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TMI Blog1986 (9) TMI 208X X X X Extracts X X X X X X X X Extracts X X X X ..... e show cause notice mentioned that the appropriate duty was to be determined under Rule 9-A(5) of the Central Excise Rules. The appellants replied denying the charges. They claimed that the Central Excise authorities had earlier sought to take proceedings on the basis that the concentrates and beverage bases fell under T.I.-1B CET but were not exempt under notification No. 22/60 CE but such proceedings were later dropped on the basis of Chemical Examiner s opinion. They contended, that therefore the contention now raised, that the products fell under T.I. 68 CET, was not valid. They, therefore, denied that they had contravened the provisions of the Central Excises and Salt Act or the rules framed thereunder in any manner. They further contended that, in any event, even if the products fell under T.I. 68 CET, they were exempt from duty either under notification No. 55/75-CE or No. 54/75-CE both, dated 1.3.75. On adjudication, the Collector of Central Excise, Delhi, under order dated 23.12.82, held the charges established. He accordingly confirmed the demand as raised under the show cause notice and further imposed a penalty of Rs. 25 lakhs. It is against the said order that this app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, as seen from the earlier proceeding, that the products fell under T.I.-1B and therefore could not fall under the residuary item. In the circumstances the issue of the show cause notice in 1980, long after the cessation of the manufacture of the products, was uncalled for. The allegations therein as if the appellants had willfully contravened the provisions of Central Excises and Salt Act or the rules framed thereunder are devoid of substance. In any event, even if the goods were classifiable under T.I. 68, they were exempted under notification No. 55/75 as the products in question were food products falling under item No. 1 of the said notification. In any event they were exempt under notification No. 54/75 also as the number of workers in the factory in which the products were being manufactured never exceeded 49. The Collector had erred in including various employees as workers though they were really not workers as defined in the Factories Act or for the purpose of the Central Excises and Salt Act. On all these grounds the Collector should have dropped action holding that no duty was payable and there had been no wilful contravention of the Act or the Rules. In any event, re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... months only. 7. Shri Diwan pointed out that the appellants were the sole manufacturers of Coca Cola concentrates and beverage bases in India. He therefore contended that when the Department took samples and had the same analysed and thereafter the Central Board of Excise Customs intimated that such Coca Cola concentrates and beverage bases were not liable for duty as falling within item 9 of notification No. 22/60 they were dealing with the products manufactured by the appellants only. We may see from the Central Board of Excise Customs F.No. 33/10 /69-CX.III, dated 7.9.70 that the same had been issued with reference to the letter No. 124-Chem-Food-Products-69, dated 7.8.69 from the Chemical Examiner, New Delhi to the Assistant Collector, Central Excise, Faridabad. The fact that the letter of the Chemical Examiner was addressed to the Assistant Collector Central Excise, Faridabad would establish the correctness of this contention that the samples sent to the Chemical Examiner related to the products manufactured by the appellants, and which are now in issue before us. From the letter of the Chemical Examiner it is clear that the samples had been sent to the Chemical Examiner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lants to comply with the necessary excise formalities and to clear the goods only on payment of duty. He points out that the Department had taken no such steps till the show cause notice, dated 17-9-80 was issued more than 2-1/2 years after the appellants had ceased production of the goods. Shri Divan contends that in these circumstances the show cause notice was wholly barred by time. 9. The notice had been issued on 17-9-1980. By that time Rule 10, as amended, had come into effect and Rule 9 had also been suitably amended. This Tribunal had held in its decision in the Atma Steels case [1984(17) ELT - 331] that in such instances the rule as it stood on the date of the issue of the show cause notice shall alone apply and not the rule as it stood on the date of the original cause of action. Shri Tripathi also does not dispute this contention of Shri Divan. Rule 9(2) itself referred to the periods mentioned in Rule 10 on the question of limitation. Shri Tripathi, therefore, concedes that in any event duty could not have been demanded for a period of more than 5 years preceding the date of show cause notice. In that event, the duty demand for the period 1-3-75 to 19-9-75 (the date o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the said notice. In his order the Collector has observed that there had been a deliberate mis-statement on the part of the appellants, disclosing their intent to evade payment of duty. He had observed in an earlier portion in fact by making one declaration before the Chief Inspector of Factories and another before the Central Excise Department, in respect of the same subject, the state of mind of the company is well indicated viz. a wilful effort to defraud the Government of its rightful revenue. Thus the Collector proceeds on the basis that there had been a deliberate mis-statement by the appellants before the excise authorities with intent to evade payment of duty and this was evidently the basis for his invoking the larger period of limitation of 5 years than the normal period of limitation of 6 months. Shri Divan urges that the observation of the Collector about the appellants having made a deliberate mis-statement to the excise authorities with reference to the number of workers employed by them is factually incorrect. He submits that since the appellants were bonafide under the belief that their products were non-dutiable and were fully exempt (falling under T.I. 1B CET) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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