ASHOK INDIA ENGG WORKS Vs. COLLECTOR OF C EX

JUDGEMENT

(1.) FOR hearing the above mentioned applicants' appeals on merits, the applicants M/s. Ashok India Engg. Works are required to deposit a sum of Rs. 2,00,000/- and the other three applicants, being the partners of the firm, a sum of Rs. 50,000/- each being the penalties imposed on them under the Central Excise Act. Shri Koruthu, the learned Consultant on behalf of the applicants pointed out that there is hardly any justification for imposition of penalties. Elaborating on this point further, he has stated that the applicants, M/s. Ashok India Engg. Works are the manufacturers of switches without the aid of power. This position has been brought to the notice of the department. Even their letter-head clearly indicates that they are the manufacturers of switches as one of the items. He took us through the various correspondences addressed to the department clearly indicating that they are the manufacturers of switches, which were exempted, since they are manufactured without the aid of power. The department had also advised the applicants to keep such activities in a separate premises by a partition.

(2.) From 1-3-88, the exemption given to switches, even if they are manufactured without the aid of power, came to be deleted by a Notification. The significance of this Notification was neither intimated to the applicants either by any Trade Notice or by a departmental circular. They were, therefore, under the impression that the switches continued to be exempted even after 1-3-88. Subsequently, when one of the partners of the firm came to know that the exemption for switches has been withdrawn, they approached the department with an offer to pay the duty in respect of the period subsequent to the withdrawal of the exemption. However, a case was made out against them, consequent on which the penalties have been imposed. Shri Koruthu pleaded that there was absolutely no intention at suppression of any facts nor any attempt at clandestine removal of the goods without payment of duty. He also stated that as per their own calculation, they had already deposited a sum of Rs. 85,596.65/- being the duty payable towards switches, even before the issue of show cause notice. Hence, the penalties imposed on them are totally unjust. On the financial position, he pointed out that the income of the firm is nearly Rs. 1,00,000/- and the penalties imposed are beyond their financial reach.

(3.) AFTER hearing both the sides, we are prima facie satisfied from the correspondences shown by Shri Koruthu that the applicants have not suppressed the fact of manufacture of switches without the aid of power, which were exempted prior to 1-3-1988. Hence, when the exemption was withdrawn from 1-3-1988, the department could have taken timely action and demanded the duty. Merely, because it is not mentioned as non-dutiable item in the classification list, allegation of suppression or clandestine removal cannot be sustained. The Supreme Court in the case of Collector v. Chemphar Drugs & Liniments reported in 1989 (40) E.L.T. 276 have held that only when something positive, other than mere inaction or failure, is proved or where there is a conscious or deliberate with-holding of information is established, allegation of suppression can be sustained. In this case, we are prima facie satisfied, based on the correspondences cited by the learned consultant that there had been no attempt at deliberate with-holding of information nor any attempt at clandestine removal. In view of this position, we grant unconditional stay as to the recovery of penalties imposed on all the four applicants. Since there is no quantification of duty amount by the department and it is reported that the applicants' firm on their own have already paid the duty as per their own calculation, no orders on this aspect are passed.