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TMI Blog2005 (9) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... iate product known as "additive mixture". An intelligence was collected by the officers of the preventive wing of the Commissionerate to the effect that the appellants were manufacturing the said "additive mixture" without obtaining registration certificate under Section 6 of the 1944 Act read with Rule 174 of the Central Excise Rules, 1944; that they have been removing the said goods clandestinely from their factories situated in Delhi; that they were unauthorisedly clearing the said goods under transfer challans to their factories in UP and HP (where the final product was manufactured). On the basis of the aforestated intelligence, various premises belonging to the three appellants were searched. Enquiries were also made from traders dealing in the kimams as well as from the manufacturers and the suppliers of the raw material. The partners of the three appellant-firms were also examined. The Department was informed that the said "additive mixture" consisted of various ingredients like raw kimam, menthol, aromatic chemicals, spices, gulab jal, attar and perfumes etc. The process of preparing additive mixture was explained in detail by the partners. On the aforestated investigation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt from time to time. That, the partners of the appellants were also examined in 1992 by Superintendent of Central Excise, New Delhi, when the entire process of mixing and blending of the raw material and the status of transfer of the additive mixture from their units in New Delhi to their factories in UP and HP was explained. In support of what is stated above, the appellants placed reliance on the panchnama, dated 20-10-1992, under which their units were searched by the Department and which indicated the stock position of the raw material, additive mixture and the branded chewing tobacco. According to the Department, in 1993, the Superintendent of Central Excise had personally visited their factories and had also studied in detail the process of manufacturing the branded chewing tobacco. The appellants further contended that there was no intent to evade as the said mixture was non-dutiable. In this connection, they relied on the Notification No. 121/94-C.E., dated 11-8-1994 under which additive mixture (input) falling under Chapter sub-heading 2404.49 captively consumed in the manufacture of chewing tobacco (final product) stood exempted from payment of duty. That, the Department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act in which he has stated that M/s. Gopal Industries did not obtain registration certificates under a mistaken belief that the activity of mixing/blending did not constitute "manufacture". The Tribunal further found that the manufacturing activities in Delhi units were suppressed from the Department; that the appellants had failed to obtain excise registration; and that the appellants had not fully complied with the procedure of Chapter X of 1944 Rules subject to which the benefit of exemption under Notification No. 121/94-C.E. was available. The Tribunal thereafter took note of the various decisions of the Tribunal which has taken the view that even substantial compliance of the Chapter X procedure was sufficient for exemption and accordingly, the Tribunal remitted the matter to the Commissioner to ascertain the question of substantial compliance. 7.On remand, the Commissioner came to the conclusion vide his order dated 16-7-2002 that there was no substantial compliance of the procedure under Chapter X of 1944 Rules. 8.Aggrieved by the said decision dated 16-7-2002, the appellants herein preferred appeals to the Tribunal. By judgment and order dated 7-7-2003, the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was rejected by this Court on the ground that no explanation was given by the assessee for not disclosing the affairs of the units in which kimam was manufactured; no explanation was given for not getting the units registered or licensed; and no explanation was given for failure to maintain the records under the 1944 Act. In the circumstances, this Court found in the case of M/s. Dharampal Satyapal total non-compliance of the 1944 Rules. This Court observed that it was for M/s. Dharampal Satyapal to explain the basis of its alleged bona fide impression. It was further found in that case that there was no evidence of receipt and utilisation of the kimam in the manufacture of Tulsi Zafrani Zarda. In the circumstances, this Court dismissed the Civil Appeals filed by M/s. Dharampal Satyapal. This Court held that the burden to prove the defence of bona fides was on the assessee and that the assessee in that case M/s. Dharampal Satyapal, had failed to prove its bona fides. However, on the question of applicability of Notification No. 121/94-C.E., dated 11-8-1994, this Court upheld the directions of the Tribunal remanding the case back to the Commissioner for re-examination. This remand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it was required to obtain 'L-6' licence because M/s. Dharampal Satyapal used to buy Lucknowi Kimam from the other manufacturers, who used to manufacture Lucknowi Kimam after obtaining registration and the requisite licence. There is no such finding by the Commissioner in the present case. In the circumstances, on the question of invocation of extended period of limitation, the judgment of this Court in the case of M/s. Dharampal Satyapal (supra) will not apply. 14.In the case of Cosmic Dye Chemical v. Collector of Central Excise, Bombay reported in [1995 (75) E.L.T. 721], this Court held that so far as fraud and collusion are concerned, intent to evade duty is built into these words. However, so far as "misstatement" or "suppression of facts" are concerned, they are clearly qualified by the word "wilful" preceding the words "misstatement or suppression of facts", which means "with the intent to evade duty". It was further observed that the next set of words in the proviso to Section 11A(1) which refers to contravention of the provisions of the Act or the Rules are qualified by the words "with intent to evade payment of duty". Therefore, this Court has held that there cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts and had actually studied the process of manufacture in Delhi. On 3-5-1993, a letter was addressed to the appellants in which the appellants were called upon to supply all information regarding the process of obtaining additive mixture which was used in the manufacture of chewing tobacco. On receipt of the said letter, the appellants clearly indicated the ingredients used by them in the manufacture of additive mixture. On 20-9-1993, the officers of the department again visited the various premises of the appellants. They conducted physical stock checking. They saw registers maintained by the appellant in respect of different types of additive mixtures. All the registers were checked and verified on that day. There is no finding in the present case that the appellants did not answer the queries made by the Department. Moreover, the Tribunal in the connected appeal has recorded a finding that the appellants were maintaining transfer challans under which the said kimam was transferred to other units. The Tribunal has further recorded a finding in the connected Civil Appeal Nos. 1878-1880 of 2004 that the appellants were maintaining Form-IV register as well stock register regarding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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