Judgment:
1. In the present appeals, two issues arise for determination. The first issue is whether ultramarine blue purchased by the appellants in bulk and then repacked in small consumer packets was classifiable under Tariff Heading 32.06 as claimed by the assessees or under Chapter Heading 32.12 as held by the authorities. The second issue is whether the demand is time barred.
2. Shri C.S. Lodha, ld. Advocate appearing for the appellants narrated the facts and submitted that the appellants purchased ultramarine blue in bulk packing and repacked them in smaller packings. He submits that the manufacturers of ultramarine blue were paying duty under Chapter Heading 32.06 and the appellants were not paying duty on the product; that CBEC issued a clarification on 7th December, 1990 stating that ultramarine blue in bulk form is appropriately classifiable under Chapter 32.06 and the same when put up in a small packing would be classified under Heading 32.12 of the CETA, 1985. He submits that consequent upon the issue of this clarification, the department raised a demand of Rs. 88,39,077.80 in one case and raised so much of Rs. 18,05,287.80 in other case. However, subsequently, the deptt. issued a notification under Section 11C of the Central Excise Act exempting the goods for the period 28-2-1986 to 6-12-1990 and therefore, the effective period of demand was confined to 7-12-1990 to 31-12-1990. He submitted that the demand for this period in one case came to Rs. 1,57,325/- and Rs. 24,777.20 in other case. The ld. Counsel submitted that the issues involved in the instant appeals were considered by the Hon'ble A.P. High Court in the case of Reckitt and Colman India Ltd. wherein after considering the various aspects, the Hon'ble High Court held that ultramarine blue is taxable only under Chapter sub-heading 3206.90. He submits that this decision of the Hon'ble High Court has been confirmed by the Apex Court holding that ultramarine blue is taxable only under Chapter sub-heading 3206.90. This confirmation of the decision is reported in 1995 (76) E.L.T. A55 (Court Room Highlights). The ld. Counsel submits that the Tribunal in case of CMC India Ltd. v. C.C.E., Ahmedabad reported in 1995 (76) E.L.T. 94 following the judgment of the Hon'ble A.P. High Court, Calcutta High Court also held that ultramarine blue is classifiable under C.H. 32.06, and that this decision is also approved by the Apex Court.
3. The ld. Counsel submitted that in view of the fact that the very same product was examined for classification in the above two judgments in which the judgment of various other High Courts were also taken into consideration. He submits that the ratio of these judgments covers their case on all fours and therefore, prays that insofar as the merits of the case are concerned, the appeal may be allowed.
4. On the question of limitation, ld. Counsel submits that the Govt. of India issued a notification under Section 11C of the Central Excise Act, 1944 which clearly shows that there were different practices being followed insofar as durability of the product was concerned. He submits that limitation also, is applicable in their case.
5. Shri A.K. Madan, ld. SDR reiterated the findings of the lower authorities.
6. Heard the submissions of both sides. We find that the main contention of the deptt. was that ultramarine blue when packed in smaller packages will attract duty on the ground that packing of goods in consumer packages amounts to manufacture. We find that this question was dealt with by the Hon'ble High Court at length inasmuch as they examined the various tariff and chapters and found that duty was leviable on a smaller package on repacking of the goods only in those cases where the chapter heading provided for such levy and held that such intention of the Legislature was not there in the instant case and therefore, duty cannot be levied. Further the Hon'ble High Court also held that ultramarine blue was known as ultramarine blue in the trade; that identical Chapter Heading 32.06 under Customs Act, ultramarine blue was indicated. It was also noted that the wording of Chapter Heading 32.06 in the Customs Tariff was more or less similar to the wording of 32.06 on the Central Excise side. Considering all the aspects of the problem, the Hon'ble High Court held that ultramarine blue was taxable under C.H. 32.06. We also observe that the ratio of this decision was followed by the Tribunal in the case referred to above. We also note that the appeal against order of the Hon'ble A.P.High Court was dismissed by the Apex Court. We also find that the appeal against the order of the Tribunal in the case of CMC India was dismissed by the Apex Court. Following the ratio of the judgments in the above cases, we hold that ultramarine blue will be classifiable under Chapter sub-heading 3206.90. We also note that in the present case, the tariff under chapter note to this Chapter Heading 32 to the effect that packing of ultramarine blue in a small packing will amount to manufacture has been introduced by the Finance Act, 1995.
7. We also observe that since the practice of non-payment of duty on repacking of ultramarine blue was recognised by the Govt. by issue of a notification under Section 11C. We find that the demand beyond a period of six months will not be enforceable and we hold accordingly.
8. In the result, the impugned order is set aside and the appeals are allowed. Consequential relief, if any, shall be admissible to the appellants in accordance with law.