Per Shri V.P. Gulati :

The issue in the appeal relates to the demand of Additional Excise Duty in respect of Man Made Fabrics (MMF) which were supplied for processing of printing to the appellants. The demand is for the period from 1.4.1982 to 26.6.1986 and the show cause notice has been issued from 28.10.86.

2. The learned advocate for the appellants has pleaded that the appellants had taken the issue regarding the leviability of the duty on printed fabrics from 16.5.83 with the authorities and even though the authorities informed them that the Additional Excise Duty had to be paid, they continued to contest the leviability of the duty and finally they approached the Hon'ble High Court to grant a stay subject to the appellants' executing a Bank Guarantee for the duty that may be determined by the department from time to time. In the meantime, the Ld. Advocate pleaded that, the appellants also took out a licence and started filing RT-12 returns. This was done from July, 94. He has pleaded that the demand would be barred by limitation in as much as the Hon'ble High Court had restrained the collection of duty and they had not restrained levy of duty and therefore in the absence of any SCN having been issued, the demand raised on 28.10.86 would be barred by limitation. He has pleaded that the appellants had been agitating the demand right from 1983 onwards and therefore the appellants would be entitled to the benefit of limitation as the authorities could have issued the SCN within a period of 6 months. He has further cited the judgement of the Hon'ble Supreme Court in the case of Gokak Patel reported in AIR 1981 SC 1161. Further, he has pleaded as it is under tariff item 22 (1) (b) only when two of the specified processes were carried out the question of duty liability would arise. In this connection, he has referred us to the description of the goods as set out under T.H. 22 (1) (b) which reads as under :-

"Man-made fabrics, subjected to the process of bleaching, dyeing, printing, shrink-proofing, stentering, heat-setting, crease resistant processing or any other process or any two or more of these processes."

He has pleaded that the use of the words "any two or more of these processes" would clearly indicate that for the purpose of levy the Fabrics must be subjected to more than one of the processes mentioned under T.H. 22 (1) (b).

3. Next plea is that the redemption fine of Rs. 30,000/- could not have been levied as the goods had been provisionally released and only recovery could have been made in terms of the bond.

4. He has also pleaded that the penalty could not have been levied as the appellants had been in touch with the authorities all along and there was no malafide intention.

5. He has also pleaded that the duty has been demanded in respect of the goods which were lying uncleared and since the said goods had been cleared later on payment of duty, the demand of duty in terms of the order would amount to levy of duty second time over and he has sought for reduction to that extent. He has pleaded that the appellants had been informing the authorities regarding filing of D-3s after they took out the licence for the purpose of availing of the proforma credit. In the event of duty being demanded finally from the appellants. He pleaded that the appellants on this issue are in appeal No. E.SP 396/93. He has pleaded that this has been ruled out for the reason that the duty at the relevant time had not been paid and that the application of proforma credit had been rejected by the Asst. Collector and this rejection was communicated to them through the communication of the Superintendent.

6. Heard the learned JDR for the department. He has pleaded that the demand is for period from 1.4.82 and the appellants came before the authorities only in 1983 and even though the department informed them that the duty was payable, they chose not to pay the duty and thereafter they filed a writ petition and the Hon'ble High Court asked them to e