TMI Blog2002 (1) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... olations of the provisions of the Act and the Rules and the appellant was called upon to pay duty of Rs. 52,717.00 and also to show cause as to why penalty should not be levied under various Central Excise Rules mentioned therein. 2.1The violation of the Rules entailing imposition of penalty was alleged on the ground that the assessee had evaded central excise additional duty by removing the fabrics without payment of such duty. In the show cause notice dated 11-5-1993, issued to the assessee by the Collector, Central Excise and Customs, it was alleged that the assessee had removed man-made fabrics measuring 50,446 Mtrs. after processing without payment of central excise duty and without issue of GP 1s. It was alleged that the authorised signatory of M/s. Ashok Fashions Ltd., in his statement, had not disputed this fact. The additional duty to the tune of Rs. 52,717.00 was thus evaded. The acts of contraventions of various provisions referred to in the show cause notice constituting wilful and deliberate suppression of facts and misdeclaration of quantities in statutory central excise documents with an intention to evade payment of excise duty, were alleged to have been committed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the use of the words 'including those relating to refunds and exemptions from duty'. The Delhi High Court held that Chapter II of the Central Excise Act, 1944 entitled "Levy and Collection" contained provisions for penalties, but the heading of that Chapter itself was not a guiding factor. The Court held that, "the argument that various sections falling in Chapter II of the Central Excises Act, which has the heading 'Levy and Collections' would also be construed as provisions for levy and collection of additional duty as well, is of no avail to the revenue ………". In paragraph 39 of the judgment, the Delhi High Court held as under : "We have given our considerable thought to various arguments raised by the parties. We find there is no mandate in the Additional Duties Act for levy of penalty and the Central Excises Act and the Rules made thereunder cannot be imported in the Additional Duties Act for the purpose of levy of penalty. We have spent anxious moments as the interpretation we have put has grave consequences for the revenue as similar terminology as used in Section 3(3) of the Additional Duties Act has been used in various Acts and other enactments, but then Article 265 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Section 3(3) of the Additional Duties of Excise Act was sufficient to attract Section 2(f) of the Central Excise Act defining 'manufacture'. In paragraph 29 of the judgment, the Supreme Court held that, it was clear that what applied to the main levy, applied to the additional duty as well, and that there was no substance in the contention which proceeded on the pre-supposition that processing did not amount to manufacture under Section 3(1) of the Additional Duties Act. In the concurring judgment, justice Ranganathan held that the words 'Levied and Collected' used in Section 3(1) of the Additional Duties Act were the same as the words used in Article 265 of the Constitution, which have been interpreted as comprehending the entire process of taxation commencing from the imposition of the tax by enacting a statute to the actual taking away of money from the pocket of a citizen it was held that, they take in every stage in the entire process of taxation. It was then held that the words 'Levy and Collection' in sub-section (3) of Section 3 of the Additional Duties Act cannot be construed differently from the words 'Levied and Collected' used in sub-section (1) of Section 3 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeds thereof among the States in pursuance of the principles of distribution formulated and the recommendations made by the Finance Commission in its second report. 'Additional duties' is defined to mean the duties of excise levied and collected under sub-section (1) of Section 3. 6.1Section 3 of the said Act, which falls for our consideration, reads as under : Levy and"3. collection of Additional Duties :- (1) There shall be levied and collected in respect of the goods described in Column (3) of the First Schedule produced or manufactured in India and on all such goods lying in stock within the precincts of any factory, warehouse or other premises where the said goods were manufactured, stored or produced, or in any premises appurtenant thereto duties of excise at the rate or rates specified in Column (4) of the said Schedule. (2) The duties of excise referred to in sub-section (1) in respect of the goods specified therein shall be in addition to the duties of excise chargeable on such goods under the Central Excise Act, 1944 (1 of 1944), or any other law for the time being in force. (3) The provisions of the Central Excise Act, 1944, and the rules m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise duties applicable to them under the Act of 1944 and the Rules made thereunder. The provision of Section 5A in Chapter II of the Central Excise Act, 1944 relates to power to grant exemption from duty of excise and of Section 11B, also contained in Chapter II, relates to claim for refund of duty. It is, therefore, obvious that the word 'including' used in the expression 'including those relating to refunds and exemptions' has only explicitly reckoned in, what is already comprised in the provisions of the Central Excise Act and the Rules framed thereunder. The word 'including' is, therefore, not used in any restrictive sense, and, given its full play sub-section (3) of Section 3 will make applicable all the provisions of the Central Excise Act, 1944 and the Rules made thereunder, to the levy and collection of additional duties of excise, in such manner as is prescribed under the rules, to all the excisable goods included in the First Schedule to this Act of 1957. To make sure that the words 'Levy and Collection' in their literal sense and away from their statutory context, may not be construed by the uninformed to exclude topics of exemption and refund, which meaning may not flow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Delhi High Court in Pioneer Silk Mill's case (supra). 9.The Levy and collection of duties of excise under Section 3 of the Central Excises Act, 1944 is to be done in such a manner as may be prescribed, which means prescribed by the Rules under that Act. By virtue of Section 3(3) of the Additional Duties Act, levy and collection of additional duties of excise will therefore have to be done in the manner prescribed by the Rules framed under the Central Excise Act, 1944, because, that Act and the Rules made thereunder are generally adopted by reference for the purpose of the Additional Duties Act. 9.1Chapter VI of the Central Excise Act, relates to 'Adjudication of Confiscation and Penalties'. Under Section 33, it is provided that, where by the rules made under this Act, anything is liable to confiscation or any person is liable to a penalty, such confiscation or penalty may be adjudged by the authorities mentioned therein. Section 34A lays down that, no confiscation made or penalty imposed under the provisions of the Act or of any rule made thereunder shall prevent the infliction of any other punishment to which the person affected thereby is liable under the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as contemplated by the Rules imposing penalties. The object of the provisions to impose heavy penalties is to ensure that the revenue is protected against procrastination, carelessness or deceit which if practised on a large scale, would make collection of the taxes a difficult task. 11.For the above reasons, it is clear to us that all the provisions of the Central Excise Act, 1944 and the Rules made thereunder, including the provisions relating to confiscation and imposition of penalty contained therein, are applicable to the levy and collection of the additional duty of excise under Section 3(1) of the Additional Duties of Excise Act, 1957 in the same manner as they already apply in relation to the levy and collection of such goods under the Central Excise Act, 1944 and Rules framed thereunder. 12.We accordingly hold that the provisions relating to confiscation and imposition of penalty contained in the Central Excise Act, 1944 and the Rules thereunder are applicable to man-made fabrics which are liable to additional duty of excise under the First Schedule of Section 3(1) of the Additional Duties of Excise Act and are 'excisable goods' mentioned in Schedule to the Central Ex ..... 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