ORDER
Jyoti Balasundaram, Member (T)
1. The above appeal arises out of the order of Additional Collector of Central Excise by which he has confiscated sensitised paper falling under Chapter Sub-heading 3703.10 of the CETA, 1985, seized on 5-8-1989 with an option to redeem the same on payment of a fine of Rs. 500/- and levied duty of Rs. 2,49,971.38 on this item cleared by the appellants between 7th July, 1988 and 5-8-1989 and imposed a penalty of Rs. 25,000/-. The ground for confiscation of 250 rolls of sensitized paper, each of 10 metre lengths is manufacture and storage by the appellants in contravention of Rule 174, Rule 53 read with Rule 173G and Rule 226 of the Central Excise Rules, 1944. The duty demand arises because the appellants were held not eligible to exemption from payment of duty under Notification 175/86-C.E., dated 1-3-1986 during the years 1987,1988 and 1988-89, since their clearances had exceeded Rs. 7.5 lakhs and the Unit was not registered as a small scale industry and further w.e.f. 7-7-1988, goods falling under sub-heading 3703.10, were also taken out of the purview of small scale exemption granted vide Notification 175/86 as amended by Notification 231 /88.
2. We have heard Shri V. Sridharan, learned Counsel and Shri J.M. Sharma, learned DR.
3. The appellants do not dispute the liability to duty of their clearances of sensitized paper but only plead that the duty demand be confined to a period of six months prior to the date of issue of show cause notice. In this case, the show cause notice was issued on 16-10-1989, proposing demand of duty for clearances during the period 7th July 1988 to 5th August 1989.
4. We find that the plea of the appellants that there was no intention to evade payment of duty is not acceptable though they had pleaded that the goods had been cleared by them under a bona fide belief that the same were exempted from the whole of the duty upto the value of clearances of Rs.15 lakhs, there is no basis for this plea. Notification 231/88 was published in the Official Gazette on 7-7-1988 and the appellants cannot take shelter under the cover of their plea of ignorance of this amendment. They were engaged in the manufacture and clearance of excisable goods right from 1986: neither did they file any declaration to claim exemption from licensing control until their goods were covered by SSI exemption Notification nor did they obtain Central Excise Licence even after it had become obligatory on their part to do so w.e.f. 7-7-1988 when the goods became dutiable. In these circumstances, it cannot be doubted that suppression of manufacture and clearance of excisable goods was with the intention to evade payment of duty. The decision of the Tribunal cited and relied upon by the learned Counsel viz. the Tribunal’s order in the case of National Dyeing Centre and Ors. v. CCE, New Delhi reported in 1988 (33) E.L.T. 551 is distinguishable as, in that case, the appellants had been carrying out the processes of calendering or hydro-extraction on textiles prior to and subsequent to 24-11-1989 which is the date on which the benefit of Notification 297/77 in respect of man-made fabrics, and Notification 80/76 in respect of cotton fabrics was not available to the appellants. In this background the. Tribunal accepted the defence of the assessees that they were under a bona fide mistaken impression that they were entitled to carry out the processes without any licence and removed the goods without payment of duty and hence there was no intention to contravene the legal provision or to wilfully evade payment of duty. In the present case, the assessees had been availing of the benefit of Notification 175/86 prior to the period in dispute and they continued to clear the goods without payment of duty even after they ceased to be eligible to the benefit thereof. We, therefore, uphold the finding of the suppression of manufacture and clearance of excisable goods with intention to evade payment of duty and consequently hold that the extended period of limitation of 5 years under the proviso to Section 11A is applicable herein. We, therefore, uphold the impugned order in its entirety and reject the appeal.