ORDER
V.T. Raghavachari, Member (J)
1. This appeal and connected appeal Excise A.No. 1138 of 80-D were heard together earlier and under order dated 15-7-1986 [1986 (26) E.L.T. 947] it had been held that Appeal No. 1138/80-D was to be dismissed but that the present appeal (1059/80-D) be posted for hearing on merits with reference to the part dealing with confiscation and levy of penalty. It was in pursuance of the said direction that this appeal has now been heard by us further.
2. To recapitulate the facts, notice dated 15-6-1979 had been issued to the respondents and three others calling upon them to show cause why duty should not be recovered from them in respect of goods seized, why the said goods should not be confiscated and why penalty should also not be levied. On adjudication the Deputy Collector under order dated 27-1-1979 confiscated the seized goods (fixing the redemption fine of Rs. 10,000/-) directed recovery of duty on the said goods and levied penalty of Rs. 5,000/-. This was against the present respondents, action being dropped under the said order against the other three. The said order was set aside by the Appellate Collector under order dated 10-10-1979. The Central Govt. being of the view that the said order was not legal, proper and correct issued notice dated 21-8-1980 under Section 36(2) of the Central Excises and Salt Act. It is the proceedings so initiated that, on transfer, was numbered as Excise Appeal No. 1059 of 80-D of this Tribunal. As earlier mentioned under order dated 15-7-1986 the said show cause notice has been directed to be discharged so far as the liability for payment of duty is concerned. Hence what survives for consideration is the proposal under the review notice to set aside the order of the Appellate Collector and restore the order of the Deputy Collector so far it directed confiscation and imposed penalty.
3. We have heard Smt. Saxena for the Deptt. and Shri V. Sridharan, Chartered Accountant for the respondents.
4. Smt. Saxena supported the order of the Deputy Collector on the ground that power had been used in raising steam for heating the water proofing solution and hence the respondents were not entitled to duty free clearances under the notification relied on by them and in the circumstances the order for confiscation and imposition of penalty was justified. While Shri Sridharan pointed out that use of power in raising steam had not even been alleged in the proceeding before the lower authorities, he further contended that in any event on the facts and in the circumstances of this case the imposition of penalty or order for confiscation would be totally unjustified. As pointed out by him the respondents had addressed – the Supdt. placing before him all facts on 5-4-1973 and had received reply dated 16-5-1973 confirming that use of steam in heating the colour solution would not be objectionable. This was in reply to the query in the letter dated 5-4-1973 whether exemption from payment of duty would be denied by use of steam in the said manner. Shri Sridharan contended that in pursuance of this correspondence the respondents had filed their classification list dated 9-4-1973 claiming exemption from payment of duty under Notification 127 of 70 and 128 of 70 and that it was in accordance with the approval granted on the said classification not permitting duty free clearances that the respondents had been clearing their goods without payment of duty. He therefore submitted that since the respondents had been acting in pursuance of lawful permission granted the order regarding confiscation of goods so removed and imposition of penalty was not justified.
5. In view of the above facts which are not controverted we hold that the order for confiscation and imposition of penalty was not justified. We therefore further hold that no grounds have been established to interfere with the order of the Appellate Collector. This appeal is accordingly dismissed and notice dated 21-8-1980 is discharged.