V.T. Raghavachari, Member (J)

1. Sixteen powerlooms, four each in the name of M/s. Manmohan Textiles (owner Bhagwan Das Kanodia); Vinod Textiles (owner Lakhmi Chand, Kanodia); Vijay Textiles (owner Chandrawati Kanodia) arid Rajinder Textiles (owner Chiranji Lal Bhotika) were working at Andheri. M/s. Surajmal Purshotam Das was said to be the firm which was running these sixteen powerlooms, though in the name of the four different entities as above mentioned. There is no dispute that the four owners above mentioned were close relatives and that the other firm above mentioned was their firm. On the allegation that the 16 powerlooms were working as a single unit and the cloth manufactured thereon was therefore, not entitled to benefit under Notification No. CER-8(28)/56, dated 5-1-1957 (as it stood during the material period 29-10-1962 to 31-8-1963), show cause notice was sent to the above said five firms as to why duty evaded should not be demanded and penalty also levied, apart from ordering confiscation of the goods seized. On adjudication the Officer on Special Duty, Central Excise, Bombay passed order on 30-12-1966 holding the charges established. He imposed penalty of Rs. 250/- on each of the four persons mentioned earlier (owners of the four Textiles) and further demanded duty from them on the cotton fabrics manufactured on the sixteen powerlooms, duty being demanded on the basis of compounded levy rates. He directed that all the four persons shall be jointly and severally liable for payment of duty. He ordered confiscation of the cotton fabrics seized from M/s. Surajmal Purshotam Das and further held that on failure to produce the goods in terms of the bond at the time of provisional release an amount of Rs. 1,000/- was to be appropriated out of the bond amount. The five appeals preferred by the five parties against the said order were disposed of by the Central Board of Excise and Customs under order dated 14-5-1979. Except setting aside the penalties levied, the Board dismissed the appeals in other respects. Five revision petitions were preferred to the Central Government which, on transfer, are now before us as the present appeals.

2. We have heard Shri Gopal Prasad, Consultant for the appellants and Smt. Saxena, SDR, for the Department.

3. The main issue for decision in these appeals is the same as in the appeals before the Board. That would be, in the words of. the Board, as follows :-

"The main issue for decision in all these appeals is whether, under the facts and circumstances of the case, the exemption granted to certain types of cotton fabrics under Government of India Notification No. CER-8(28)/56, dated 5-1-1957 (as it stood during the material period i.e. 2.9-10-1962 to 31-8-1963) was applicable to the cotton fabrics produced on the 16 powerlooms in the appellants' four units. If the exemption is admissible, then there would be no contraventions of Rules as alleged and the demands for duty, confiscation of goods and imposition of penalties on the appellants will not be sustainable. If the exemption is not admissible, then the duty demand and confiscation of the fabrics would be correct in law and the correctness of imposition of penalty will have to be determined on the basis of various other factors."

4. The notification in question is Notification No. CER-8(28)/56, dated 5-1-1957. As it stood at material time it exempts from the whole of the duty the following types of cotton fabrics:

"Unprocessed cotton fabrics manufactured by or on behalf of the same person in one or more factories commonly known as powerlooms (without spinning plants) in which less than 5 powerlooms in all but no roller looker machine are installed."

5. The order-in-original held that though the five appellants were separate legal entities the sixteen powerlooms were being worked by a group or consortium of the 4 individuals mentioned earlier and thus the said consortium was the single manufacturer. It was therefore held that since the said