Per K.K. Bhatia:

The Central Excise Officers of Headquarters (Anti-Evasion), Commissionerate, Jaipur-I, visited the factory of the appellants on 9 11.9.1998. They found that the appellants were engaged in the manufacture of car matting/other mattings. They has neither obtained any registration from the Central Excise Department nor had been paying central excise duty on removal of their final product. Certain documents/records were resumed from heir premises for further scrutiny From the scrutiny of these records, it was learnt that they were clearing their final products viz. car mattings or floor foot mats of the cars and accordingly it was observed that during the period 1995-96 to 1998-99, they has cleared finished goods valued at Rs 78,79,908.75 without payment of duty of central excise amounting to Rs 21,95,458.77 as per the particulars given below -

In this connection, the statement of Smt. Jyotsna Sharma, Proprietress of the party, was recorded on 11.9.1998 and 17.9.1998. in her statements, she deposed that they were manufacturing car mattings since 20.8.1995 with the raw material re. nonwoven (needle loom felt) which was procured front M/s Sirsa Felts, Sirsa and other such parties and rest of the raw materials (floor covering) had been purchased from

M/s Kanak Fibrefeb (P) Ltd., Gurgaon, and M/s Bajaj Carpet Ltd., Noida, and that the raw materials received by them was classified under Chapter sub-heading 5703.20 and 5703.90.

2. Further from the scrutiny of the records/documents of the party, it was learnt that they had been procuring the raw material i.e. polyester non-woven fabric (needle loom felt) textile floor covering from various manufacturers under invoice with the following descriptions "Textile floor Covering of Jute" classifying the product under sub-heading 5703.20. Out of such material, the party had been manufacturing car matterings and other mattings, such as, bath mats, telephone mats, floor foot mats etc. with the aid of power operated machines. The process or manufacture involved cutting as per standards, overlocking and stitching etc.

3. in her further statement dated 22.2.1999, Smt. Jyotsna Sharma confirmed that besides manufacturing car mattings, they were also engaged in the manufacture of various other mattings as well. The manufacturing process was the same for both types of mats. It was further learnt that the process of conversion of textile floor coverings (non-woven and in roll form) into car mattings/other mattings involved the process of cutting to required/specified size, stitching, sizing, overlocking etc. and the newly emerged final product was known in different names in the market. It, therefore, appeared that the central excise duty was chargeable on the products i.e. car mattings/floor foot mats of car, or other mattings which were appropriately classifiable under sub-heading no 5703.90 of the first schedule to the Central Excise Tariff Act, 1985.

4. Accordingly, a show cause notice dated 21.6.1991 was issued to the party in which they were called upon to show cause as to why the central excise duty amounting to Rs 21,95,458.77 should not be recovered from them under Section 11- a of the Central Excises Act, 1944 and Rule 9(2) of the Central Excise Rules, 1944, and as to why the penalty should not be imposed on them under Rules 9(2), 5 2-A, 173- Q and 226 of the Central Excise Rules, 1944. they were further called upon to show cause as to why the interest on the delayed payment of duty at applicable rate should not be recovered from them under Section 11-AB of the Central Excise Act, 1944 and as to why the penalty should not be imposed on them under Section 11-AC. Smt. Jyotsna Sharma, Proprietress of the party, was also called upon to show cause as to why the penalty should not be imposed on her under Rule 209 (A) of the Central Excise Rules, 1944.

5. on considering the reply of the notice party, the