NATHAN BLEACHERS & ORS. Vs. CCE

JUDGEMENT

(1.) IN all these three appeals, common question of law and facts are involved, hence they are taken up together for disposal, as per law. The Commissioner in Appeal E/1131/96 has by his Order -in -Original No. 94/96 dated 21.6.1996 has confirmed duty demand of Rs. 7,44,401/ - under Rule 9(2) of Central Excise Rules read with Section 11A(1) of Central Excise Act, 1944. He ordered for confiscation of seized goods of 3500 L Mts processed cotton fabrics valued at Rs. 50,000/ - however granting redemption on payment of a fine of Rs. 10,000/ -. There is a personal penalty of Rs. 1,00,000/ - on the company under Rule 173Q and 226 of Central Excise Act. The allegation in this appeal is that on visit of the officers to the appellants' factory on the reasonable belief that cotton fabrics were mercerised with the aid of power without obtaining CE Registration Certificate and the same were cleared without payment of Central Excise duty. The proprietor was present at the time of visit of the officers and a Mahazar was drawn. It was found that 8 cement tanks with grey fabrics and 2 cement tanks with finished fabrics (mercerised). A mercerising machine was functioning near the said tanks. The officers found a 3 HP Motor (Electro Induction motor/50 Cycles/400 - made by Elctro Fabs, Coimbatore Type TEPL/GPM1440/SL. No. 164) attached with portable base plate and connected with mercerising machine through conveyor belt which was running at the time of search. For the working of this motor, EB Service connection No. SC 1009/Vairapalayam East was available. The officers also noticed 17 small rollers attached to the mercerising machine and those were functioning. This mercerising machine was functioning in the hall with asbestos sheet as roofing.

(2.) The officers found two store rooms and one hall on the northern side of the machinery shed, where starch powder was stored. In the big hall adjacent to the store room, a padding machine with two rollers with one 2 HP electric motor and one 5 HP oil engine were found installed. By the side of the padding mangle, there was a water pump with two compressors with two electric motors respectively of 5 HP and 2 HP. The officers also noticed a MS Tank of size 8' x 4' outside the shed in which about 3500 liters of caustic soda lye in liquid form was stored to be used for mercerising. This caustic soda tank was connected to the mercerising machine through M.S. Pipes. There was also enough space behind the factory (0.75 acres) with facilities for air drying the mercerised fabrics. The officers also found a well in the drying yard with an electric motor for pumping water for bleaching and mercerising. Further, the officers found a thatched shed which was divided into two parts, one used as office room and in the other half, there was a bleaching liquor tank kept separately. The officers searched the office premises and found two small steel racks, with account books and documents. The officers did not find any goods or incriminating documents in the thatched shed adjacent to the factory. Further, the officers verified the stock of goods kept in the factory and found the following: - -

(3.) COMMISSIONER in paras 21 to 24 recorded the findings rejecting their pleas and confirming the appellants carrying on the process of mercerising and not scouring as claimed by them. He relied on the initial statements, mahazar, photographs, details found in the Insurance Policy giving the details of mercerising machines; purchase invoices of machinery for mercerising and concluded that the enormous evidence clearly indicated that they were carrying on the work of mercerising and not scouring. He also upheld the charge of suppression of facts for invocation of larger period. He noted that the SITRA's letter was based on their own information which cannot be accepted as the same has meagre relevance to the case.