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TMI Blog1987 (7) TMI 351X X X X Extracts X X X X X X X X Extracts X X X X ..... ld make such goods falling under Tariff Item 68 non-excisable and the value of their clearance not includible in determining eligibility of the appellants to benefit of exemption under Notification No. 71/78 or No. 80/80. (c) whether on the facts and circumstances of the case, invoking the longer time limit of 5 years for raising demand of duty against the appellants is not legal and justified; and (d) whether the imposition of penalty in the 3 cases is on the facts and circumstances of the cases not justified and called for. 2. These three appeals arise out of orders-in-original Nos. 8 of 1985,9 of 1985 and 10 of 1985 passed by Collector of Central Excise, Bombay-I all, dated 24.6.85. These are the outcome of three show cause notices (1), dated 26.2.1983 read with corrigendum, dated 7.12.1983, (2), dated 19.7.83 read with corrigendum, dated 7.12.1983 and (3), dated 7.12.1983. The first show cause notice raising in all a demand of Rs. 38,276.31 P. relates to the period 1.4.1982 to 31.1.1983. The second show cause notice, dated 19.7.1983 read with corrigendum, dated 7.12.1983 raised in all a demand of Rs. 4,492.82 P. for the period 1.2.83 to 31.3.83. The third show caus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statutory records and documents and had thus committed breach of Rule 173-E, 173-F, 173-C, 173-G(1) read with Rule 9(1), 173-G(2) read with Rule 51-A, 173-G(4), 173-G(3) read with Rule 53 and 226 of the Central Excise Rules, 1944. 3. The notices raised demand of duty and proposed penalty as already set out above. The appellants filed replies, dated 27.2.85, 20.5.83 and 18.8.83 to the show cause notices. In the replies, the appellants denied the charges as being totally false, misconceived and untenable. In the replies to the notices, the appellants urged that pharmacopoeial products falling under Item 68 of the Central Excise Tariff were wholly and unconditionally exempted from payment of Central Excise duty under Notifications No. 55/75 and 104/82. The appellants factory was also exempted from Central Excise Licensing control. The appellants therefore, submitted that there was no legal and statutory, obligation upon the appellants to follow any Central Excise procedure and make any declaration. It was also submitted that prior to introduction of Notification No. 71/78-C.E., dated 1.3.78, the appellants were holding Central Excise licence but on account of exemption from payment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) Nagrath Paints Pvt. Ltd. v. U.O.I. -1978 Tax Law Reporter No. 645 (iii) Eseptori & Co. P. Ltd. v. Superintendent of Central Excise -1985 (19) E.L.T. 57 (All.) (iv) Tata Export v. Union of India -1985 (22) E.L.T. 732 (MP) (v) Shri Madhav Mills P. Ltd. v. Collector - 1984 (17) E.L.T. 310 (Pat.) 5. For the contrary view, he brought to the notice of the Bench, the following two decisions - (i) Tamil Nadu (Madras) State Handloom Weavers Cooperative Society v. Assistant Collector -1978 E.L.T. (J 57) (Mad.) (ii) Vishal Andra Industries v. U.O.I. - 1983 E.L.T. 2265 (Del.) 6. Relying on Madhav Mills Pvt. Ltd. and Tata Exports (supra), Shri Jain submitted that wholly exempted goods were not includible in the value of clearance of all excisable goods. He however, in fairness, drew attention of the Bench to Delhi High Court decision in Vishal Andhra Industries case (supra) where contrary view is taken. Relying on State of Tamilnadu v. Kandaswami [1975 (36) STC 191 (SC)], Shri Jain submitted that taxable goods ceased to be taxable goods after full exemption. He also submitted that 5 year time limit could not be applied in the case of the appellants as the non-filing of declaration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of determining aggregate value of clearance under the two notifications. For the purpose, she relied on the Delhi High Court decision in Vishal Andhra Industries v. Union of India - 1983 E.L.T. 2265 (Del.) and the Karnataka High Court decision in Karnataka Cement Factory v. Superintendent of Central Excise & Others - 1986 (23) E.L.T. 313. She submitted that Supreme Court decision in State of Tamilnadu v. Kandaswami (supra) had been taken note of by the Tribunal in 1986 (25) E.L.T. 843 and in spite of this decision, the Tribunal following the Karnataka High Court decision held that fully and unconditionally exempted goods do not cease to be excisable. Therefore, value of such goods would be includible for finding out the aggregate value of clearance under the two notifications. She submitted that merely because the manufacturer was exempt from Licensing Control would not mean that the goods manufactured by the manufacturer would cease to be excisable. She also referred to two decisions of the Tribunal Order No. 576/86-C, dated 3.10.86 M/s. Techno Chemical Industries v. Collector of Central Excise, Cochin where the Tribunal had taken a similar view. According to her, licencing and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jain's reliance on the Supreme Court decision in State of Tamilnadu v. M.K. Kandaswamy - AIR 1975 SC 1987 for the argument that after exemption the goods ceased to be taxable goods, it may be stated that the Tribunal in 1986 (25) E.L.T. 843 (Tribunal) in Shri Krishna Tiles & Pottery case on which Smt. Chander has placed reliance in para 7 of the decision, repelled the contention placing reliance on the Supreme Court judgment in Health way Dairies v. Union of India - (AIR 1976 SC 2271 -1978 J-457) and held that even on exemption excisable goods continue to be excisable goods. Shri Jain's reliance therefore, on Kandaswamy's case does not help the appellants. 9. It may also be stated that the Tribunal in M/s. Techno Chemical Industries v. Collector of Central Excise, Cochin - Order No. 576/86-C, dated 3.10.86 inter alia following the Karnataka High Court decision and Delhi High Court decision in Vishal Andhra Industries v. Union of India -1983 E.L.T. 2265 (Del.) had taken a similar view. 9A. In view of the foregoing, we hold that excisable goods on being exempted from payment of duty by exemption notification issued under Rule 8(1) of Central Excise Rules, do not cease to be excisa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal (para 24 and 25 of the decision) followed the Vishal Andhra Industries decision and the Madras High Court decision in Tamilnadu (Madras) State Handloom Weavers Society Ltd. and held the value includible. It would therefore, not be proper to differ from this Special Bench decision. Madhav Industries case therefore, does not help the appellants. 13. Shri Jain submitted that the appellants activity of manufacture was within the knowledge of the Department as earlier the appellants held a licence prior to introduction of Notification No. 71/78. After issue of this notification, the appellants surrendered the licence which was cancelled by the Central Excise authorities. According to him, on these facts, invoking the longer time limit of 5 years under Section 11A of the Central Excises and Salt Act, 1944 which is applicable in the case of mis-statement, suppression of facts, collusion, fraud and the like, should not be invoked in the appellants case and the time limit for raising the duty, if any, should be the normal and shorter time limit of 6 months. We cannot agree with Shri Jain's submissions of the point. The mere fact that in some distant past one was engaged in manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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