1985 (12) TMI 263 - AT - Central Excise

Issues Involved:
1. Limitation under Section 40(2) of the Central Excises and Salt Act, 1944.
2. Liability for duty under Rule 40 of Central Excise Rules, 1944.
3. Applicability of Rule 10 in a demand for duty under Rule 40.
4. Jurisdiction and evidentiary issues.

Detailed Analysis:

Limitation under Section 40(2) of the Central Excises and Salt Act, 1944:
Issue: Whether the proceedings are barred by limitation under Section 40(2) of the Central Excises and Salt Act, 1944, as it stood prior to its amendment on 19-5-1973.

Analysis: The Tribunal found that the proceedings are not barred by limitation. It relied on the Madhya Pradesh High Court decision in 'Universal Cables Ltd., Satna v. Union of India and Others (1977 TLR 1825)', which interpreted the term 'other legal proceedings' using the Rule of ejusdem generis, indicating that these proceedings are before a Court of Law and not a quasi-judicial authority. However, the Madras High Court in 'A.P. Arumugaswamy v. Deputy Collector of Central Excise - 1981 ECR 86D (Madras)' held that Section 40(2) covers all proceedings, including departmental ones. Given the conflicting High Court decisions, the Tribunal proposed referring this question to the Supreme Court under Section 35H of the Central Excises and Salt Act, 1944.

Liability for Duty under Rule 40 of Central Excise Rules, 1944:
Issue: Whether the mere receipt of unmanufactured tobacco without a valid permit renders the receiver liable to pay duty, irrespective of whether the goods had suffered duty earlier, and whether this liability is a penalty.

Analysis: The Tribunal upheld the Collector's decision that the applicants were liable for duty on tobacco received without proper documentation, under Rule 40 of the Central Excise Rules, 1944. The rule states that receiving goods in a warehouse without a valid transport document makes the receiver liable for duty and a penalty. The Tribunal's order confirmed that the liability to pay duty is independent of whether the goods had previously paid duty and is not merely a penalty.

Applicability of Rule 10 in a Demand for Duty under Rule 40:
Issue: Whether the provisions of Rule 10 apply to a demand for duty under Rule 40, and whether the amended or unamended Rule 10 applies.

Analysis: The Tribunal found that Rule 10, whether in its amended form (effective from 6-8-1977) or unamended form, does not alter the liability under Rule 40. The show cause notice was issued on 22-7-1980, after the amendment of Rule 10, but the illicit removal occurred between 1972 and 1974. The Tribunal held that the demand for duty is not barred by the limitation periods prescribed under either version of Rule 10.

Jurisdiction and Evidentiary Issues:
Issue: Various questions regarding the jurisdiction of the Collector, the admissibility of evidence, and the sufficiency of proof for illicit receipt and removal of tobacco.

Analysis: The Tribunal addressed multiple evidentiary and jurisdictional issues:
- Jurisdiction: The Tribunal found that the Collector of Central Excise, Madurai, had jurisdiction to demand duty for tobacco received at Pudukkottai, regardless of its origin from Puliampatti.
- Admissibility of Evidence: The Tribunal admitted private accounts seized from former employees as evidence, considering them relevant and credible.
- Sufficiency of Proof: The Tribunal concluded that the evidence on record, including statements from various individuals and seized documents, sufficiently established the illicit receipt and removal of tobacco.

Conclusion:
The Tribunal dismissed the appeal, confirming the Collector's order demanding duty and imposing penalties under Rule 40. The Tribunal proposed referring specific legal questions to the Supreme Court due to conflicting High Court decisions, particularly on the scope of Section 40(2) and the application of Rule 10 in the context of Rule 40. The Tribunal's findings on jurisdiction and evidence were upheld, affirming the legality and factual basis of the Collector's actions.

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