2001 (2) TMI 572 - AT - Central Excise

Summary

Issues:
1. Whether the product in question contains alcohol.
2. Validity of the show cause notice issued to the appellants.
3. Justification for invoking a longer period of limitation.
4. Confirmation of demand of duty based on test report.
5. Allegations of non-use of alcohol in a specific batch.
6. Imposition of penalty on the appellants.

Analysis:

Issue 1:
The appellants manufactured 'Boroplus Prickly Heat Powder,' an ayurvedic medicine containing alcohol, governed by the Medicinal and Toilet Preparations (Excise Duty) Act, 1955. Central excise authorities drew samples to check alcohol presence. Most tests showed alcohol, except the one in the appeal. The sample in question was drawn on 14-6-1990.

Issue 2:
A show cause notice was issued on 30-11-1993, alleging the absence of alcohol in the sample, proposing duty payment and penalties. Appellants argued they followed approved manufacturing processes, maintaining records as per regulations. They presented evidence of alcohol use in the batch in question.

Issue 3:
The appellants contested the longer limitation period invoked, stating the notice was time-barred. They argued no suppression of facts existed to warrant an extended limitation period. The appellants emphasized the timeline of events and lack of justification for the prolonged notice.

Issue 4:
The chemical examiner's test report on the disputed sample was challenged. Appellants questioned the testing procedure, sample storage conditions, and the delayed testing timeline. They highlighted discrepancies in the testing process and lack of verification post-recommendation, casting doubt on the accuracy of the report.

Issue 5:
Appellants disputed the duty demand based on the specific batch, asserting the demand should be limited to the batch in question. They criticized the Revenue's extension of the duty demand beyond the relevant batch, citing precedents.

Issue 6:
The imposition of penalties was contested by the appellants, arguing the duty demand was unjustified. They emphasized the consistency in their manufacturing process and the implausibility of altering it for a single batch. The appellants sought the reversal of the duty confirmation and penalties.

The Tribunal found discrepancies in the testing process, noting the unique circumstances of the delayed testing and potential alcohol evaporation. The appellants' consistent manufacturing practices and regulatory compliance supported their claim of alcohol presence. The Tribunal set aside the duty demand, citing doubts about the accuracy of the test report. The appeal was allowed, providing relief to the appellants without addressing alternative arguments.