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TMI Blog2018 (9) TMI 1202X X X X Extracts X X X X X X X X Extracts X X X X ..... ture of FCP, on job work basis to M/s.BBA India Limited during the period from September 1993 to June 1997, out of the raw materials i.e. FC, supplied by M/s.BBA India Limited as per their specifications and under the brand name of M/s.BBA India Limited and clear of the same from their factory. The 1st respondent got themselves registered with the Department only on 19.06.1997 and started paying duty on the clearance of the said products manufactured by them from 19.06.1997 onwards. 3. The case of the appellant herein is that they have made a prima facie case against the 1st respondent for non payment of duty in respect of the manufacture and clearance of the above said products during the period from 16.03.1995 (the date of insertion of Chapter Note 7 to Chapter 21) to 18.06.1997. The said matter was investigated by the Headquarters Preventive Unit of the Central Excise Department, which culminated in issuing of Show Cause Notice No.2/2001 dated 03.01.2001, demanding duty of Rs. 1,55,56,454/- under proviso to Section 11A(1) of the Central Excise Act 1944, for the period from 01.12.1995 to 18.06.1997, besides demanding appropriate interest under Section 11(a)(b) and sought to impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ropriate interest under Section 11(a)(b) of the Act. The Commissioner has also imposed penalty of Rs. 3,50,000/- on M/s.BBA India Limited under Section 209A of the Central Excise Rule, 1944. Thus, the duty demand was re-determined as Rs. 35,55,780/-. 7. Aggrieved by the order of the Commissioner of Central Excise, Chennai IV Commissionerate, the respondent filed Appeal No.E/1174/2004-DB, E/1175/2004-DB on various grounds before the CESTAT, 'Chennai. The Appellate Tribunal, by its order dated 08.01.2015, set aside the order passed by the Commissioner of Central Excise, Chennai IV Commissionerate, dated 11.06.2004 on the ground that in the show cause notice, there was no allegation of malafide and at the relevant period, confusion of classification of the goods, persisted in the industry. Tribunal held that the appellant therein was in confusion. That apart, the Tribunal held that the claim made by the department was time-barred. 8. As against the order of the CESTAT, the Commissioner of Central Excise, Chennai IV Commissionerate, has preferred this Civil Miscellaneous Appeal on the following substantial questions of law:- "(i) Whether the demand of duty under the extended p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent under 11A(1) of the Central Excise Act, 1944. 11. The main grievance of the appellant before this Court is that the 1st respondent, despite entering into an agreement dated 07.09.1993 with M/s.Bush Boake Allen India Limited, registered themselves with the department only on 19.06.1997 and started paying duty on the clearances of the Food Colour Preparations manufactured by them only from the said date, and hence, the appellant has made a prima-facie case against them for non-payment of duty, in respect of the manufacture and clearances of the said products during the period from 16.03.1995 to 18.06.1997 and therefore, issued a show case notice dated 03.01.2001 demanding duty of Rs. 1,55,456/- under proviso to Section 11a(1) of the CEA, 1944, for the period from 01.12.1995 to 18.06.1997. 12. According to the appellant, the insertion of Chapter Note 7 to Chapter 21 was from 16.03.1995, empowering the appellant to assess from 16.03.1995 to 18.06.1997. As the 1st respondent registered themselves only on 19.06.1997, provision under Section 11(a) for recovery of duty not levied or not paid, is attracted. 13. It could be seen from the explanation given before the Appellate Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to whether Food Colours was to be classified under the Heading No.2107.99 or under the Heading No.3204.90 of the Central Excise Tariff Act, 1985. The CEGAT at Delhi, while dismissing the appeal filed by the Customs Department, held as follows: "12. Though it is true that Chapter titles by virtue of the Rules for the interpretation of the Central Excise Tariff Schedule are provided for an ease of reference only and, for legal purposes, classification shall be determined according to the terms of headings and any relative section or Chapter notes, they do provide a broad indication of the good; sought to be covered within the respective chapters. Chapter 21 is entitled "Miscellaneous edible preparations" and Chapter 32 "Tanning and Dyeing Extracts; Tannins and their Derivatives; Dyes, Colours, Paints and Varnishes; Putty, Fillers and other Mastics; Inks". Broadly speaking, therefore, edible preparations must find classification under one or the other of the headings in Chapter 21 in preference to Chapter 32. We have already referred to the Supreme Court's observations with reference to food colours in relation to the Sales Tax entry "dyes and colours and compositions th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a claim of Modvat credit and that has been allowed. However, the fact remains that duty liability has to be worked out for the larger period if the ingredients of Section 11A has been made out." 20. The only relevant factor, in the case cited by the appellant counsel, to the present case is that the 1st respondent pleaded before the Appellate Authority that there was confusion in the industry which prevented them to seek registration under the Central Excise Act, 1944, even though it was manufacturing food colour preparation both as a manufacturer as well as job worker. Due to their bonafide belief as to the dispute raised by M/s.Roha Dychem before various forum where such food colour preparation would fall under Chapter 21, when the Revenue was claiming classification under Chapter 32 of Central Excise Tariff Act, 1985. However, on a conjoint reading of the pleadings and going through the observations made in the case reported in 2015 (319) E.L.T. 631 (Mad.) for invoking Section 11(A) of the Central Excise Act, the authorities ought to have satisfied themselves with regard to the element of mens rea which is one of the component for invoking Section 11(A) of the Central Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X
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