Shah, J. - (1.) The appellant Company is engaged in the production of cellulose film. The Central Excise Inspector reported that the appellant Company was producing in its factory nitro-cellulose lacquer [falling under tariff Item No 22 (iii) (i) , No 14 (iii) (i) of the First Schedule to the Central Excises and Salt Act, 1944 read with the Finance Act, 1955], without obtaining a central excise licence as required by the rules and was also removing nitro-cellulose lacquer for "internal use" without payment of duty. The appellant Company denied that the chemical compound utilised by it to render plain film moisture-proof was "nitro-cellulose lacquer" within the meaning of the Central Excises and Salt Act, 1944.
(2.) The Deputy Superintendent of Central Excise, determined that the appellant Company was liable to pay, for the period between March 1, 1955 and September 19, 1962, Rs. 4,88,797 34 as excise duty on the consumption of nitro-cellulose lacquer produced by the Company. The Deputy Superintendent issued a demand notice, but the appellant Company failed to pay the duty.
(3.) The Assistant Collector of Customs required the Appellant Company to show cause why penalty should not be imposed on it for failing to obtain a licence for production of nitro-cellulose lacquer. The appellant Company contended that what was produced by it was not nitro-cellulose lacquer. The Assistant Collector rejected the contention and confirmed the order of assessment and imposed a penalty of Rs. 25/-.;