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TMI Blog1998 (4) TMI 355X X X X Extracts X X X X X X X X Extracts X X X X ..... was used for captive consumption free of duty under Notification No. 217/86. In the manufacture of Benzyl Cyanide, Benzyl Chloride was used, which was also manufactured by the assessees and cleared free of duty for captive consumption under the same notification. In their classification list dated 1-3-1989, for claiming benefit under the said notification for these two chemicals, it was stated that the final products were dutiable. The assessees were asked to specify the names of the dutiable products. On receipt of the reply to the effect that the final product was Phenyl Acetic Acid, the show cause notice was issued demanding duty on Benzyl Cyanide as well as Benzyl Chloride wrongly cleared under the notification for captive consumption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts and Shri H.K. Jain, ld. SDR for the Revenue. 4. We consider it necessary to deal with the plea on limitation before considering the issue on merits. The charge of suppression arose out of the perusal of classification list 2/CL/CHEL/DCW/89, dated 1-3-1989 in which the benefit of Notification No. 217/86-C.E., dated 2-4-1986 was claimed on the ground that these substances were being used for the manufacture of dutiable products . We have seen the photo copy of this classification list which does contain this phrase in Column No. 10. In this classification list wording for manufacture of dutiable goods has been written by hand. The ld. Counsel, at the time of personal hearing, made the half-hearted claim that this was not written by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rice lists. 6. The next claim of knowledge, etc. is based on the declaration filed under the Modvat scheme. On 13-1-1986, the Inspector, on perusal of the Modvat declaration, informed the assessees that where the duty-paid inputs are used in the manufacture of finished goods which were cleared free of duty, the credit taken was required to be reversed. In their reply, the assessees agreeing to this observation, had furnished rates at which they would be reversing the credit. In their letter, they had also said that they would not take any credit on Benzyl Chloride purchased from outside used in the production of duty-free Phynyl Acetic Acid. This correspondence does not come to the benefit of the assessees because it has no bearing on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellants that the Department was aware of the captive consumption of the impugned products in the manufacture of duty-free product, does not sustain on perusal of any of the evidence furnished by the assessees. 10. In their judgment, in the case of Ceaky Rubber Industries v. Collector of Central Excise, Cochin reported in [1996 (88) E.L.T. 634], the Supreme Court upheld the majority judgment of the Tribunal to the effect that where the assessees had not declared the manufacture and use of certain articles, in their classification list, which were used captively by them, the charge of clandestine removal could sustain. In the same manner, where the fact of manufacture was declared but a patent mis-representation was made that the goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.015 to 1.025 Gm/Ml 3. Repactim Index at 20 o C 1.522-1.524 Not analysed 4. Purity 99% Min. on Gas Chromatograph Crude product cannot be analysed as gas Chromatograph. 13. During the personal hearing, we pointed out to the ld. Advocate that no data was available for comparison on Sl. Nos. 3 and 4 of the Table and, therefore, no comparison could be made between the saleable product and the product internally consumed as the latter had not been analysed on these two counts. It was, further, pointed out that the differences between the colour and density were very narrow and that neither before the Collector nor before us, was any technical evidence led to show that the differe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s reversed in view of the fact that Phenyl Acitic Acid, the final goods, were duty-free. Since we have held Benzyl Cyanide attracted duty, in calculating this factor, will have to be kept into account. In other words, on the demand being confirmed, the credit earlier reversed should be permitted to be taken again. 18. The claim was also made that the part of the Benzyl Cyanide used in the manufacture of Phenyl Acetic Acid, went into the by-products, which were cleared free of duty. If this is correct, then to that extent, the benefit of Notification 217/86 would be available for the Benzyl Cyanide so used. 19. On these three grounds, the duty short levied will have to be re-calculated by the Commissioner. 20. We now come to the argume ..... X X X X Extracts X X X X X X X X Extracts X X X X
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