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TMI Blog1993 (10) TMI 168X X X X Extracts X X X X X X X X Extracts X X X X ..... y falling under Item 68 of erstwhile Central Excise Tariff cleared without payment of duty during the period 1-10-1983 to 27-2-1986 (iv) imposed a penalty of Rs. 1,00,000/- on the appellants. 2. On behalf of the appellants Shri Kapil Vaish C.A. appeared before us. He stated that the Collector had erred in holding that the credit availed by the appellants was irregular since mere change in the headings and sub-heading in the declaration filed under Rule 57G constitutes only a technical breach. He submitted that the inputs in question falling under Chapters 29 and 33 were covered by Notification No. 177/86 and they were received under a duty paying document. He added that the duty paid inputs were used only in the manufacture of the declared final products. He argued that under these circumstances the conditions of MODVAT were fully complied with and the findings of the Collector were not maintainable. In support of his contentions he cited the following case law : - 1993 (65) E.L.T. 289 (Tri.) = 1993 (47) ECR 498 - CCE, Bangalore v. Triton Valves Ltd. 1990 (47) E.L.T. 292 (Tri.) = 1990 (31) ECR 111 - Madras Fabricators v. CCE, Madras 3. Continuing his submission Shri Vaish s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under MODVAT Scheme and the duty-paid inputs were used only in the manufacture of the declared final products was not relevant since they had not declared the inputs in question as required under Rule 57G. In support of his contentions he cited the following case law : 1990 (47) E.L.T. 28 - Aluminium Indust. Ltd. v. C.C.E. 1990 (47) E.L.T. 392 - Usha Martin Indust. Ltd. v. C.C.E. Referring to the second charge in the show cause notice, Shri Arora submitted that the appellants had evaded duty by deliberately misdeclaring items used in food and beverage industry falling under Heading No. 3302.10 as Organic Chemicals falling under Chapter 29 in the classification lists for the period 28-2-1986 to 11-6-1986. He contended that under these circumstance, the Collector was justified in conferring the demand for the differential duty. In support of his submissions he placed reliance on the judgment of the Supreme Court in the case of Jaishri Engg. Co. Pvt. Ltd. v. Collector of C. Excise reported in 1989 (40) E.L.T. 214. Dealing with the third charge in the show cause notice, Shri Arora stated that the Collector had rightly confirmed the demand for duty on Orange Oil and Lemon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rave usually imported and Orange emulsion swells, etc. 28.06 Caramal and Preservative like Citric Acid, Phosporic Acid, Sodium Benzoats, Ascorbic Acid (Vitamin C ) Plain, Sodium Citrate, Caffene IP, Iso Propyl Alcohol, Proplene Glycol etc. 28.06 Packing materials like Glass bottles 70.07 Bottle closures made of aluminium sheet 76.1290 HDP Carboys and Jerry Cans of varying Capacity Ch. 39 This is to inform you that as and when we get other inputs, after payment of duty, we shall file additional list of this declaration. Kindly acknowledge receipt of this letter and oblige". It is seen that Flavouring Essences and Iso Propyl Alcohol were specifically mentioned in the declaration. According to the appellants these inputs were invariably duty-paid and the declared final products were also cleared on payment of duty. Under these circumstances we are inclined to agree with the appellants that there was substantial compliance with the provisions of the MODVAT Scheme and the incorrect classification of the inputs in the declaration filed under Rule 57G was only a technical breach. In this regard we find that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not sustainable. 7. The Collector had also confirmed a demand for Rs. 3,69,121.50 on the basis of his findings that the appellants had wrongly classified certain items used in food and beverage industry as Organic Chemicals under Chapter 29 during the period 28-2-1986 to 11-6-1986 whereas they were correctly classifiable under Heading No. 3302.10. In this regard the appellants case is that they had given full and complete description of the goods in the relevant classification lists 2/86 and 3/86 which were duly approved. They have contended that under these circumstances and in the absence of suppression or mis-statement even if it is assumed that the goods ought to have been classified under Heading No. 3302.10 with effect from 1-3-1986, the demand dated 31-12-1986 for differential duty, for the period beyond six months has to be held as time-barred by limitation under Section 11A of the Act. 8. On perusal of the copies of the classification lists 2/86 and 3/86 we find that while giving the general description of the goods as Organic Chemical in the relevant column and classifying them under Heading 2913.00 read with Notification No. 172/86, dated 1-3-1986 they had e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his finding that the appellants had manufactured and cleared Orange Oil and Lemon Oil falling under Chapter 33 of the Central Excise Tariff Act, 1985, without filing any classification list or price list and they had also failed to discharge the duty liability on these goods. In this regard the appellants case is that in respect of these products they had acted under the bona fide belief that they were chargeable only to Cess and no Central Excise Duty was attracted on them. They have contended that for this reason and also on account of the fact that in Column 5 of the Classification Lists 2/86 and 3/86 they had declared Oil extracted from Orange and Lime Fruits used in the factory under the heading Particulars of other goods produced or manufactured and intended to be removed by the assessee confirmation of the demand by invoking the extended period under the proviso to Section 11A was illegal. 11. It is seen that the dutiability of Orange Oil and Lemon Oil has not been disputed by the appellants. In view of the fact that they had included these products in the list of Other manufactured products in Column 5 of the Classification List Nos. 2/86 and 3/86 we are i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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