The court determined that penalty provisions under the Central Excise Act, 1944 apply to goods under the Additional Duties of Excise Act, 1957.

JUDGEMENT

(Per : MR.JUSTICE M.S.SHAH) This is an application filed by the Commissioner of Central Excise Surat-1 seeking a direction to the Customs Excise & Gold [ Control ] Appellate Tribunal, Mumbai to refer the statement of case and the following question under Section 35 H [1] of the Central Excise Act , 1944. [hereinafter referred to as " the Act "]

" Whether the provisions of fine and penalty as given in Central Excise Act, 1944 are applicable to the goods i.e.Man Made Fabrics [ MMF] which are subjected to Additional Excise Duties in terms of additional Duties of Excise [ Goods of Special Importance ] Act, 1957 ?"

In the order giving rise to this reference the Tribunal has placed reliance on the decision of the Delhi High Court in Pioneer Silk Mills Vs. Union of India reported in 1995 [80] ELT- 507 wherein it was held that the penalty provisions contained in Central Excise Act, 1944 were not applicable to the man made fabrics as no such provisions were found in the Additional duties of Excise [ Goods of Special Importance ] 1957 [ hereinafter referred to as the " Act of 1957 " ] before the amendment of the latter in 1994.

2.Earlier, this very question came to be referred to this Court in Central Excise and Customs Gold Control Ref. No.1 of 2001. After considering the aforesaid decision of the Delhi High Court in Pioneer Silk Mills [supra], this Court answered the reference in favour of the revenue for the following reasons:-

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It will thus be seen that penalty provisions are an integral part of assessment and collection of duties of which the necessary adjuncts are confiscation and penalty without which the imposition of taxes will lack teeth and become ineffective. If power to impose penalty for violation of the obligation to pay additional duty of excise is excluded in respect of the goods enumerated in the First Schedule of the Additional duties Act, then these taxation provisions would be reduced to a donation drive in respect of these very items for which duty of excise is also imposed under the Central Excise Act, 1944 and the rules made thereunder and violation of which would entail both confiscation and penalty.

The provisions of penalties are devised to ensure that the excise regulations are enforced and the recovery of excise dues is secured. The process of collection of revenue involves enacting methods of collection. The procedure of assessment and collection are intertwined with confiscation and penalty once violation of excise regulations is established, as contemplated by the rules imposing penalties. The object of the provisions to impose heavy penalties is to ensure that the revenue is protected against procrastination carelessness or deceit which is practised on a large scale, would make collection of the taxes a difficult task.

For the above reasons, it is clear to us that all the provisions of the Central Excise Act, 1944 and the rules made thereunder, including the provisions relating to confiscation and imposition of penalty contained therein, are applicable to the levy and collection of the additional duty of excise under section 3[1] of the Additional Duties of Excise Act, 1957 in the same manner as they already apply in relation to the levy and collection of such goods under the Central Excise Act, 1944 and rules framed thereunder.

We accordingly hold that the provisions relating to confiscation and imposition of penalty contained in the Central excise Act, 1944 and the rules thereunder are applicable to man-made fabrics which are liable to additional duty of excise under the First Schedule of section 3 [1]

of the Additiona