Commnr. Of Central Excise, New Delhi vs M/S. Hari Chand Shri Gopal & Ors

4. The respondents herein M/s Gopal Industries, M/s Hari Chand Shri Gopal and M/s Gopal Zarda Udyog were engaged in the manufacture of excisable goods viz. preparation containing chewing 4 tobacco falling under Chapter Heading no. 2404.40 of the Tariff Act, then chargeable to nil rate of duty, which was made leviable to central excise duty with effect from 1.3.1994. The Intelligence Wing of the Department came to know that the respondents had been manufacturing the said goods without applying/obtaining the certificate of registration as required under Rule 174 of the Excise Rules and had been removing the same clandestinely from their factories without payment of central excise duty leviable thereon and without following any of the prescribed procedures. It was noticed that a major portion of the above goods manufactured was consigned to M/s Gopal Zarda Udyog (Meerut), M/s Hari Chand Shri Gopal, Baddi District, Solan (H.P.) and M/s Gopal Industries, Baddi (H.P.) under the cover of `transfer challans' describing therein the said goods as "ADDICTIVE MIXTURES" or "KIMAM/K". On 28.9.1996, the factories of the respondents at Delhi were inspected by the Central Excise (Preventive) Officer of MOD IV, Delhi and took the samples of the finished products and detailed statements were also recorded from the partners of the firms. The Central Excise Officers also visited the various factories of the respondents at Solan and Baddi on 3.10.1996 and it was noticed that the addictive 5 Mixture (Kimam) manufactured at the factories at Delhi was being clandestinely removed for the manufacturing of chewing tobacco. The Officers noticed that the respondents were manufacturing the excisable goods Kimam falling under the Tariff Act under Chapter Sub-heading no. 2404.49 (up to 22.7.1996) and, with effect from 23.7.1996, covered under Chapter Sub-heading no. 2404.40, packed the same in the containers of different capacities as per the requirement of buyer/consumer without obtaining Central Excise Registration Certificate in contravention of the provisions of Section 8 of the Tariff Act read with Rule 174 of the Excise Rules up till 14.10.1996 and removed the same from their factories clandestinely without payment of central excise duty in contravention of the provisions of Rules 9(1), 52A, 53, 54, 173B, 173C, 173F and 226 of the Excise Rules.

5. The Central Excise Officers noticed that, during the period from 18.3.1994 to 15.4.1995, M/s Gopal Zarda Udyog had manufactured and removed from their factory a total quantity of 1,52,226.150 Kgs. of preparation containing Kimam, collectively 6 valued at Rs.15,27,90,675.00 and the amount of duty involved was fixed at Rs.6,14,17,770.00.

6. M/s Gopal Industries, during the period from 16.6.1995 to 26.9.1996, had manufactured and removed from their factory a total quantity of 2,66,648.800 kgs. of preparation containing Kimam collectively valued at Rs.16,26,68,569.00 and the amount of duty involved was fixed at Rs.8,13,34,285.00.

7. M/s Hari Chand Shri Gopal also, during the period from 14.6.1995 to 24.9.1996 had manufactured and removed from their factory a total quantity of 1,51,054.900 kgs. of preparation containing Kimam collectively valued at Rs.15,86,77,319.00 and the amount of duty involved was fixed at Rs.7,93,38.660.00.

9. The respondents filed detailed objections to the show cause notices and disputed their liability and also claimed exemption under the Notification no. 121/94-CE. The Commissioner (Excise) by his order dated 20.5.1998 rejected the objections filed by the respondents against the show cause notices and determined that M/s Gopal Zarda Udyog, M/s Gopal Industries and M/s Hari Chand Shri Gopal were liable to pay central excise duty of Rs.6,14,17,770/-, Rs.8,13,34,285/- and Rs.7,93,38,660/- respectively and also imposed the penalty of Rs.16,00,000/-, Rs.18,00,000/- and Rs.17,00,000/- on them under Rule 173Q of the Excise Rules and ordered confiscation of the goods seized from the premises of M/s Gopal Industries and M/s Hari Chand Shri Gopal respectively, with permission to redeem the confiscated goods 8 on redemption of fines of Rs. 5,00,000/- and Rs.3,20,000/- respectively.

33. The assessee in these appeals were engaged in the manufacture of pump parts and gun metal casting falling under Chapter 84 and Chapter 73 respectively of the First Schedule of the Tariff Act and claimed the benefit of above mentioned notifications. The Officers of the Central Excise Department carried out a search at the factory premises of the assessee on 25.8.2004. On the basis of that search, the Commission took the view that the assessee had contravened the procedure of the exemption notification and removed the excisable goods clandestinely. A notice was issued to show cause why the central excise duty and the penalty therein be not imposed on the assessee. The Commissioner, Central Excise, Ahmedabad vide order dated 31.5.2007 demanded central excise duty of Rs.15,14,966/- from M/s Neatwell Castings under proviso to Section 11-A of the Central Excise Act, 1944 by invoking extended period of five years along with the penalty thereon. In 33 appeal filed by the assessee before the Commissioner (Appeals), it was held that the benefit of the notification could not be denied only on the ground that the procedure laid down in Chapter X had not been followed. The decision of the Commissioner (Appeals) was upheld by the Tribunal in appeal.

CIVIL APPEAL NOS. 568-569 OF 2009

35. Consequently, Civil Appeal Nos. 1878-1880 of 2004 and Civil Appeal Nos. 568-569 of 2009 preferred by the Revenue would stand allowed and Civil Appeal No. 1631 of 2001 shall stand dismissed. There will be no order as to costs.

November 18, 2010.