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TMI Blog1994 (9) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... ted from duty, they did not file L-4 application for obtaining Central Excise licence. On 14-9-1990, the preventive officers visited the appellants factory and seized 3896 cartons of Soya Milk sold under the brand name Big Sipp on the ground that Big Sipp Soya Milk was not entitled for exemption under Notification 20/89. Thereafter the appellants obtained a Central Excise licence in Form L-4 in respect of the goods manufactured by them and started paying duty on the goods manufactured and sold under the brand name Big Sipp `under protest . The appellants were served with a show cause notice dated 26-9-1990 issued by the Assistant Collector, Central Excise requiring them to show cause to the Collector, Central Excise, Meerut as to why duty amounting to Rs. 16,15,831.09 leviable on Soya Milk flavoured and Soya Milk with admixture of fruit pulp cleared from the factory during the period 27-3-1990 to 13-9-1990 should not be demanded under Rule 9(2) read with Section 11A of the Central Excises and Salt Act, 1944 and why penalty should not be imposed on them under Rule 173Q, Rule 9(2) and Rule 52A of the Central Excise Rules, 1944. The show cause notice further alleged that Soya Beverage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for exemption. The Tribunal held that for the failure of the Department to carry out the necessary enquiry, the assessees could not be held responsible. However, the appellants were served with another Show Cause Notice dated 11-3-1992 issued by the Collector of Central Excise requiring them to show cause as to why duty amounting to Rs. 29,01,430 for the period 16-5-1989 to 13-9-1990 should not be demanded on soya milk based products flavoured with fruit pulp cleared from the appellants factory and why penalty should not be imposed on them. Thereafter by the impugned order dated 4-2-1993 the Collector confirmed the demand of Rs. 29,01,430 under proviso to Section 11A. He also imposed a penalty of Rs. 1 lakh on the appellants under Rule 173Q. The Collector observed that there was no infirmity in the second show cause notice issued by him by invoking the extended period since the earlier show cause notice dated 26-9-1990 issued by the Assistant Collector was adjudicated by him only to settle the question of classification, and whether the seized goods were liable for confiscation. 2. On behalf of the appellants, Shri N. Khaitan, Learned Advocate with Smt. Malini Sud, Advocate appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uppression, mis-declaration etc. was not sustainable. He therefore pleaded that the impugned order confirming the demand by invoking extended period may be set aside. In support of his contention, he cited the following case law :- M.P. Tobacco Ltd. v. Collector of Central Excise, Raipur - 1994 (53) ECR 2; Collector of Central Excise, Bangalore v. A.V.R.A. Co., Bangalore - 1987 (31) E.L.T. 238; Sandoz (India) Ltd. v. Collector of Central Excise - 1990 (50) E.L.T. 403. 3. On behalf of the respondent, Shri R.K. Kapoor, SDR stated that the appellants had filed a classification list in which they have declared their product as Soya Milk and had claimed exemption under the provisions of Notification No. 20/89-C.E., dated 1-3-1989. He added that the classification list was returned to them by the Superintendent who advised them to file a declaration in respect of their product in terms of Rule 174. Shri Kapoor contended that the Collector had correctly arrived at the finding regarding mis-declaration and suppression of fact since the appellants after claiming their product as exempt under Notification No. 20/89 had failed to file the required declaration under Rule 174 giving t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Excise - 1992 (20) ETR 20 and in the appellants own case by Final Order No. E/15/93-D, dated 13-1-1993. Hence, the only issue to be examined is whether the demand for the period 27-3-1990 to 13-9-1990 amounting to Rs. 29,01,430 confirmed under the proviso to Section 11A of the Central Excises and Salt Act, 1944 and the penalty of Rs. 1 lakh imposed on the appellants are sustainable. It is seen that the Collector held that the extended period for confirmation of the demand under proviso to Section 11A of the Central Excises and Salt Act was invokable mainly on the ground that the appellants had failed to file the declaration as required under Rule 174 of the Central Excise Rules even after the Superintendent had directed them to do so while returning the classification list filed by them, in which they had claimed their product as Soya Milk exempted under Notification 20/89-C.E. The Collector has held that the failure on the part of the appellants to file the declaration in terms of Rule 174 resulted in the clearance of the goods without levy of proper duty. For proper appreciation of the Collector s finding on the point of limitation, we refer to the relevant extract from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sorted to mis-declaration or suppression of certain facts in the classification list with the intent to evade duty refrained from confirming the demand on the ground that the Assistant Collector was not competent to issue a show cause notice invoking the extended period under the proviso to Section 11A of the Central Excises and Salt Act. Even though the demand for extended period was not confirmed by the Collector, the Tribunal in its order No. E/15/93-D while arriving at the finding on the question of classification of the disputed product also examined the question whether the extended period under the proviso to Section 11A of the Central Excises and Salt Act, for confirmation of the demand, was invokable. The Tribunal s findings in paragraphs 18 and 19 of the said order being relevant are reproduced below :- 18. The second question for our consideration is pertaining to the extension of the proviso of Section 11A of the Act. It has been alleged against the appellant that they have suppressed material facts and has not furnished all the material details and thus the extended period under the proviso of Section 11A of the Act can be inforced on them. The learned Counsel has v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turned. The Supdt. also informed them to file annual declaration to Assistant Collector. The appellants filed a reply to this letter and protested about their filing annual returns as they were exempted under the said Notification. The question that arises for our consideration is as to whether there is suppression in the details given by the party in the Classification List filed by them. As has been extracted above, the Classification List clearly indicates the product `Golden Glow and `Big Sipp the Big Sipp and they have also clearly indicated, `Mango, Rose, Pinakool and Banana . These four items indicate use of fruit and flower-essence. This should have given very clear indication to the department about the addition of fruit pulp in the Soya Milk. They have also clearly indicated that they are going to sell these in pouches, in cans of plastic and metal. Therefore, when they were to market in cartons with a brand name, any reasonable person would certainly come to the conclusion that what the party is marketing is not plain Soya Milk for which exemption is granted in the said notification but it is a separate product manufactured by using Soya Milk as a base. Therefore, the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llector of Central Excise, reported in 1989 (43) E.L.T. 195, the Hon ble Supreme Court has held that mere failure or negligence on the part of the manufacturer either to take out a licence or not to pay duty in case where there was scope for doubt does not attract the extended limitation unless there is evidence that the manufacturer knew that the goods were liable to duty or he was required to take out a licence. The Supreme Court further held that for invoking the extended period of five years limitation duty should not have been paid, short levied or short paid or erroneously refunded because of either fraud, collusion or wilful mis-statement or suppression of facts or contravention of any provisions of the Act or Rules made thereunder. On a plain reading of the Tribunal s finding in Order No. E/15/93-D, it follows that the appellants had acted on the basis of a bona fide belief that their product was eligible for exemption under Notification No. 20/89, dated 1-3-1989. As observed by the Tribunal in the Classification list No. 1/89 submitted by them to the Superintendent of Central Excise they had given the description of the goods which gave clear indication that the product co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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