1. Being dissatisfied with the demand of duty amounting to Rs. 33,370.91 under Rule 9(2) of the Central Excise Rules, 1944 and also imposition of penalty of Rs. 500 under Rule 173Q ibid the appellants have filed the present appeal.
2. Factual backdrop: As a result of visit to the manufacturing premises of the appellants on 3-4-1982 the officer concerned found that the appellant had manufactured corrugated box falling under T.I. 68 without obtaining any Central Excise Licence and had also exported corrugated box to Nepal and Bhutan without payment of Central Excise duty and further without issuing the gate pass or observing the other provisions of law. As a sequence thereof a show cause notice calling upon the appellant to show cause why duty amounting to Rs. 33,370.91 be not demanded on the goods exported to Nepal and Bhutan and penalty be not imposed, was issued. In reply it was contended that the goods manufactured by the appellant have since been classified under T.I. 68, as such are exempted from payment of duty in pursuance of Notification No. 105/80 dated 19-6-1980 read with Notification No. 144/82 dated 23-4-1982. It was pleaded that since the goods were exempted the appellants were not required to take out a licence under Rule 174 as they enjoyed exemption from licencing control under Notification No.111/78 dated 9-5-1978 as amended from time to time. It was further pleaded that as envisaged in the Notification No. 111/88, supra the appellants were also not required and obliged to maintain the prescribed accounts of Central Excise and to follow the procedure outlined thereunder. Inter-alia it was also the defence of the appellant that the clearance value of the goods cleared from the factory never exceeded the exemption limit of Rs. 30 lakhs in any financial year and all clearance from the factory was for home consumption and not otherwise. However, the adjudicating authority did not agree with the said defence of the appellant and ultimately demanded the duty and imposed the penalty as aforesaid. Hence the present appeal.
3. We have heard Shri U.C. Chatterjee, learned counsel for the appellant and Mrs. J.K. Chander, learned Jr. D.R. for the respondent.
4. Shri Chatterjee, learned counsel for the appellant vehemently contended that the articles i.e. to say, corrugated boxes manufactured by the appellants were exempted from payment of duty in pursuance of Notification No. 105/80 dated 19-6-1980 and the clearance value of the goods cleared from the factory never exceeded the exemption limit of Rs. 30 lakhs in any financial year and all clearances from the factory was for home consumption and not otherwise. In the process he submitted that the adjudicating authority went wrong in holding that the sale made to the respective buyers i.e. to say, Nepal and Bhutan was not for home consumption. While elaborating his arguments he further submitted that the goods were removed from the factory of the appellant to their own godowns and from these godowns goods were sold to the respective buyers belonging to Nepal and Bhutan on orders as and when received.
Thus the appellants never directly exported the goods to Nepal or Bhutan. The goods were cleared to Nepal and Bhutan from the premises, which was separate and situated within the country, but outside the factory of production. Shri Chatterjee also cited the decisions rendered in the case of Hemraj Goverdhan Dass v. H.H. Dave, Assistant Collector of Central Excise, 1978 (2) E.L.T. (J 350) and Suhrid Geigy Ltd. v. Union of India, 1980 (12) E.L.T. 759 and also certain orders (decisions) passed by this Tribunal to show as to how a taxing statute and Notification should be construed. In reply Smt. J.K. Chander, learned Jr.D.R. while supporting the impugned order submitted that from the photostat copies of the orders etc. produced by the appellant with the appeal it would appear that the goods were exported to Bhutan and Nepal from the premises of the appellant. Even otherwise if the goods were cleared from their own godown it cannot be said that the goods were cleared for home consumption as envisaged in Notification No.105/80.
5. We have considered the contentions raised by the parties and have studied the case law cited by the appellant but find no substance in the contentions raised by the learned counsel for the appellant. It is admitted to the appellant and would also appear from Notification No.105/80 dated 19-6-1980 (which is clear and unambiguous) as amended from time to time that the exemption is available only in respect of the clearances of the manufactured goods 'for home consumption'. In Re: Central Provinces and Brar Sales of Motor Spirit and Lubricants Taxation Act, 1938 reported in 1978 (2) E.L.T. J 269, the Federal Court of India had held that "excise duty' is a tax on articles produced or manufactured in the taxing country and intended for home consumption.
In the instant case from the photocopies of the orders etc. placed with the appellant by the merchants (buyers) of Nepal and Bhutan we find that the orders were placed with the appellants at their official address and the goods were exported directly to the merchants of Nepal and Bhutan as per orders stated above. Thus the contention of the learned counsel for the appellant that the appellant never exported the goods direct to Bhutan and Nepal cannot be accepted. Even otherwise if according to the appellant the goods were cleared from the factory to their godown and then from these godowns to Nepal and Bhutan directly it cannot be said that the goods were cleared for home consumption. In other words, whether the goods were cleared from the factory of the appellant or from their own godown, the fact remains that they did not clear the goods for home consumption but exported the goods outside the country that is to say, to Bhutan and Nepal. Consequently the appellant was not entitled for the exemption under Notification No. 105/80 and since on their own admission the appellants had exported the goods to Nepal and Bhutan without payment of Central Excise duty, without taking out a licence and without submitting any declaration for the clearance of dutiable goods as required under Notification No. 111/78, the contravention of various rules as detailed out in the findings of the Assistant Collector in the impugned order stand proved.