Decided on October 19,2000



S.S.SEKHON,MEMBER (T) - (1.)THESE appeals have come up for decision against the order of the Collector of Central Excise, Coimbatore by which he found that M/s. Bharat Printing Mills at Erode is not a separate entity and production which was claimed to be on the part of M/s. Bharat Printing Mills was actually the production of M/s. Jayalakshmi Printing Mills and as such the imposition of penalty on M/s. Bharat Printing Mills would be incongruous. The Collector went on to demand duty on Jayalakshmi Printing Mills as alleged in the show cause notice and ordered confiscation of 720 LM of processed fabrics under Rule 226 of the CE Rules, and gave option of redemption on payment of fine of Rs. 2,000/ - and imposed penalty of Rs. 5 lakhs on the appellant company under Rules 9(2), 173Q and 226 of the CE Rules, 1944 and penalty of Rs. 2 lakhs on partner NR Nachimuthu under Rule 209A of the CE Rules, 1944. We have heard Shri K. Krishnamurthy, learned Consultant for the appellants who submits that:
(a) imposition of penalty and confiscation of the goods for additional duty of excise is not called for as per the decision of the Delhi High Court in the case of Pioneer Silk Mills Pvt. Ltd. v. UOI as reported in, 1995 (80) ELT 507 (Delhi) :, 1995 (4) Delhi Lawyer 75 (DB) :, 1998 (79) ECR 553 (Del).

(b) Collector has not considered the voluminous documents of defence and their written replies which would have indicated that Bharat Printing Mills was a separate legal entity responsible for its own activities and its production cannot be thrust upon the production of the appellants herein as arrived at by the Collector.

Shri S. Kannan, learned DR appearing for the respondent submits that:

(a) request for granting cross -examination of Shri P. Natarajan, Inspector who had drawn the mahazar and conducted enquiries have been clearly recorded by the Collector in para 14 of the impugned order and no prejudice could be caused to the defence for refusal of the cross examination.

(b) As regards cross -examination of the 10 defence witnesses the learned Consultant had conceded before the Collector that their cross -examination as requested earlier was not required, as recorded in para 13 of the impugned order.

(c) Statement of Shri Nachimuthu partner, Jayalakshmi Printing Mills is incriminating and has been correctly relied upon by the Collector to determine the duty and penalty in this case.

(d) In the case of Pioneer Silk Mills the department has gone in SLP before the Hon'ble Supreme Court.

(e) The Collector's order is not only based on the confessional statement of Nachimuthu but also on independent material collected from the State Pollution Control Board and District Supply Officer and after that only the department established that Bharat Printing Mills and the appellants i.e. Jayalakshmi Printing Mills are one and the same.

He submits that there is no infirmity in the order of the Collector.

(2.)WE have considered the rival submissions and record of the case and find that:
(a) The Board has issued orders under section 37B for clubbing of production of two units which was binding on the Collector, The impugned order does not indicate how the clubbing of the production of two units in this case has been done in view of this order of the Board under Section 37B as reported in, 1993 (45) ECR 47 C wherein trade notice issued by the Madurai Collectorate has been extracted which is based on this order of the Board. This matter is therefore required to be re -determined in the light of this order which is binding on the Collector.

(b) We also find that though the Collector has dealt with the request for cross -examination of the witnesses, he has denied the same. Therefore, it was his duty to have considered the documents submitted by the defence in the reply to the show cause notice and determined thereafter as to why these documents did not indicate that the two units will be separate legal entities entitled to the benefit of the separate production. We find from the impugned order that this has not been done. Therefore we are of the opinion that a serious prejudice has been caused to the defence in determining the quantum of duty against them. Therefore, the impugned order is required to be set aside for de novo adjudication.

(c) Since we are setting aside the order and remanding back the matter for de novo adjudication, we direct that while determining the penalty and redemption fine etc. the Collector shall take into consideration the decision in the case of Pioneer Silk Mills Pvt. Ltd. (supra).

In view of our findings, we set aside the impugned order and remand back the matter to the Collector to decide the issue in the de novo proceedings after following the principles of natural justice, within a period of two months from the date of receipt of this order. Ordered accordingly.

(Dictated and pronounced [in the] open Court).

Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.