ORDER
Shri S.L. Peeran
1. Both these appeals raise common question of law and facts, hence they are taken up together for disposal as per law.
2. The appeal of Om Tex Ltd. arises from Order-in-Original No. 172/96 dated 24.10.96 by which the Commissioner of Central Excise, Coimbatore has confirmed a duty demand of Rs. 1,87,567/- for clearance of colour cotton towels without payment of duty during the period 1994-95 and 1995-96 after extending the benefit of exemption notification 1/93 dated 28.2.93. Further, there is a seizure of goods and option to clear the same on payment of fine of Rs. 1000/-. The Commissioner has imposed a combined penalty under Section 11AC read with Rule 9(2), 52A, 173Q and 226 of CE Rules equivalent to the duty amount without bifurcation under respective rules. Therefore, the appellants are aggrieved on this count besides the ground that duty computation has not been correctly arrived at in as much as that the Cum-duty price was required to have been taken into consideration in the light of the Larger bench judgment of the Tribunal rendered in the case of Sri Chakra Tyres Ltd. [1998 (108) ELT 361. They also relied on the Supreme Court judgment in the case of CCE Vs. Elgi Equipments Ltd. [2001 (128) ELT 52 which also lays down that Section 11AC does not have retrospective effect for purpose of imposition of penalty. It is contended that the full period is prior to the passing of Section 11AC and therefore, a combined penalty imposed is not as per law. Further plea taken is that they have not been given deduction with regard to job charges paid to the job workers as the goods had been got manufactured through job worker and also the Commissioner was not justified in rejecting the evidence without giving proper and clear reasons. It is also contended that the entire industry in that region were manufacturing cotton towels without payment of duty and clearing the same and therefore they all held bona fide belief that the item is not dutiable. In this regard they rely on several judgments – in the case of Pushpam Pharma [1995 (78) ELT 401 (SC)], Tamil Nadu Housing Board [1994 (74) ELT 9 (SC)] and Chemphar Drugs Ltd. [1989 (40) ELT 276 (SC)]. They further stated that when they hold a bona fide belief and demonstrated it by bringing to the notice of the Commissioner about the entire industrial belt in that region not clearing the good on payment of duty, then such a belief demonstrated should be accepted for holding that the larger period is not extendable. On this ground also, they rely on the judgment of Tribunal in the case of Executive Engineer, KSEB Vs. CCE [1997 (68) ELT 869], Shroff Textiles Vs. CCE, Bombay [1998 (69) ECR 364], Duraippa Lime Products Vs. CCE Madurai [1998 (79) ECR 88], and Super Syncotex Vs. Collector, Jaupur [1996 (87) ELT 56].
3. Ld. Counsel further submits that in identical matter dealt with by the Commissioner of Central Excise, Coimbatore in respect of M/s. Tamilarasi Textiles Vs. CCE, the Tribunal remanded the matter for de novo consideration on all the points raised by Final Order No. 1124/2001 dated 11.7.2001. Counsel further submits that he had appeared in that case and seeks for a similar order.
4. The appeal of Shree Vishnu Spinners arises from Order-in-Original No. 163/96 dated 15.10.96 passed by the same Commissioner on almost similar grounds for clearance of cotton yarn on cones in 20 bags. The duty demanded in the present case is to the tune of Rs. 1,42,135/- under Rule 9 (2) read with Section 11A of CE Act. Further, there is a confiscation of 1000 Kgs. of cotton yarn of 20s count valued at Rs. 68,000/-. However, the same was directed to be released on fine of Rs. 10,000/-. The vehicle which was seized was also directed to be released on fine of Rs. 10,000/-. A combined penalty of equivalent amount has been imposed under the provisions of Section 11AC read with Rule 173Q and 226 of Central Excise Rules. Ld. Counsel adopts the arguments as made in the case of Om Tex Ltd. He submits that in this case also, a combined penalty cannot be imposed under Section 11AC and read with other rules and he relies on the Apex Court judgment rendered in the case of CCE Vs. Elgi Equipments (supra). Although on merits, the counsel is not seriously contesting the cases, he is only seeking deductions in the Cum-duty price along with the deduction on the removal of goods sent under Form 20 which is given as loan to the other units with permission of the department. He submits that the value of these removals ought to have been given deductions which has not been done and hence he seeks for re-computation of duty on this ground. He further contends that value of the goods which were under seizure and production have also been taken into consideration. He submits that the goods which are under production cannot be taken for duty computation as it had not reached the RG-1 stage and the same has not been removed from the factory, hence it cannot be construed as clandestine removal. Therefore, he seeks for remand of the matter on the same terms as has been done in the case of Tamilarasi Textiles by final order No. 1124/2001 dated 11.7.2000 for re-considering the aspect pertaining to duty computation, various deductions claimed and for scaling down of penalty as the penalty has been a combined one.
5. Ld. SDR contends that in so far as Om Tex case is concerned, party has not contested the case on merits. The aspect raised was with regard to the deductions under Section 4(4)(d)(ii) has been dealt with by the Commissioner in his order and has also clearly noted that it is a clandestine removal without taking licence and paying duty. He points out that duty was payable on cotton towels and he has also extended the benefit of notification. He submits that the plea of bona fide belief cannot be accepted as it was clearly dutiable and it was mentioned in the tariff. He submits that the citations relied by the counsel on the limitation, bona fide belief etc. does not apply to the facts of this case. However, to a specific query as to how the Commissioner can combine the penalty under Section 11AC with other provisions, when Section 11AC was not in existence during the relevant period, Ld. SDR points out that in the case of Tamilarasi Textiles (supra) the bench has remanded the matter for re-computation of the penalties. For similar re-computation, if order is remanded, he has no objection.
6. In so far as the appeal pertaining to the Sree Vishnu Spinners, he points out that appellants had clearly manufactured and cleared 1000 Kgs. of 20’s cotton yarn in 20 bags which were seized while the same was being transported. Therefore, question of appellants plea pertaining to limitation or non-dutiability of the goods does not arise. He points out that Commissioner has given a detailed findings on all the pleas raised by them with regard to the duty computation including the plea of removal of goods under Form 20 as pleaded by the counsel not in para 37 of the impugned order. He points out that in so far as this case is concerned, appellants have absolutely no case on merits except for the plea pertaining the re-quantification of penalty for which he has no objection for remand.
7. On a careful consideration of the submissions made by both the sides, we notice that in an identical case pertaining to Tamilarasi Textiles Vs. CCE, the matter was remanded for de novo consideration to the same Commissioner which deals with the clearance of cotton towels by recording the findings in para 5 which is noted herein below:-
“On a careful consideration of the submissions made by both the sides, we are of the considered opinion that the matter has to go back to the Commissioner for re-determining the duty after granting an opportunity of hearing to the appellants to show that the value of clearance as claimed in the show cause notice is not correct, further that they are entitled for the benefit of cum duty price which has been upheld by the Larger bench judgment in Sri Chakra Tyres (supra). Further, the deductions claimed by them have to be examined in the light of other judgments. The plea that they held bona fide belief as large number of units was not paying duty during that period on cotton towels is required to be re-examined by the Commissioner, including the plea that penalty under Sec. 11AC is not imposable in view of Apex Court judgment cited. Therefore, the impugned order is set aside and the matter remanded to the Commissioner of Central Excise, Coimbatore to redetermine the matter in the light of the above observations and submissions made by the Counsel. Appellants should be given an opportunity to put forth any evidence and submissions and the Commissioner shall give a detailed order. The appellants shall not be entitled for seeking return of the amounts which have been paid till the matter is adjudicated by the Commissioner”.
The above ratio would apply to the Om Tex Textiles case and we are required to follow the same in terms of judicial discipline as the issue is identical and also because of the party was also manufacturing and clearing cotton towel in that matter. In the present case of Om Tex Textiles, a further plea has been taken with regard to deduction on job work charges besides other pleas raised as noted above. Therefore, the Commissioner shall re-adjudicate on the quantum of deductions and re-arrive on the findings on bona fide belief, time bar and re-fixation of penalty in terms of the judgments cited.
8. In so far as the case of Shree Vishnu Spinner is concerned, the ratio of the judgment of Tamilarasi Textiles by final order noted above would apply with regard to the re-fixation of penalties, as the Commissioner has imposed combined penalty both under Section 11AC and other provisions of law. The Apex Court in the case of CCE Vs. Elgi Equipments (supra) has held that Section 11AC does not retrospective effect. The counsel’s plea that the period of clearance is pertaining to a period earlier to the promulgation of Section 11AC, therefore the Commissioner’s invocation of Section 11AC and imposing penalty including the other provisions is unsustainable and this has to be re-adjudicated. In so far as the plea of the counsel that there has been clearance with permission from the department under Form 20, we notice that although the Commissioner has given findings in para 37, the counsel’s plea that the evidence supporting to their plea has not been considered. On perusal of para 37 of the impugned order, we notice that there is no reference to the evidence while in the paper book, much evidence has been produced. Therefore, this aspect is also required to be re-adjudicated after granting an opportunity of hearing to the appellants.
9. At this stage, Ld. Counsel clarifies that the statute provides for clearance under Form 20 and the party had not taken specific permission and the statutory provisions prevail despite not taking specific permission from the department. This plea is required to be reconsidered by the Commissioner. The aspect pertaining to claim of deductions on Cum-duty price in the light of the ratio of Shri Chakra Tyres should also be loquat into. The Commissioner shall grant an opportunity of hearing in this matter and decide the case uniformly in both the matter as well as in the earlier matter already remanded in the case of Tamilarasi Textiles by final order No. 1124/2001 dated 11.7.2001 in order to maintain uniformity in the matter. Thus, both the appeals are allowed by way of remand to the original authority namely the Commissioner of Central Excise, Coimbatore for de novo consideration in the light of the observations made above.
(Pronounced & dictated in open Court)