TMI Blog1993 (5) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... ,538.10 without obtaining Central Excise licence and without payment of Central Excise duty. It was further alleged that the concessional rate of duty under Notification No. 175/86-C.E., dated 1-3-1986 availed of by the appellants during the period 1-4-1986 to 30-6-1987 was not admissible in respect of the goods manufactured by them and thereby they had evaded duty to the tune of Rs. 3,06,106.35 on goods valued at Rs. 30,61,061.00. The appellants were, therefore, directed to show cause as to why :- (a) Central Excise duty of Rs. 5,72,538.10 for the period 1-4-1983 to 31-3-1986 should not be demanded from them under Rule 9(2) read with Section 11A, (b) Central Excise duty to the tune of Rs. 3,06,106.35 evaded during the period 1-4-1986 to 30-6-1987 should not be demanded under Section 11A, and (c) Why a penalty should not be imposed on them? 2. In their reply to the show cause notice and also during the personal hearing the appellants denied the charges. They contended that exemption extended to small scale manufacturers of goods falling under erstwhile Tariff Item 68 not having been extended to manufacturers of Tea (falling under erstwhile Tariff Item 3), the question of cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted even though the value of clearances had exceeded the prescribed limit and the declaration purported to have been submitted in April 1985 was neither effectively served nor acknowledged by the Department. 3. On behalf of the appellants Shri M.A. Rangaswamy, learned advocate with Sh. K. Srinivasan, Consultant and Advocate, Ms. Radha Rangaswamy appeared before us. Shri Rangaswamy stated that admittedly for the years 1983-84 and 1984-85 the appellants had not filed the declaration in terms of Notification No. 111/78 dated 9-5-1978. He added that even though M/s. Debes Industries was a division of the Malhati Tea and Industries, being a Small Scale Unit registered with the State Directorate of Industries for the manufacture of Electrical Switching and control apparatus, control panels and wrapping they were genuinely under the impression that they were eligible to enjoy the exemption from central excise duty admissible to Small Scale Units in terms of various notifications. He added that the appellants kept in touch with the Central Excise Department and from time to time furnished the required informations. He stated that in view of the change in the criteria for exemption an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -7-1986. He stated that the Superintendent of Central Excise having issued a certificate on as late as 5-9-1986 that the appellants while availing the SSI concession had been paying proper duty. He submitted that in his order the Collector had only stated that there was suppression of facts and there was no finding of wilful suppression on the part of the appellants. He contended that without prejudice to their submissions that duty was not leviable at all the appellants were of the view that the demand of duty had to be restricted for a period of six months only in view of the Supreme Court s decisions in the case of Tata Iron and Steel Co. Ltd. v. Union of India, reported in 1988 (35) E.L.T. 605 and CCE v. Camphor Drugs and Liniments, reported in 1989 (40) E.L.T. 276. He cited the decision of the Tribunal in the case of Indian Oxygen v. CCE, reported in 1990 (47) E.L.T. 449 and claimed that clearances having been effected on the basis of an approved classification list, demand for short levy, if any, could be only prospective. He contended that under these circumstances the order confirming the demand for the period beyond 6 months on the grounds of suppression of facts was not s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to exemption from duty as claimed by them. He stated that the issues involved in the case could not be examined separately by dividing the relevant period in four different parts as suggested by the appellants since all that was necessary was to examine the validity of demand during the period 1-4-1983 to 31-3-1986 when the goods manufactured by M/s. Debes Indus. were classifiable under Item 68 of the erstwhile Central Excise Tariff and again from 1-4-1986 when that became classifiable under different headings of the new Tariff. He reiterated his stand that the extended period was invokable for raising the demand since the appellants had knowingly mis-declared the facts and suppressed information in regard to the total clearances by their different units. He contended that under these circumstances the appellants contention that the demand could have been only prospective on account of classification list having been approved, has to be rejected. He argued that for these reasons penalty was also imposable on the appellants since they had manufactured goods without filing the required declaration and cleared them without payment of duty. As regards the appellants claim that while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ished by them on each occasion while filing their AL-4 application in March, 1986 and the classification list No. 1/86-87 dated 22-5-1986, the Collector s finding that they had suppressed the facts regarding the value of excisable goods cleared by their other factories, and his order confirming the demand by invoking the extended period of limitation were illegal and not sustainable. 7. It is seen that in the show cause notice for the period 1-4-1983 to 31-3-1986 it was alleged that the appellants had cleared 6760 pieces of Motor Control Centers, L.T. Control Panels and different parts and accessories assessable under Item 68 of the erstwhile Central Excise Tariff without obtaining a Central Excise Licence and without payment of duty amounting to Rs. 5,72,438.10. The show cause notice further alleged that during the period 1-4-1986 to 30-6-1987 in respect of various products assessable under Chapter 85 of the Schedule to Central Excise Tariff Act, 1985 by availing the concessional rate of duty available to Small Scale Units under Notification No. 175/86 dated 1-3-1986 which was not admissible to the appellants they had evaded duty to the tune of Rs.3,06,106.35. 8. The appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt has not admitted having received the said communication, we are of the view that there was no infirmity in the Collector s finding that the communication dated 4-4-1985 and the enclosed declaration in terms of Notification No. 111/78 claimed to have been despatched under `Certificate of Posting to the Superintendent of Central Excise could not be deemed as having been served on the addressee and no cognizance of the same could be taken. It is significant to note that against Column 8(a) of the Schedule to their letter dated 4-4-1985 addressed to the Superintendent the appellants had declared that they were claiming exemption under Notification No. 105/80, dated 19-6-1980, read with Notification No. 77/83, dated 1-3-1983. In terms of Para 3(a) of Notification No. 77/83 dated 1-3-1983 exemption admissible to SSI units was subject to the condition that the aggregate value of clearances of all excisable goods by a manufacturer or on his behalf, for home consumption from one or more factories during the preceding financial year was not in excess rupees forty lakhs. Hence, even if it is assumed that the letter dated 4-4-1985 and its enclosure was received by the department, in our vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellants from the Superintendent of Central Excise to the effect that the appellants while availing the SSI concession had been paying proper duty cannot be of any assistance to them. 11. While making his submissions Shri Rangaswamy had contended that the Collector s order confirming the demand for the extended period was not sustainable since the Collector had merely held that there suppression of facts and there was not finding that there was any wilful suppression of facts. In this regard we find that in the case of R.G. Nagori and Sons v. CCE, reported in 1989 (39) E.L.T. 303 the Tribunal has held that even if there is no specific allegation of fraud or suppression of facts in the show cause notice invocation of the extended period of 5 years for raising the demand would be justified if any such allegation is otherwise spell out at length in the show cause notice. On the ratio of this decision, we hold that having regard to the allegations against the appellants spelt out in the show cause notice and the detailed findings in regard to the suppression of facts and evasion of duty and invocation of the extended period for confirmation of the demand by the Collector cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning a Central Excise licence and without discharging duty liability thereon and they had suppressed material facts in order to avail the concessional rate of duty under Notification No. 175/86 during the period 1-4-1986 to 30-6-1987 have been found by us to be sustainable. For these reasons we find no merit at all in the appellants claim that the demand could not have raised with retrospective effect. 14. On behalf of the appellants Shri Rangaswamy has also contended that even for the period 1983-84 and 1984-85 the demand for recovery of duty under Rule 9(2) was not sustainable since in the show cause notice there was no allegation of removal of goods clandestinely and without assessment. In this regard Shri Rangaswamy placed reliance on the decision of the Supreme Court in the case of N.B. Sanjana v. Elphinstone Spinning Weaving Mills Co. Ltd. reported in 1978 (2) E.L.T. (J 399). In this regard we find that in the case of Jajmau Dyeing and Proofing Company, Kanpur v. CCE, Kanpur reported in 1986 (25) E.L.T. 595 the Tribunal has held that if the show cause notice makes clear allegations of Central Excise Licence not having been obtained and classification list and price list ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot given any abtement in respect of all these charges which are prima facie not includible in the assessable value. The appellant therefore submits that the impugned order has been made on a consideration of material which was prima faice erroneous and hence it is without jurisdiction, null and void. (b) The appellant submits that for certain customers the appellant had only acted as a job fabricator converting the raw materials supplied by the customer into finished product on payment of conversion charges only. In such cases the appellant submits that the value of the goods has to be determined on the basis of the cost of raw materials + the conversion charges + the manufacturing profit only. The Ld. Collector has failed to take this into consideration while determining the value of clearances." 16. In view of the above discussion, we confirm the Collector s findings that the appellants had manufactured and cleared excisable goods without obtaining Central Excise licence during the period 1-4-1983 to 31-3-1986. We also confirm the Collector s finding that during the period 1-4-1986 to 30-6-1987 the appellants availed concessional rate of duty under Notification No. 175/86 dat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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