ORDER
Shri S.L. Peeran
1.
The short question that arises for consideration in this appeal is as to whether the impugned order-in-original NO.185/96 dated 2.12.96 has correctly quantified the duty liability in the matter and as to whether the Commissioner can impose consolidated penalty amount under Section 11AC of Central Excise Act which was not applicable during the relevant period and Rule 9(2), 52A, 173Q and 226 of C.E. Rules, and the last question to be decided is as to whether the appellants are entitled for deductions on the basis of cum duty price and further deductions claimed by them.
2. The Commissioner has also confiscated the goods which are cotton towels valued at Rs. 11.100/- which have been directed to be released on fine of Rs. 1500/-.
3. Ld. Counsel Shri Ravikumar does not contest the matter on merits with regard to clandestine manufacture and removal of cotton towels by the appellants on their purchasing cotton yarn and subjecting the same to bleaching, dying, and further converting into cotton towels, int he power loo,ms installed in their premises. However, it is his contention that quantification of duty has not been correctly arrived at including the value of the clearance. He submits that they had taken serious objection to the valuation aspect of the mater which has not been properly dealt with in the order. He contends that they had specifically claimed for the benefit of various deductions and also pleaded that the price was cum duty and in terms of Larger Bench judgement rendered in SRI CHAKRA TYRES – 1998 (108) ELT 361, they are entitled for the same. He further points out that penalty imposed is a consolidated one invoking section 11AC which was not in force alongwith other provisions of law. He relies on the Supreme Court judgement rendered in CCE Vs ELGI EQUIPMENTS LTD 2001 (128) 52 (SC) which clearly lays down that said section 11AC does not have retrospective effect for the purpose of imposition of penalty. Although, dutiability of the goods and its clearance without informing the department is not seriously challenged by the Counsel. However, he contends that they were holding genuine bonafide belief that the process carried out y them does not amount to manufacture, and hence on that the plea the demands cannot be confirmed for larger period extending 5 years. He relies on the following judgements :-
BONAFIDE BELIEF:
1. 1996 (87) ELT 56 (T) – SUPER SYINCOTEX Vs COLLR.Jaipur
2. 1997 (68) ELT 869 (T) – EXE.ENGR., KSEB Vs CCE Kerala
3 1998 (69) ECR 364 (T) – SHROFF TEXTILES Vs CCE Bombay
4. 1998 (79) ECR 88 (T) – DURAIAPPA LIME PRODUCTS Vs CCE Madurai
LIMITATION:
1. 1995 (78) ELT 401 (SC) – PUSHPAM PHARMA
2. 1994 (74) ELT 9 (SC)- TAMIL NADU HOUSING BOARD
3. 1989 (40) ELT 276 (SC)- CHEMPHAR DRUGS LTD.
MANDATORY PENALTY:
1. 2000 (42) RLT 274 (SC)- ELGI EQUIPMENTS
2. 2000 (41) 506 (T)- SAMRAT ENTERPRISES
3. 120 ITR 1- BRIJ.MOHAN
4. 2000 (41) RLT 160- FREEDOM RUBBER CO.
5. 2000 (41) RLT 359- CHARMINAR BOTTLING CO.
4. Ld. SDR opposes the arguments of the Counsel and points out to the detailed finding given by the Commissioner on each of the points raised. On a specific query from the Bench as to whether the Commissioner can invoke Sec. 11AC which had not been legislated and also when Supreme Court judgement was drawn to SDR’s attention, he submits that the Bench has been remanding such type of cases to the Commissioner to re-determine the penalty and he has no objection if the matter is remanded on this point. As regards the plea of cum duty price, he contends that this was not raised before the Commissioner, including the value of clearance as contended by them. He submits that they are not entitled for the deductions of commissions claimed by them. He submits that it was a clear case of clandestine removal and question of holding bonafide belief for grant of benefit of time bar does not arise. He seeks for confirmation of demands and remand of the case only on the question of penalty in view of the Supreme Court judgement cited by Ld. Counsel.
5. 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 judgement in SRI CHAKRA TYRES (supra). Further, the deductions claimed by them have to be examined in the light of other judgements. The plea that they held bonafide belief as large number of units was not paying duty during that period on cotton towels is required to be reexamined by the Commissioner, including the plea that penalty under Sec. 11AC is not imposable in view of Apex Court judgement 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.
(Pronounced & Dictated in open court)