1986 (9) TMI 208 - AT - Central Excise

Issues Involved:
1. Classification of Coca Cola concentrates and beverage bases under the Central Excise Tariff.
2. Applicability of exemption notifications No. 55/75-CE and No. 54/75-CE.
3. Validity of the demand for duty and imposition of penalty.
4. Limitation period for demanding duty.
5. Allegations of willful suppression and misstatement by the appellants.

Detailed Analysis:

1. Classification of Coca Cola Concentrates and Beverage Bases:
The appellants, M/s. Coca Cola Export Corporation, were manufacturing Coca Cola concentrates and beverage bases. A show cause notice was issued alleging that they failed to obtain the necessary central excise license and removed excisable goods without following central excise formalities. The appellants contended that the products fell under T.I.-1B CET and were exempt under notification No. 22/60 CE, supported by the Chemical Examiner's opinion and the Central Board of Excise and Customs' acceptance. They argued that the products could not be classified under T.I. 68 CET.

2. Applicability of Exemption Notifications No. 55/75-CE and No. 54/75-CE:
The appellants claimed that even if the products fell under T.I. 68 CET, they were exempt from duty under notifications No. 55/75-CE (as food products) and No. 54/75-CE (due to the number of workers being less than 49). The Collector, however, included various employees as workers, which the appellants argued was incorrect.

3. Validity of the Demand for Duty and Imposition of Penalty:
The Collector confirmed the demand for duty and imposed a penalty of Rs. 25 lakhs. The appellants argued that the demand was unjustified and the penalty excessive. They contended that they had not willfully contravened the provisions of the Central Excises and Salt Act or the rules framed thereunder.

4. Limitation Period for Demanding Duty:
The appellants argued that the demand for duty was barred by time as the show cause notice was issued long after the cessation of production. They contended that the extended period of 5 years under Rule 10 was not applicable as there was no willful suppression or misstatement. The department conceded that the demand could not extend beyond 5 years from the date of the show cause notice.

5. Allegations of Willful Suppression and Misstatement:
The Collector's order was based on the assumption of deliberate mis-statement by the appellants regarding the number of workers. The appellants argued that there was no occasion for them to make any statement before the excise authorities as they believed their products were non-dutiable. The Tribunal found the Collector's finding factually incorrect and concluded that the appellants acted bonafide without intent to evade payment of duty.

Conclusion:
The Tribunal held that the department was not justified in invoking the larger period of limitation of 5 years and should have restricted the demand to the normal period of 6 months. The demand for duty was thus barred by time, and the imposition of penalty was unjustified. The appeal was allowed, and the order of the Collector was set aside.

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