ORDER
P.S. Bajaj, Member (J)
1. The above captioned appeals have been directed against the common order-in-original dated 18-4-2000 vide which the Commissioner as adjudicating authority has confirmed duty demand of Rs. 15,69/046/- against the firm appellant No. 1 with penalty of Rs. 2,00,000/-, and also imposed penalty of Rs. 50,000/- each on appellants Nos. 2 and 3.
2. The facts are not in dispute. The firm appellant No. 1 got its unit registered as 100% export oriented unit and obtained permission in that regard from the Government of India, Ministry of Industries. Accordingly, the firm was required to export 100% of their production for 10 years as per Exim Policy. The production of the firm was to be treated as manufactured in bond. The firm was engaged in the manufacture of dehydrated onion, falling under sub-heading 701.90 of the CETA and were fully exempt from the payment of central excise duty. The firm, also, filed requisite declaration and availed exemption from the operation of Rule 174 of the Central Excise Rules. The appellants Nos. 2 and 3 were the partners of the firm at the relevant time who were looking after the day-to-day affairs regarding production and clearances of the goods i.e. dehydrated onion. However, it revealed that during the period 4-12-92 to 25-7-95, the appellants made DTA clearances of the goods without obtaining central excise registration and without payment of duty. They evaded central excise duty of Rs. 21,09,893/-. They, however, deposited this duty amount through challan dated 21-8-95. But they were served with show cause notice dated 5-1-98 vide which the duty demand was raised and penalties were proposed to be imposed on them. They contested that show cause notice by alleging that they had furnished the requisite information to the Range Superintendent regarding clearances made by them ,in DTA and that the show cause notice issued was time barred and that there was no fraud, collusion or wilful mis-statement on their part. The Commissioner thereafter passed the impugned order vide which he confirmed the duty demand of Rs. 15,69,046/- and appropriated the same from the amount already deposited by the firm appellant No. 1. He also imposed penalty of Rs. 2,00,000/- on the firm and of Rs. 50,000/- each on the partners of the firm appellants No. 2 and 3.
3. So far as the clearance of the goods (dehydrated onion) by the appellants, in the DTA without seeking permission from the competent authority and in violation of the conditions of the permission granted to them for operating as 100% EOU, is concerned the same has not been disputed before us. The learned Counsel has only contended that the appellants even without taking the permission from the Government of India, Ministry of Industries, for working as 100% EOU, could export goods and as such, the permission taken by them was only superfluous and did not affect their right to clear the goods in the DTA, being not restricted goods. Therefore, no violation of the conditions of the permission could be attributed to them for confirming the duty against them. But we are unable to subscribe this contention of the counsel. The appellants could export their production i.e. dehydrated onion before getting their unit registered as 100% EOU and without obtaining necessary permission from the Government of India, Ministry of Industries, But they themselves got their unit registered as 100% EOU for carrying out export of their goods and as such, they were bound by the terms and conditions of the permission granted to them in that regard, by the Government of India, Ministry of Industries and were also bound to abide by the terms and conditions of the Exim Policy in accordance of which they were to export the goods. They could not clear the goods in DTA without necessary permission and without obtaining the central excise registration and without payment of duty. By so doing, they violated the procedure as prescribed in paras 102 and 114 of the Exim Policy 1992-97. Therefore, they had been rightly saddled with duty liability for having cleared the goods in DTA, without obtaining the central excise registration and without payment of duty. They cannot be heard saying that their registration and permission to work as 100% export oriented unit was superfluous and irrelevant. The goods manufactured by them were to be treated as manufactured in bond as per conditions Nos. 1 and 2 of the Annexure appended to the permission granted to them by the Ministry of Industries while allowing them registration as 100% EOU.
4. Another argument putforth by the learned Counsel for the appellants is that the demand is time barred, as there had been no suppression of material facts by the appellants from the excise department and that no demand for the period beyond 5 years could even otherwise be issued under Section 11A(1) of the Central Excise Act.
5. The learned SDR, on the other hand, however, has refuted this contention of the counsel also. But we have gone through the record and we find that the demand for more than 5 years had been raised through the impugned show cause notice. The demand had been raised for the period December, 1992 to July, 1995, whereas the show cause notice was issued to the appellants on 5-1-1998. The demand could only be restricted to a period of 5 years even if there was a suppression of material facts by the appellants from the excise department. The duty demand could be reckoned only from 5-1-98 backward for a period of 5 years. The rate of duty during that period also was different. Therefore, the duty demand deserves to be recalculated for a period of 5 years from 5-1-98 backward, taking into consideration the rate of duty prevalent during that period, by the adjudicating authority.
6. However, we are unable to accept this contention of the Counsel that the extended period of limitation could not be at all invoked as there was no suppression of material facts by the appellants, from the department. There is nothing on the record to suggest before making clearances in the DTA, the appellants ever informed the central excise department. They did not obtain central registration even. It was their duty to give information to the excise department before making the clearances in the DTA. They can be safely held to had suppressed the true facts from the department with intent to evade payment of duty. The ratio of law laid down in R.G. Nagori & Sons v. CCE–1989 (39) E.L.T. 303, British India Corporation Ltd., Dhariwal v. CCE, Chandigarh–1986 (25) E.L.T. 727, McGaw Ravindra Laboratories (India) Ltd. v. Union of India–1992 (60) E.L.T. 71, Geep Industrial Syndicate Ltd. v. CCE, Allahabad–1994 (74) E.L.T. 888, Pushpam Pharmaceutical Company, v. CCE, Bombay–1995 (78) E.L.T. 401, Raj Bahadur Narain Singh Sugar Mills Ltd. v. Union of India–1996 (88) E.L.T. 24, referred by the Counsel, that to invoke special time limit of 5 years, mere allegations regarding fraud or suppression are not enough and from non-filing of declaration no suppression could be inferred, there has to be positive omission or commission of facts resulting in fraud, suppression or wilful mis-statement with intent to evade duty, is not attracted to the facts of the present case. The unit of the appellants was admittedly registered as 100% EOU. Before clearing the goods in DTA, they were required to take permission or central excise registration. But none of such act was done by them, rather they quitely without taking any permission cleared the goods in DTA, without payment of duty. There was obviously suppression of material facts and wilful mis-statement of facts by them, with intent to evade duty. Therefore, the extended period of limitation had been rightly invoked against them as all the conditions of the proviso appended to Section 11A(1) of the Central Excise Act, stand satisfied.
7. Lastly, the Counsel has contended that penalty imposed on the firm appellant No. 1 as well as on its partners apellants Nos. 2 and 3 is quite exorbitant as they are facing financial hardship. He has prayed for reduction of penalty on them. We have gone through the record and we find that keeping in view the facts and circumstances of the case, the prayer of the Counsel deserves to be accepted, especially when the appellants have already paid excess amount of duty than the amount confirmed against them. They had paid duty of Rs. 21,09,893/- as against the duty confirmed of Rs. 15,69,046/-. Therefore, we reduce the penalty on the firm appellant No. 1 from Rs. 2,00,000/- to Rs. 50,000/- and on appellants Nos. 2 and 3 from Rs. 50,000/-each to Rs. 20,000/- each. The duty liability of the appellants for a period of 5 years-backward from 5-1-1998, the date of issuance of show cause notice to them, shall be calculated, taking into account the duty rate prevalent during that period and the same shall be appropriated from the amount already deposited by them.
8. In the light of the discussions made above, the impugned order of the Commissioner stands modified and the appeals of the appellants stand disposed of accordingly with consequential relief, if any, permissible under the law.