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TMI Blog1998 (8) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... 69 workers along with 3 technical Personnel engaged in the manufacture of the said machinery without licence under Rule 174 of Central Excise Rules, 1944. On 17-9-1979, the Superintendent of Central Excise sent a show cause notice to the Company. On 15-2-1980, the reply was sent on behalf of the Company. On 30-6-1980, as requested by the Company, opportunity of personal hearing was given to the Representative of the Company. The statements and reply obtained from the persons on behalf of the Company would consistently show that the company was not aware of the provisions of taking out a licence, however, the quantum of duty liability was disputed. After considering the statements and submission made on behalf of the company, ultimately the Collector of Central Excise passed orders imposing penalty on the Company. Subsequently, the respondent herein filed a private complaint against the petitioners. Though initially two charges were framed, since the respondent did not press in respect of the second charge, the trial court discharged the petitioners in respect of the said charge and convicted the petitioners in respect of the first charge, as stated above. On being aggrieved over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n referred to above, we shall now go into the factual aspects. 8.On 2-5-1979, the prosecuting officers went and inspected the premises and the machineries and found 69 persons were engaging in the manufacture of the machineries which were intended for Solvent Extraction Plants, Vanaspathi Plants, etc. On the date of inspection, the second petitioner, the Managing Director of the Company gave a written statement stating that the manufacture, supply, transport and erect on turnkey basis Solvent Extraction Plants, Fatty Acid Splitting and Glycerine Recovery Plants etc., that the value of Bills for the period 1977-78 was Rs. 1,36,42,195/- and the value of the goods for the period 1978-79 was Rs. 43,92,036/-, that since they were not aware of the fact that they should take out the licence, as the turn over exceeded Rs. 30 lakhs and that they have since applied for the necessary licence and declared to abide by the Central Excise Rules. This is Ex. P 1. 9.Even in the show cause notice Ex. P 6 sent on 17-11-1979 it was stated by the respondent that the Company contravened the provisions of Rule 174 read with Section 6 of the Central Excise and Salt Act, 1944 without taking out a Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enior Counsel for the petitioners, would submit that P.W. 1 did not state that the excisable goods worth more than Rs. 30 lakhs were cleared for home consumption. He would point out that P.W. 1 would merely state that the turn over for the year 1976-77 was over 30 lakhs and as such unless it is proved that it is not exempted from duty as the clearance of the goods exceeding 30 lakhs for home consumption, it cannot be contended that the petitioners have committed an offence of not taking out a licence. 14.In other words, he would contend that unless it is established that it is not exempted from the payment of excise duty, the petitioners cannot be prosecuted for failure to obtain the licence under Rule 174. 15.In support of the said submission, the learned Senior Counsel has cited the following authorities. (1)Sulekh Ram and Sons v. Union of India [1978 (2) E.L.T. (J 525) (Del. High Court)]; and (2) E. Septon and Company v. Superintendent of Central Excise [1985 (19) E.L.T. 57 (All.)]. 16.In the judgment of the Allahabad High Court reported in 1985 (19) E.L.T. 57 (Septon's case), the decision of the Delhi High Court in Sulekh Ram's case reported in 1978 (2) E.L.T. (J 525) has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1986 (23) E.L.T. 313 (Karnataka)]. In this decision it is specifically mentioned that the decision in Sulekh Ram's case [1978 (2) E.L.T. (J 525)] was overruled by the Division Bench of the Delhi High Court in Vishal Andhra Industries v. Union of India [1983 (14) E.L.T. 2265]. This decision referred about Septon's case [1985 (19) E.L.T. 57 (All.)] also without agreeing the view of the Allahabad High Court. The relevant observation is as follows :- "The character of a product, as excisable goods, does not depend upon the actual levy of duty, but depends on the description as `excisable goods' as contained in the First Schedule to the Act. `Excisable goods' is defined in Section 2(d) of the Act. `Excisable goods', means, goods specified in the First Schedule as being subjected to a duty of excise, and includes salt. Under the charging Section 3 of the Act, duty as specified in the First Schedule is levied on all excisable goods. The First Schedule to the Act gives description of goods, which are excisable and the rate of duty. It is significant to note that in respect of some of the goods given in the schedule, the duty is `nil'. The submissions made on behalf of the petitioner th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "Excisable goods means goods specified in the First Schedule as being subject to a duty of excise and includes salt." 25.The words "as being subject to a duty of excise" in the definition of the term "excisable goods" are only nature of the goods specified in the First Schedule. It has no reference to the factum of their liability to duty. Therefore, the exemption granted by the Notification under Ex. P 5 only exempts the excisable goods from the levy of excisable duty only if the value of the goods cleared for home consumption which do not exceed 30 lakhs. Of course P.W 1 would merely state that turn over exceeded 30 lakhs, it is true that he did not refer home consumption. Taking advantage of this, the learned Senior Counsel for the petitioners would contend that the case of the defence is that all the goods were exported to foreign countries and not cleared for home consumption. This submission cannot have any substance because there is no material whatsoever that the goods were exempted under Rule 174(A), as they were exported to foreign countries with the permission of the Government. 26.In this context, the charge framed against the petitioners is quite relevant, which is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of obtaining the licence. 31.In such circumstance, once the goods manufactured by the petitioners are to be found in the First Schedule, the mere exemption from payment of excise duty by various notifications issued by the Central Government from time to time would not save the petitioners for prosecution from having not obtained the licence. 32.In the instant case, as indicated earlier, the petitioners consistently claimed before authorities that they were ignorant of law. It is now seen that the petitioners want to be ignorant throughout. Therefore, I do not see any reason to interfere with the findings of both the courts below to impose conviction on the petitioners. 33.Though some of the reasons given by the Courts below may not be germane to the issue raised, as discussed above, the prosecution, in my view, has proved that the petitioners have manufactured the excisable goods irrespective of the fact whether those goods are exempted by Notification Ex. P 5, without obtaining licence as provided under Rule 174 of the Act. 34.However, as requested by the learned Senior Counsel for the petitioners regarding the question of sentence, I deem it appropriate to reduce the fine f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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