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TMI Blog1989 (9) TMI 227X X X X Extracts X X X X X X X X Extracts X X X X ..... ff without taking out a Central Excise licence and clearing the same without paying the Central Excise duty and without observing other Central Excise formalities. The value of clearances and the products manufactured during the period 1980-81 to 1985-86 was ferreted out. It was discovered that the aggregate value of clearances of Calibration oil, Synthetic pine tar, Petroleum jelly and Mahatone Factice was alleged to have exceeded the exemption limit in every year from 1981-82 to 1985-86. The records were recovered under a mahazar dated 13-11-1986. The statement of Shri R. Sanjeevi, Manager was recorded on 13-11-1986 and that of Shri Ananthanarayanan, Managing Partner of the film was recorded on 24-11-1986 and a show cause notice dated 26-3-1987 was issued demanding duty of Rs. 3,69,471.38 p. 3. Shri R. Sanjeevi, Manager of M/s. Mahatha Petro Chemicals gave a statement on 13-11-1986 wherein he has stated that they had taken out a Central Excise licence L-4 No. 1/71 during the year 1971 during which the manufacture was started and surrendered the licence during December, 1979 as the products were exempted and the value of clearances was within the exemption limit; that they had n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om 1975 and that they were having licence till 1976. The officers were visiting and scrutinising all the records till this time. They submitted that if the commodities were excisable than the same should have been assessed right from the year 1975. They submitted that while their factory was under licensing control, they had filed classification list and had stated under item 7 - Particulars of the other goods produced or manufactured and intended to be removed by the assessee . The Department finding the goods excisable, had not instructed them to take the licence and to follow any procedure. They further submitted that on 28-8-1978, in response to the letter OC No. 1935/78 dated 28-8-1978, a declaration was submitted to Superintendent of Central Excise, Range III Madras wherein the firm had notified the manufacture of the above commodities and had also stated that the goods were exempted as per classification list dated 19-5-1978. Again on 27-5-1985, the Asstt. Collector of Central Excise, Madras-I Division alongwith the Inspector visited the factory and had scrutinised the accounts as well as the nature of processing of the various goods. They complied with their instructions a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the citation in Adreena Industries v. Collector of Customs, Chandigarh [1987 (28) E.L.T. 364-T] wherein it had been held that if power had been used in a process which does not turnout to manufacture, it cannot be said that power had been used in the manufacture of the said article. They submitted that the furnace oil was mixed with resin and pine oil and packed in containers and in terms of Notification No. 179/79 as amended, the Mahatal RT 75 was not liable to duty as it was wholly exempted. They submitted that Mahatal RT 75 was distilled furnace oil classifiable under Tariff Item 10 and it had suffered duty, no further duty could be levied. They relied on the ruling in Nava Bharath Enterprises (P) Ltd., New Delhi v. Collector of Central Excise, Madurai reported in [1983 (13) E.L.T. 1134]. They further submitted that the value of drums and barrels in which calibration oil and Mahatal RT 75 were sold were returnable containers and its value should not be computed. If the value of these items are deducted, their clearances would be less than the exempted limit of Rs. 30 lakhs and they relied upon the citation as reported in Associated Cement Corp. Ltd, v. Collector of Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e oil and resin and used in Rubber industry as Plasticizers. They purchase duty paid furnace oil and remove lighter fraction by process of distillation for which an electric blower is used. Their case is that even after distillation the furnace oil remains as such and it is known in the market as furnace oil. There is no change in the name, character or use of furnace oil and that the process of distillation is not manufacturing activity. After distillation, they mix manually with pine oil and resin and as no power is used, their claim for exemption under Notification No. 179/77 is justified. Their further case is that furnace oil even after distillation and addition of pine oil and resin continues to be furnace oil as described in Tariff Item 10 of the Central Excis Tariff. They relied upon the Test Certificate. They have relied upon the definition of furnace oil in Item 10 which is stated as - (i) which has a smoke point of less than 10 mm; (ii) possesses a viscocity of 100 seconds or more by Redwood I visco meter at 37.08 C; (iii) leaves a carton residue of not less than 1/4th per cent by weight; and (iv) is as dark as or darker than, 0.04 Normal Iodine solution when te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se notice as already noted supra. In this connection, they have relied upon the rulling in Rishi Enterprises v. Collector of Central Excise [1984 (15) E.L.T. 260 Tribunal]. 11. Sh. K.V. Subramanyam, Advocate making his submissions has further relied on the definition of pine tar as given at page 818 of the Condensed Chemical Dictionary, Tenth Edition Revised by Gessner G. Hawley. He further relied upon the following rulings :- 1. Mahabir Jute Mills v. Collector of Central Excise, Ahmedabad [1988 (35) E.L.T. 119] 2. Adreena Industries v. Collector of Central Excise, Chandigarh [1987 (28) E.L.T. 364] 3. National India RubberWorks Ltd. v. Union of India Others [1988 (34) E.L.T. 19 Delhi] 4. Rajbir Singh Santokh Singh Another v. Collector of Customs (Prev.), Bombay [1988 (35) E.L.T. 122] 5. Collector of Central Excise v. Protein Products of India [1988 (38) E.L.T. 749 SC] Shri K.V. Subramanyam, Advocate finally sought for allowing the appeal. 12. Shri A.S. Sunder Rajan, Departmental Representative appearing for the Revenue, justified the reasoning given by the Collector in the impugned order and submitted that the Department is justified in invoking the longer per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o appears that they have deliberately contravened the provisions of Section 6 of the Central Excises and Salt Act, 1944 read with Rule 174, Rule 9(1) read with Rules 52-A, 178-B, 173-C, 173-F, 173-G and 226 of the Central Excise Rules, 1944". This change has to fail as admittedly the assessee was holding a licence L-4 No. 1/71 until 20-12-1979 when the licence was surrendered as the products were declared as exempted. Further correspondence and regular visits of the Departmental officials clearly discloses the fact that there is no suppression of production and clearances of Tariff Item 68 goods. The appellants were holding licence L-4 No. 1/73 for manufacturing of vapourising oil until 29-11-1976, when it was surrendered on their discontinuing the manufacture of vapourising oils. The Superintendent of Central Excise, Range III, Madras by his lettter dated 12-5-1978 in OC No. 892/78 sought for revised classification list. The appellants by their letter dated 19-5-1978 enclosing a detailed classification list in Form 1 submitted to the Superintendent of Central Excise, Madras III Dn. In coloumn 6, they have disclosed in detail all the items manufactured by them. The Superintendent i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise party, the appellants did not think it fit to approach the Department and seek clarification . Just before these two lines, the Collector has written, The Department is expected to guide/will guide the assessee when approached in proper form . It is strange how the Collector is blowing hot and cold in these sentences. If the Department is expected to guide/will guide the assessee, then why did the Asstt. Collector remain silent after the visit of 27-2-1985 to the appellants factory and how does it hold for the Department to allege that the assessee had suppressed the production of goods from 1980 when admittedly the Department is fully aware of the existence of factory of the appellant/assessee and their production of goods. Hence this charge of suppression by invoking proviso to Section 11(1)A of the Act for extending longer period of five years fails except for six months from the date of the show cause notice. The assessee has stated that they have obtained licence on 26-3-1986 on introduction of new Tariff of 85 and computing six months from the date of show cause notice dated 26-3-1987 will be 26-9-1986 and no demand prior to this could be made. To this extent if the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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