COMMISSIONER OF CENTRAL EXCISE & CUSTOMS v. GOYAL SILK MILLS PVT. LTD

CORAM : MR.JUSTICE M.S.SHAH MR.JUSTICE K.A.PUJ Date of decision: 02/07/2002 ORAL JUDGEMENT (Per : MR.JUSTICE M.S.SHAH) (cid:9)Heard Mr Asim Pandya learned Additional Standing Counsel for the applicant and Mr Chetan Panday learned counsel for the respondent - assessee.

2.(cid:9)This reference application is filed by the Commissioner of Central Excise, Ahmedabad under subsection (1) of Section 35(H) of the Central Excise Act, 1944 for directing CEGAT to refer the following question of law:- "Whether the provisions of fine and penalty as given in Central Excise Act, 1944 are applicable to the goods i.e. MMF (Proc) which are subjected to Additional Excise Duties in terms of Additional Duties of Excise (Goods of Special Importance) Act, 1957 ?

3.(cid:9)Mr Asim Pandya, learned Additional Standing Counsel for the Department points out that an identical question came to be considered by another Division Bench of this Court in CECG Reference No.1 of 2001. After considering the decision of the Delhi High Court in Pioneer Silk Mills' case 1996 (67) ECR 131, by judgment dated 22-1-2002, the Division Bench held as under:- "9.3(cid:9)It will thus be seen that penalty provisions are an integral part of assessment and collection of duties of which the necessary adjuncts are confiscation and penalty without which the imposition of taxes will lack teeth and become ineffective. If power to impose penalty for violation of the obligation to pay additional duty of excise is excluded in respect of the goods enumerated in the First Schedule of the Additional Duties Act, then these taxation provisions would be reduced to a donation drive in respect of these very items for which duty of excise is also imposed under the Central Excise Act, 1944 and the Rules made thereunder and violation of which would entail both confiscation and penalty.

10.(cid:9)The provisions of penalties are devised to ensure that the excise regulations are enforced and the recovery of excise dues is secured. The process of collection of revenue involves enacting methods of collection. The procedure of assessment and collection are intertwined with confiscation and penalty, once violation of excise regulations is established, as contemplated by the Rules imposing penalties. The object of the provisions to impose heavy penalties is to ensure that the revenue is protected against procrastination, carelessness or deceit which if practised on a large scale, would make collection of the taxes a difficult task.

11.(cid:9)For the above reasons, it is clear to us that all the provisions of the Central Excise Act, 1944 and the Rules made thereunder, including the provisions relating to confiscation and imposition of penalty contained therein, are applicable to the levy and collection of the additional duty of excise under section 3(1) of the Additional Duties of Excise Act, 1957 in the same manner as they already apply in relation to the levy and collection of such goods under the Central Excise Act, 1944 and Rules framed thereunder.

12.(cid:9)We accordingly hold that the provisions relating to confiscation and imposition of penalty contained in the Central Excise Act, 1944 and the Rules thereunder are applicable to man-made fabrics which are liable to additional duty of excise under the First Schedule of section 3(1) of the Additional Duties of Excise Act and are `excisable goods' mentioned in Schedule to the Central Excise Tariff Act, 1985, by virtue of incorporation by reference under section 3(3) of the Additional Duties Act, of all the provisions contained in the Central Excise Act, 1944 and Rules made thereunder. (cid:9)The question referred to us is answered accordingly in favour of the Revenue and against the assessee. There shall be no order as to costs.

4.(cid:9)It is, thus, clear that this Court has already answered the question in favour of the revenue and the controversy is thus already concluded in favour of the revenue and against the assessee.

5.(cid:9)In view of the above, nothing further is required to be done by this Court except directing the Tribunal to rehear Appeal No.E/804/96-Mumbai.

6.(cid:9)Accordingly, the judgment dated 6-9-2001 of the CEGAT in above numbered appeal is set aside and the Tribunal is directed to rehear the appeal in light of the law laid down by this Court in the aforesaid judgment dated 22-1-2002 in CECG Ref. No.1 of 2001. (cid:9)It is clarified that this Court has not gone into the merits of the controversy about the quantum of penalty and the Tribunal will hear the parties de novo on the said question on the basis of the aforesaid law laid down by this Court.

7.(cid:9)The application accordingly stands disposed of with no order as to costs. Rule is made absolute to the aforesaid extent. (cid:9) (cid:9)(M.S. Shah,J)(cid:9)(K.A. Puj,J) zgs/- (cid:9)