1993 (9) TMI 240 - AT - Central Excise

Issues:
1. Demand for duty on rectified spirit (Industrial Alcohol) containing 6% water.
2. Allegation of time bar in issuing Show Cause Notices.
3. Department's knowledge of manufacturing activities.
4. Circular issued by CBEC regarding the dispute on duty.

Analysis:

1. Demand for duty on rectified spirit (Industrial Alcohol) containing 6% water:
The issue revolves around the demand for duty on rectified spirit containing water, alleged to be usable as fuel for Internal Combustion Engine. The Appellant argued that due to the water content, the spirit cannot be used as fuel, and the demand is time-barred. The Appellate Tribunal noted the Appellant's communication to the Department regarding the manufacturing of industrial alcohol subject to State Excise Control and the request for a Central Excise License for a waste product, indicating transparency in their activities. Despite no penalties imposed and the Collector's satisfaction with the absence of mens rea, the extended period was invoked for demanding duty.

2. Allegation of time bar in issuing Show Cause Notices:
The Appellant contended that the Show Cause Notices issued were time-barred, covering periods from 1985 to 1989. The Tribunal observed the Appellant's proactive communication with the Department regarding their manufacturing activities, including the request for a Central Excise License. The Tribunal found that the Department's knowledge of the manufacturing processes and the circular issued by CBEC directing authorities not to enforce the demand until the Supreme Court's decision indicated a lack of deliberate concealment of manufacturing activities.

3. Department's knowledge of manufacturing activities:
The Tribunal highlighted the Department's awareness of the manufacturing activities through the Appellant's communications and the application for a Central Excise License for a waste product. The Tribunal noted that the Department's failure to direct the Appellant to obtain a license for the main manufacturing activity suggested uncertainty regarding the dutiability of the rectified spirit. The Tribunal's prima facie view indicated that the manufacturing activities were not deliberately kept away from Departmental scrutiny.

4. Circular issued by CBEC regarding the dispute on duty:
The Tribunal referenced a circular issued by the CBEC, acknowledging a long-standing dispute and directing authorities not to enforce the demand until the Supreme Court's final decision. This circular further supported the Tribunal's view that the Appellant's manufacturing activities were not deliberately concealed from the Department. The Tribunal directed the Appellants to furnish a personal bond covering the duty amounts within a specified period, with a stay and waiver of deposit of duty amounts pending appeal disposal.

This detailed analysis of the judgment addresses the key issues raised in the case, including the demand for duty, time bar in issuing notices, Department's knowledge of activities, and the impact of the circular issued by the CBEC on the dispute over duty.

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