA, 1944 within its scope.
5. In view of the foregoing discussion we hold that no question of law arises for reference to the High Court [and] accordingly reject the application.
