TMI Blog1989 (9) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... d 319 of running cloth was converted into rags and cleared by paying duty at the lower rate. The petitioner appeared before the authority concerned and submitted its explanation. After hearing the petitioner the Collector of Central Excise, Baroda passed order dated October 23, 1973 and held that the petitioner had deliberately cut the second cloth into rags with a view to evading payment of excise duty leviable thereon in as much as rags were exempted from payment of duty at the material time. The Collector further held that the petitioners had given incorrect marks as rags on cotton fabrics of Sort No. 319 showing that these cotton fabrics were damaged or sub-standard rags in spite of the fact that these goods were obtained from running l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordered that the petitioners shall pay duty at the appropriate leviable rate prevalent at the material time on the original piece of cotton fabrics measuring 18044.30 sq. mtrs. (20274.5 L. mtrs.) equivalent to 1763 kg. of Sort No. 319 fine Dyed Mercerised Cambric, under seizure, from which rags have been obtained in a manner otherwise than as provided by law. The Collector also passed order directing the petitioner to pay duty at the appropriate rate prevalent at the material time on the original pieces of cotton fabrics measuring 115113-04 sq. mtrs (or 129340.5 L. Mtrs.) (equivalent to Kg. 11247) of Sort No. 319 from which 'rags' had been obtained in a manner otherwise than as provided by law. 2. The petitioner carried the matter in app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction was entered in the record as 'rags' and was packed and cleared as 'rags' only. A visit to the B.S.R. showed that there was only one bale of rags of the above sort in balance which was got opened and the contents were examined. The bale contained rags of Sort No. 319 of fine dyed Mercerised Cambric of uniform length of 70 cms. A huge stock of the above Sort was also found in the stamping section. Some of these pieces were already marked a 'rags' while the others were in the process of being so marked. All pieces were cut to a uniform size of 70 cms. When the visit was made by the officers of the S.R.P. (Prev.), an employee of the petitioner Mill Company, Shri Damani, was present. He was asked to explain as to why there was no packing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... airly conceded by the learned counsel for the petitioner that this point was not raised before the departmental authorities. This point is being raised for the first time in this petition. Even so, we may examine the argument urged by the learned counsel for the petitioner. The records disclose that from December 1971 onwards upto June 20, 1972 the malpractice of evading the excise duty was being practised by the petitioner Company. The search was made some time in the month of May, 1972. The previous conduct of the petitioner clearly shows that sound second cloth was being converted into rags in order to evade payment of excise duty. Therefore, the respondent authorities were justified in drawing inference in respect of the goods which wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s linked to manufacture of the article), not to its sale. Even if the manufacturer does not sell the goods, he has to pay excise duty." Excise duty is an indirect tax. The manufacturer passes on the burden of the same to the purchaser. As held by Supreme Court in the case of R. C. Jail v. Union of India, AIR 1962 SC 1281, excise duty may be recovered at any convenient stage and not necessarily at the initial stage from the manufacturer. In the case of. R. C. Jail (supra), excise duty was sought to be recovered from the consignee, but it was linked to the manufacture of the article in question. Therefore it retained the character of excise duty, and though it was sought to be recovered from the consignee it was considered to be excise duty ..... X X X X Extracts X X X X X X X X Extracts X X X X
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