2004 PLP (Trib (PTD)

Messrs Kamran Ceremics, Guj. Rs.1,50,060 Rs.20,000 (2) Messrs Shan Cremics, Guj. Rs.1,47,600 Rs.20,000 (3) Messrs Three Star Ceremics, Guj. Rs.1,47,600 Rs.20,000

3. It has been argued on behalf of the appellants that during the aforesaid period of three months, they continued manufacturing of sanitary wares but stopped clearances in protest against the levy of duty on their product. 'On 12-6-1996 this item was granted exemption from duty subject to certain conditions but since they did not fulfill those conditions, they obtained necessary central excise licence, had their stock taking done by the Central Excise staff arid entered their stocks (accumulated during the preceding three months) in the prescribed record (RG-1 Register). The stocks were subsequently cleared on payment of duty and, as such, they had not indulged in any evasion as alleged in the impugned orders. It has also been submitted that during the period in question, the appellants had regularly been paying instalments of fixed amount of sales tax to which the Department never objected but later on calculated excise duty on, the basis of sales tax paid and raised demand thereof alongwith penalty vide impugned order-in-original.

4. The departmental representative opposed the appeal arguing that originally, the appellants had taken the plea that they had closed their units to protest against levy of excise duty on their product and as they had not produced any goods during that period, they were not liable to pay any duty. But, later on, when the department found out from their gas consumption bills that their factories were in full operation, they took a different stand that they manufactured the goods but did not effect any clearance. This, according to the Department, was an afterthought to cover up the act of evasion of duty on their part. To ascertain the factual position, the representative of the Department was required during the course of hearing on 15-11-2001 to check the appellants record and let us know whether or not the entries on the opening dates of the RG-1 Registers of the appellants satisfy the Department as to the carry over production of last three months specially in view of the quantities of energies, (gas and electricity) consumed by them. The departmental representative, has, however, not clarified this aspect even after lapse of about three months and has only reiterated what has already submitted by the department, in support of its case.

5. We have considered the case records and the submissions made by both sides carefully. The entire case of the department is based on the presumption that since the appellants units were in production, as proved by their gas consumption bills, they produced excisable goods and cleared the same without payment of duty. The appellants on the other hand do not deny production of goods. Their plea is that they stopped only clearance of goods produced by them in protest against the levy of duty in the hope of revival of exemption and. when they obtained necessary central excise licence after issuance of S.R.O. 772(I)/96, dated 12-9-1996, the entire production in stock was entered in the prescribed central excise record and the same was cleared on payment of duty. The department has not been able to controvert this contention from' the record inspite of sufficient time given to it. The joint declaration of closure said to have been given by the Association of Sanitary Ware Manufacturer to the department cannot be treated as a notice of closure required to be given under Rule 43(2) of the Central Excise Rules, 1944 and, therefore, the appellants cannot be penalized only on this account. On the contrary, in a semi-official communication, dated 26-3-1999 placed on record by the appellants the Collector of Customs and Central excise, Gujranwala himself reported to the Central Board of Revenue. Islamabad that no clearances were made by the sanitary ware units located in the jurisdiction of Gujranwala Collectorate during the period 13-6-1996 to 30-9-1996 and therefore, no duty was payable by them and that the audit authorities had also been informed about this fact. The Departmental representative has confirmed this letter to be genuine and in view of this admission made by the Collector himself, we do not think the Department has any case as according to section 3 of the Central Excises Act, 1944, read with Rule 9 of the Central Excise Rules, 1944. central excise duty is no doubt levibale on production of excisable goods that payment thereof is to be made at the time of clearance of the same.

6. In view of the aforesaid, all the three appeals are accepted and the impugned orders are set aside. C.M.A./1013/Tax (Trib.) Appeals accepted.