Ar. Lakshmanan, J. - (1.) The appellant-firm filed these appeals challenging, inter alia, the judgment and order dated 25-2-2000 passed by the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi being Miscellaneous Order No. M/12/2000-D in E/ROM/125/99-D in Application No. E/2618/90-D and final Order No. 487/98-D dated 15-6-1998 in Appeal No. E/2618/1990-D, whereby the Tribunal has held that Tespa yarn manufactured by the appellant was covered under Heading No. 56.06 of the Central Excise Tariff and, therefore, confirmed the demand of duty of Central Excise of Rs. 5,63,066.40 and penalty of Rs. 50,000/-. The facts of the case in brief are as follows :-
(2.) The appellant-firm was issued a licence under the Central Excise Act, 1944 for carrying out the processing work of yarn. According to the appellant, since 22-5-1986, the doubled and/or multifolded yarns falling under Chapter 54 or Chapter 55 of the Schedule to the Central Excise Tariff Act, 1985 were wholly exempted from the duty of excise leviable thereon, provided such doubled or multifolded yarns were manufactured out of yarn falling under Chapter 54 or Chapter 55 of the said Schedule on which appropriate duty of excise had already been paid. Relying upon the aforesaid notifications, the appellant did not pay any duty of excise on the same and neither did it recover such duty of excise from its customers. The Collector of Central Excise issued a show cause notice dated 15-7-1988 to the appellant-firm calling upon the appellant to show cause as to why duty of excise amounting to Rs. 5,63,066.40 be not recovered on the goods, i.e. Tapsa yarn/fancy yarn falling under erstwhile tariff item No. 62 with effect from 1-3-1986 and under Chapter/tariff sub-heading 56.06 and penalty be not imposed on them under Rule 173-Q of the Central Excise Rules, 1944. A reply was sent to the show cause notice that the appellant categorically averred that it bona fidely believed that the doubled filament yarn was exempted from payment of duty of Central Excise and there was no intentional contravention of Rule 173 of the Central Excise Rules, 1944.
(3.) The appellant-firm further stated that it was engaged in the business of processing yarns such as crimping, texturising, doubling, multifolding etc. and that the firm had carried out doubling of yarn on a simple crimping machine and that the simple process of doubling of yarn on crimping machine was covered under Notification M.F. (C.D.R.) I. No. 114/18/88 CX 3 dated 18-4-1986.;