1. These 23 appeals involve common facts and common question of law and emanating from the same impugned order. We, therefore, heard them together and dispose of them, by this common order.
2. Very briefly the question before us is whether the confiscation of certain goods seized by the Central Excise Officers and the imposition of fine in lieu of confiscation and the penalty imposed against M/s.
Straw Products Ltd., one of the appellants (hereinafter referred as the First Appellants) is justified or not. Insofar as the question of rate of duty is concerned, the position, as stated by Shri Gopal Prasad, Ld.
Consultant, is that the appellants agreed that they are not entitled to the benefit of Notification No. 46/83-C.E. They accept the department's view in this regard. The rate of duty is not therefore an issue before us.
3. M/s. Straw Products Ltd. filed a classification list No. 3/83, dated 30-4-1983 effective from 1-5-1983 in respect of straw board and Kraft board following the issue of Notification No. 133/83-C.E. This notification gave certain additional concessions and amended an earlier Notification No. 46/83. The appellants believed that they were entitled to this notification and filed a revised classification list. This list was not ultimately approved, as the department felt that the appellants did not satisfy the conditions prescribed in the Notification No.46/83. On 13-5-1983 the Central Excise Department seized some goods cleared from the factory of the Appellants M/s. Straw Products Ltd. on the ground that they did not pay the full and proper excise duty.
Proceedings followed culminating in the imposition of a penalty of Rs. 10,000/- on the First Appellant, confiscation of the goods seized from various other parties (buyers) with option of redemption of the same on payment of fine which was fixed at 10 per cent of the value. Hence the present appeal.
4. Shri Gopal Prasad, the Ld. Consultant submitted that the Collector was not justified in confiscating the goods and in imposing- the penalty as the appellants manifestly acted bona fide and there was no offence committed by them at all. While conceding that the rate of duty as held applicable by the department was accepted by the appellants, Shri Gopal Prasad pleaded that the appellants bona fide believe that they were entitled to the concessional rate and followed it up by filing a proper classification list. If this list was disapproved right at the time of filing, the appellants would not have availed of the lower rate. Besides, Shri Gopal Prasad submitted, the first appellant executed B-16 bond under which any shortfall in collection of duty could have been easily made up by the department. Thus, the revenue was never in jeopardy. Shri Gopal Prasad also submitted that the appellants paid the differential duty on 30-5-1983, well before the issue of show cause notice on 13-9-1983. He also submitted that imposition of penalty in these circumstances was not justified and relied upon the Supreme Court's judgment in Hindustan Steel Ltd. v. State of Orissa reported in 1978 E.L.T. (3 159).
5. Shri Chakraborty did not dispute the facts but reiterated the findings of the Collector justifying the confiscation and imposition el penalty.
6. We have considered the submissions made by both sides. We note that the rate of duty is no more in dispute between the parties. From an examination of the facts we observe that the appellants filed a revised list of classification seeking application of the Exemption Notification No. 46/83 under which they thought they were entitled to pay a lower rate of duty. The covering letter to this classification list dated 30-4-1983 shows that the appellants made a request to the Asstt. Collector for approval of the classification list and "in the mean-time" permission to clear the goods under the provisional assessment basis. It appears that no order was passed on the classification list and what followed was that on 13-5-1983 the Central Excise Departmental seized the goods cleared from the Factory of the First Appellants and lying in the premises of the remaining appellants who are buyers. If the department intimated the appellants on 1-5-1983 that they were not entitled to the concession, the appellants would not have cleared the goods applying the new classification list. Under Rule 173C(5) the Assistant Collector could have, if he could not make up mind, grant provisional assessment for which a request made in the appellants' letter dated 30-4-1983. This too was not done. From the documents placed before us, from the circumstances of the case and from the pleadings of the Ld. Consultant for the appellants we are convinced that there was bona fide belief on the part of the appellants that they were entitled to Notification No. 46/83-C.E. That is why they filed a revised classification list.Shri Gopal Prasad (Hindustan Steel Ltd. v. State of Orissa report in 1978 E.L.T. (3 159).
We note that the Supreme Court in this judgment ordered that"...penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation.
Penalty will not also be imposed merely because it is lawful to do so...,". We are convinced that in this case the appellants M/s. Straw Products Ltd. did not act in deliberate disregard of law. They paid the differential duty at an early stage. We, therefore, set aside the penalty.
8. The fact, however, remains that the goods seized and confiscated were removed from the factory without payment of correct Central Excise duty. While, therefore, we uphold confiscation thereof, we feel that a lenient view is called for in the matter of the quantum of fine in the light of the above observations. We, therefore, reduce the fine in view of confiscation from 10% to 2%.
10. I am in agreement with Brother Rao that penalty of Rs. 10,000/- imposed on the appellant M/s. Straw Products Ltd. be set aside. I however, do not agree with his proposal to uphold confiscation of goods seized. I, therefore, briefly record my dissent in the following words - 11. Clause (a) of Sub-rule (1) of Rule 173Q which alone appears to be material in the present appeal makes "all such goods liable to confiscation" if removed by any manufacturer, producer or licensee of a warehouse in contravention of any of the provisions of the rules.
According to T.P. Mukherjee's Law Lexicon, the meaning of the word "liable" based on a decision of the Supreme Court in Superintendent and Remembrancer of Legal Affairs to Government of West Bengal v. Abani Maity (1979 4 SCC 85 P. 89-90) inter alia is given in the following words- 12. The word "liable" occurring in many statutes, has been held as not conveying the sense of an absolute obligation or penalty but merely importing a possibility of attracting such obligation, or penalty, even where this word is used alongwith the words "shall be". Thus, where an American Revenue Statute declared that for the commission of a certain act, a vessel, "shall be liable to forfeiture, it was held that these words do not effect a present absolute forfeiture but only give a right to have the vessel forfeited under due process of law. Similarly, it has been held that in Section 302, Indian Penal Code, the phrase "shall also be liable to fine" does not convey a mandate but leaves it to the discretion of the Court .convicting an accused of the offence of murder, to impose or not to impose fine in addition to the sentence of death or imprisonment for life".
13. Based on certain High Court decisions, the learned Lexicographer further says - "The word "liable" means a future possibility or probability happening which may or may not actually occur. In other words the Magistrate has the power to impose the sentence of fine but it is discretionary".In Kwality Containers (Pvt) Ltd., Bombay v. Collector of Central Excise, Bombay [1987 (29) ELT 304 Tribunal], it has been held by the Tribunal that when no case has been made out of wilful infraction of any statutory provision making the goods liable for confiscation, the order for confiscation was not proper.
15. The relevant facts have been set out by Brother Rao in para 6 of the order as also the decision of the Supreme Court in Hindustan Steel Limited's case in para 7. Considering the facts as set out in para 6, the Supreme Court decision relating to penalty in para 7 of the meaning of word "liable" given in Law Lexicon as also the Tribunal decision (supra) without laying down any general propositions, I feel that confiscation of the goods is not called for in the facts and circumstances of the case. I would therefore, set aside the same as also the redemption fine in toto rather than reduce the same to token value of 2%. I will wholly allow the appeals.
16. I agree with the confiscations of the brother Shri S.D. Jha. I hold that in terms of Rule 173B read with Rule 173CC, an assessee can clear the goods paying duty on the basis of the revised classification list filed, pending the approval of the same by the proper officer. Rule 173CC makes a specific provision for clearance of the goods subject to the conditions, and proviso set out thereunder when the same are manufactured for the first time, but does not in terms as specifically state that an assessee who has filed a revised classification list in terms of Rule 173B(4)(c) can arose clear the goods, based on the revised classification list pending its approval by the proper officer.
Now the procedure for filing of the classification list and approval thereof be it a revised classification list in terms of Rule 173B(4)(c) or otherwise is the same. Under Rule 173B(2A) all clearances shall, subject to the provisions of Rule 173CC be made only after the approval of the list by the proper officer and Rule 173CC allows the facility of the clearances of goods subject to the conditions set out therein pending approval of the classification list. A harmonious reading of Rule 173B & 173CC leads to the conclusion that this facility is available even in cases where a revised classification list has been filed. In the present case, the appellant filed the revised classification list after the issue of Notification 133/83-C.E. and informed the authorities that the pending approval of classification list, the goods may be permitted clearance on provisional assessment basis. In fact, Rule 173CC permits exactly that. In view of this, I hold that the appellants were not guilty of any breach of Central Excise Rules and Act. I, therefore, allow the appeals.
17. In accordance with the decision of the majority, the appeals are wholly allowed and the penalty, the order of confiscation and the redemDtion fine set aside.