ORDER
H.R. Syiem, Member (T)
1. By his order No. 2/82/TI-68 dated 2-2-1983, the Collector of Central Excise, Indore directed payment of duty on the wooden furniture manufactured by the factory of M/s. Steel Authority of India Limited.
2. The learned counsel for M/s. SAIL Mr. Bhattacharya said that the demand was correct; they had no argument to present against it. His chief grievance was that duty was sought to be recovered by the authorities at 8% under Item 68, though at the relevant period covered by the Collector’s order, different rates of duty under Item 68 were in force. He said this was not correct because the rate of duty must be the date of clearance of the goods. His next grievance that the penalty was imposed although there was no suppression or mis-statement. The Central Excise authorities got the figures from their factory records; this would not have been possible they had suppressed the facts. Their records were meticulous and detailed and were sufficient for the Central Excise Authorities to gain informations on clearances of the furniture. In these circumstances, the learned counsel said, no penalty should be imposed.
3. The learned counsel for the department Mr. Verma, however, said that they had not been licensed, had not declared the goods to Central Excise and did not pay the duty. The clearances were not known to the Central Excise and even the manufacture of wooden furniture was not declared. He said the imposition of penalty was appropriate. The recovery of the duty at 8% for all the clearances was in accordance with Rule 9A(5) as these clearances were illegal.
4. The weakness in the department’s case is that no charge was made against the factory over payment of duty at the flat rale of 8% which was the highest duty in the period. The show cause notice does not call upon them to show cause why this duty, which was the highest, should not be recovered instead of duty at the rates applicable at the relevant times: nor does the Collector Pass such an order in his adjudication. Accordingly there is no sanction for the Superintendent or the lower authorities to take upon themselves to exact duty at any but the relevant rate. If the highest rate under Rule 9A(5) is to be imposed, there must be a finding and an order to that effect by the adjudicating authority, since this was a duty recovered as a result of adjudication. The learned counsel for the department said that the proper remedy is for them (SAIL) to file an appeal against the Superintendent’s action who recovered duty at the highest rate, but We are not able to agree with this. That recovery is a recovery that resulted directly from the Collector’s order and no recovery can be made in accordance with this order of the Collector except at the rate appropriate at the relevant time of clearances. In the absence of an order by the adjudicating authority to recover duty at the 8% which was a duty recoverable only during a part of the period, recovery of duty under this order at any other rate is illegal. Of course, if the authorities want to recover duty at the highest rate of 8% they must take separate proceedings therefor. The present recovery is under this order of the Collector and no recovery at 8% rate of duty is lawful.
5. The Central Excise shall recover duty only at the correct rate applicable at the time relevant to the clearances during the period covered on the Collector’s order.
6. The penalty is not a heavy one and the factory had indeed laid themselves open to the charge of clearance contrary to the law when they removed excisable goods without payment of duty, the charge is serious enough.
7. The appeal with respect to the penalty is rejected.