Judgment:
1. This is an appeal filed against the decision of the Collector of Central Excise and Customs, Ahmedabad, made in Order-in-Appeal No. 343 & 344/92 (33 to 34-KDL) Cus/Collr.A/Ahm. dated 30.4.1992 whereunder he confirmed the orders of the Assistant Collector of Customs, Orders-in-Original No. 20/89 dated 13.11.1989 and 30/89 dated 2.11.1989 regarding duty confirmed on fabrics and refund claim of Rs. 53,858/- respectively.
2. The facts of the case are that the appellants were approved for setting up a unit in Kandla Free Trade Zone in the year 1964 for weaving and printing of yarn, fabrics, printing dyeing, crayon etc. and manufacture of mixed fabrics. The appellant after establishing their unit in Kandla, imported several consignments of yarn totaling about 17670 kgs. valued about Rs. 2,31,800/-. It was alleged by the appellants that the manufactured fabrics, using portion of the imported raw materials and exported 710 kgs. of manufactured fabrics. The importation, it is alleged, had taken place at Bombay Port during December 1968 to March 1969. After such importation it was transported by road to KFTZ after executing bond with Bombay Customs. The two consignments consisting of 48 cases imported from two vessels weighing about 40760 kgs. valued at about 2500 were despatched. A bond was executed for Rs. 4,27,050/- towards goods which were sent in 39 cases on 30.12.1968 and 7.3.1969. As far as the last consignment of 9 cases imported ex s.s. Asia, is concerned, the appellants executed a bond for Rs. 1,39,038/- and it was found that they were substituted. In respect of 39 cases supra, goods i.e. polyester filament yarn weighing 3580.2 kgs. valued at 1772.4 CIF was found substituted. It was also found that same goods weighing 813.600 valued at 482.15 was also found substituted. The goods worth about Rs. 6 lakhs were exported. The Customs Authority issued tow notices dated 23.5.1969 demanding payment of duty from the appellants, demanding Rs. 1,39,038/- and Rs. 4,27,050/-. The appellants filed writ petition in Bombay High Court resulting in Consent Terms filed in the Bombay High Court, dated 19.12.1992. The appellants preferred appeal to the Central Board of Excise which by its order dated 30th September, 1978 allowed the appellants to export the goods within a period of six months. By further order dated 23rd October, 1979, further period of six months was granted. Ultimately it was further extended upto 11.5.1981. It appears that the appellant exported 19268 metres of fabric. It transpires that due to litigation, the goods held on stock became substandard and on inspection by Textile Committee, it was found that the goods were not fit for export. The appellant moved Gujarat High Court by filing Special Civil Application No. 1188/80 against the orders of the Development Commissioner, KFTZ challenging confiscation.
By order dated 9th August, 1986, the Gujarat High Court set aside that order of confiscation. Special Leave Petition was filed by the Government in the Supreme Court against this order. The Supreme Court was pleased to hold that the direction by the High Court of Gujarat for release of stale and unexportable goods found subject matter of the Special Leave Petition on payment of duty lawfully leviable. The Supreme Court directed release of the goods in three lots. As per orders of the Supreme Court the duty leviable in the show cause notice dated 28.4.1988 was issued under Section 3 of the Central Excise Act.
The appellants filed reply challenging the applicability of Section 3 of the Central Excuse Act, especially the amendment thereof which came into force on 1st March, 1982 whereas the goods in question were confiscated as far as back in 1976. The appellant also stated that, but for the confiscation made in 1976, the same would have been expected or released for DTA. It was also stated by the appellant that there cannot be any retrospective application of the amendment made in 1982. They also claimed exemption as the goods were manufactured on powerloom and are in grey state as per Central Excise Tariff No. 55. By Order-in-Original dated 3rd November, 1989, the adjudicating authority rejected the contention against which two appeals were filed. The appellate authority confirmed the same. Hence the present appeal before us.
3. Learned counsel appearing on behalf of the appellant challenged the application of the amendment made in 1982, to Section 3 of the Central Excise Act inasmuch as the goods were confiscated in 1976. He emphasizes the fact that there cannot be any retrospective application.
He also stated that the Collector (Appeals) did not make any speaking order especially in respect of valuation of the goods. The learned DR appearing before us would reiterate what is contained in both the orders.
4. We have considered the rival submissions. It is pertinent to refer to certain orders passed by the Courts. In the Special Leave Application No. 1188/80, on August 9, 1985, the Gujarat High Court passed orders on the following terms:- "Right from 1968 to 1985 much water has flown beneath the bridge and the situation has totally changed. In the period of sixteen years, the goods must have become qualitatively deteriorated considerably and must have become totally unfit for export. It is truism to state that the Export Board would never permit export of such stale goods.
So, the only course left open to the Customs authorities is to release these goods for that domestic use, of course by charging the requisite duty as it may be leviable, which the petitioner is willing to pay. We, therefore, direct the authorities, as the inevitable outcome of their unreasonable stand taken all these years, that they shall not now insist on the export obligation undertaken by this petitioner and, as a consequence, permit the petitioner to utilise these goods for the domestic market subject, of course, to his paying the reasonable duty. Rule is accordingly made absolute with no order as to costs." 5. Against this order, the Supreme Court in SLP filed by the Government of India has passed orders as under:- "After hearing both sides we are not satisfied that this is a fit case for granting special leave. The direction given by the High Court for release of the "Yarn" and unexportable goods which form the subject matter of the special leave petition, on payment of the duty lawfully leviable thereon, does not suffer from any legal infirmity. We accordingly dismiss this special leave petition. The interim order passed by this Court directing auction of the goods by the customs department will stand vacated and the High Court's direction for release of the goods t the respondents will be carried out be the petitioners in accordance with the terms of the order of the High Court. The counsel for the respondent made a request that the duty payable on the goods may be permitted to be remitted in instalments. We consider this request to be reasonable and we direct that the duty may be paid in three equal instalments and as against the payment of each instalment a proportionate quantity of the goods will be released. The parties will bear their respective costs. The contempt petition C.H.P. No. 30550 of 1986 filed by the respondent will stand dismissed as withdrawn." 6. In the order of the Supreme Court, it is very clear that the request of the department was to be reasonable one and the Court specifically directed that the duty may be paid in three equal instalments as against the payment of each installment a proportionate quantity of the goods in the very least. We have to see whether in the teeth of the said direction, there can by any demand of duty by the department in terms of Section 3.
7. It is specifically urged before us that proviso to Section 3 was added in 1982 and therefore there cannot be any levy of duty. In our view this argument cannot be accepted. Even if we accept the argument of the counsel that the proviso does not have retrospective application, the fact remains that the goods were removed only after the order of the Supreme Court made in 1987 in SLP filed by the Government of India against the order of the Gujarat High Court in Special Civil Application 1188/80. In the said judgment it is specifically mentioned, even by way of repetition, that direction was given to the appellant before us that the duty may be paid in three equal installments. It is not as if the appellant did not know the existence of the proviso at that time. When that is the point, it passes one's comprehension as to how the appellant can argue that the proviso to Section 3 of the Central Excise Act will not be applicable in this case. The Supreme Court when it passed the order which is binding on the appellant before us, did not say that no duty should be paid and it is not leviable at all. The effect of the Supreme Court order is that the department's action of confiscation and the claim of demand of duty is correct and it was upheld. Hence the argument of the counsel for the appellant about the leviability of duty is rejected.
8. This leaves us to the question of valuation. In the Order-in-Original and Order-in-Appeal, there are no particulars or reasons given as to why the duty is demanded in that particular way, for e.g. letter of the assessee issued on 2.5.1988 gives statement of stock. Reply of the assessee dated 10.6.1988 calls for method of valuation. Page 8 of the order does not give reasons for method of valuation. The valuation, according to us, has not been properly done.
For that purpose, we set aside that portion of the order and remand the matter to the adjudicating authority for giving reasonable opportunity to the appellants reason as to why the valuation should be done in a particular way and decide the matter accordingly by passing a reasoned order. 9. During the course of the argument, the learned counsel had given plethora of judgments of the Supreme Court and the High Courts especially regarding the proviso. But in view of what is stated above, namely the judgment of the Supreme Court in the appellant's own case, it is unnecessary to deal with them individually. 10. The appeal is disposed of on the above terms.