P.C. Jain, Member (T)

1. This is originally a revision application transferred to the Tribunal as an appeal under the provisions of Section 35P of the Central Excises and Salt Act, 1944, hereinafter referred to as the Act. The revision application was filed against an order-in-appeal passed by the Central Board of Excise and Customs which has confirmed the order-in-original passed by the Collector of Central Excise, Baroda.

1.1. Facts in brief leading to the impugned order are as follows:

1.2. In the course of checks by the Central Excise Officers on 22-7-1978 it was revealed that the appellant company was engaged in manufacture of textile machinery parts and accessories falling under Tariff Item 68. Earlier the company had held an L-4 licence for manufacture of the said goods. From January 1977 it availed of exemption from duty on the ground that the total number of workers employed by it was less than 50. Since the basis of exemption underwent a change in Notification 176/77-C.E., dated 18-6-1977 to the aggregate clearances of a factory during the preceding financial year, the company submitted an application to the jurisdictional Assistant Collector of Central Excise claiming exemption from duty for its product under the said notification. Declaration was made to the effect that since their clearances during the preceding financial year 1976-77 did not exceed Rs. 30 lakhs and that the value of its capital investment on plant and machinery did not exceed Rs. 10 lakhs, they were entitled to the exemption under Notification No. 176/77-C.E. The Assistant Collector granted exemption under his letter dated 14-7-1978. In addition another application was made by the company and its L-4 licence was also cancelled on 21-12-1977.

1.3. As a result of the scrutiny of the company invoices, the officers observed that the invoice value of the goods removed by the appellants from their factory during the financial year 1976-77 was in excess of Rs. 30 lakhs. This scrutiny was based on R.T. 12s for the first nine months of the financial year 1976-77 i.e. from April 1976 to December 1976 and for the remaining three months it was based on the sale invoices issued by the appellant company because R.T. 12s returns for the later period were not available, since as mentioned above, they had started availing an exemption from January, 1977. As a result of this checking, certain goods found in the appellants' factory had been seized by the officers. A statement was recorded from the Managing Director, Shri M.P. Shah of the appellant company. A show cause notice dated 18-1-1979 was issued to the appellant company as to why the seized goods should not be confiscated under Rule 173Q, why duty should not be demanded on the goods valued at Rs. 13,72,007.90/- removed by them during the period 18-6-1977 to 31-3-1978 without payment of duty under Rule 9(2) of the Central Excise Rules and why a penalty should not be imposed on them for contravention of Rules, 174, 9, 173F, 173G read with Rules 173PP, 52A and 53. After due adjudication, the Collector of Central Excise demanded duty on the above value of the goods cleared during the period 18-6-1977 to 31-3-1978, confiscated the seized goods with an option to redeem them on payment of a fine of Rs. 10,000/- and also imposed a penalty of Rs. 3,000/- under Rule 173Q(1) after upholding the charges mentioned as contained in the show cause notice.

2. Various points have been raised by the appellants' learned Advocate, which had already been raised before the lower authorities. These points are dealt with seriatim below:-

(1) Learned Advocate Shri D. Dave for the appellants has urged that the question of exemption under Notification 176/77-C.E. had already been examined by the Assistant Collector after issue of a regular show cause notice to the appellant company, After satisfying himself with the Clearances of the appellant company, the said Assistant Collector had extended the benefit of the said notification. This