1. The relevant facts of the case are that the appellants were engaged in the manufacture of synthetic organic dyestuffs falling under item 14D and synthetic organic products falling under item 14DD of the First Schedule to the Central Excises and Salt Act, 1944. They were also manufacturing excisable goods, viz., 4'-4' diamine stilbene, 2'-2' disulfonic acid, 4'-4' dinitro stilbene and 2'-2' disulfonic acid falling under tariff item 68. Under notification No. 71/78 dated 1-3-1978, as amended by notification No. 141/ 79 dated 30-3-1979, the goods described in the table appended to the notification No. 71/78 (hereinafter referred to as "specified goods"), which, inter alia, include synthetic organic dyestuffs falling under tariff item 14D and synthetic organic products falling under T.I. 14DD, cleared in a financial year for home consumption up to aggregate value not exceeding Rs. 5 lakhs were exempted from central excise duty provided that the aggregate value of the specified goods cleared during the preceding financial year did not exceed Rs. 16 lakhs and provided further that when a manufacturer was manufacturing other excisable goods (i.e., the goods other than specified goods), such aggregate value of all the excisable goods cleared during the preceding financial year should not have exceeded Rs. 20 lakhs. The appellants cleared synthetic organic dyestuffs valued at Rs. 7,08,689.25, synthetic organic products valued at Rs. 12,88,204.90 and goods falling under T.I. 68 valued at Rs. 1,26,539.29, i.e., total value being Rs. 21,23,433.44 during the year 1978-79. During the financial year 1979-80, they availed of exemption in respect of Rs. 5 laks each on synthetic organic dyestuffs falling under T. I. I4D and synthetic organic products falling under T.I. 14DD.As the value of total clearances of all the goods manufactured by the appellants in 1978-79 exceeded Rs. 20 lakhs, a show cause notice dated 24-12-1979 was issued to them by the Central Excise Range Officer demanding central excise duty of Rs. 2,99,671.65 on the clearances of synthetic organic dyestuffs and synthetic organic products valued at Rs. 9,98,905.50 during the year 1979-80. The appellants filed a reply to the show cause notice on 1-7-1980 in which they contended that:-- (i) The demand was time-barred as it was issued after a period of 6 months.
(ii) The R.T.-12 monthly returns were submitted regularly and were assessed by the proper officer and returned to them without any query.
(iii) The goods falling under tariff item 68 were not to be included in the computation of value of goods cleared during the preceding financial year as the goods falling under tariff item 68 were already exempted by notification.
(iv) The value was not computed correctly as invoice value included charges other than manufacturing cost and manufacturing profit.
The contentions of the appellants were not accepted by the Assistant Collector of Central Excise and the demand notice was confirmed. Appeal filed against the said order was also rejected by the Collector of Central Excise (Appeals) by the impugned order. Hence, the present appeal before this Tribunal.
(i) The appellants were eligible for exemption under notification No. 71/78-CE dated 1-3-1978, as amended by notification No. 141/79-CE dated 30-3-1979, in respect of the goods cleared by them during the financial year 1979-80; and (ii) In case, it is held that they were not eligible for the said exemption, whether the demand for duty was barred by limitation.
3. When this matter came up for hearing before us, the learned consultant Shri Patel argued on behalf of the appellants. He has stated that the goods falling under tariff item 68 were already exempted by a notification issued under Rule 8(1) of the Central Excise Rules, 1944, and as such, the same were not excisable goods. The value thereof should not, therefore, have been clubbed together with the value of other goods falling under tariff items 14D and 14DD for the purpose of computing the aggregate value of clearances for the year 1978-79. If the value of clearances of goods falling under T.I. 68, i.e., 1,26,539.29 is deducted from the total value of Rs. 21,23,433.44 as computed by the Department, then the aggregate value of clearances during that year would be below Rs. 20 lakhs. Accordingly, the appellants were eligible for exemption of the central excise duty under the aforesaid notification, for the clearances done in 1979-80. He has also stated that if it is held that the benefit of exemption was not admissible to the appellants for the year 1979-80, then the element of excise duty of Rs. 2,99,671.75 should be deducted from the value for the purpose of arriving at the assessable value. The learned consultant has further argued that the demand show cause notice was issued under Rule 10 of the Central Excise Rules and confirmed under Section 11-A of the Central Excises and Salt Act, 1944. Duty has been demanded by the Department for the period starting from 1-4-1979, whereas the notice was issued on 24-12-1979. There was no suppression of facts by the appellants as the Officers knew about the goods falling under tariff item 68, Those goods were declared in the classification list. The classification list dated 4-4-1979 was approved by the Central Excise Officer on 19-7-1979 without any objection. Item 68 goods were also declared in the appellants' letter dated 10-4-1979 addressed to the Superintendent of Central Excise, Range No. VI, Div. II, Ahmedabad. As there was no suppression of facts by the appellants, the demand for duty for the period beyond six months is barred by limitation. In support of his arguments, learned Consultant relied on the judgment of Patna High Court in the case of Shri Madhav Mills Private Limited v.Collector of Central Excise and Ors. Bata Shoe Co. (P) Ltd. and Anr. v. Collector of Central Excise, and Ors.
4. Arguing for the respondent, Shri A. K. Rajhans, JDR has stated that in computing the clearances of previous year the value of all the excisable goods manufactured and cleared by the appellants including the value of the goods falling under tariff item 68 was correctly clubbed together since the goods falling under T.I. 68 were excisable goods notwithstanding the fact that no duty was charged thereon because of separate exemption notification issued under Rule 8(1) of the Central Excise Rules. In support of his arguments, the learned JDR has relied upon the decisions , ECR 45 (CEGAT). He has particularly drawn our attention to condition (a) (iii) and explanation (iv) in para. 1 of the amended notification in support of his arguments. As regards the question of limitation, Shri Rajhans has stated that in the classification list filed by the appellants, they did not furnish the figures of clearance nor did they indicate that total clearances during 1978-79 exceeded Rs. 20 lakhs.
They deliberately suppressed the facts. Regarding the argument of learned consultant that the appellants furnished the clearance figures of T.I. 68 goods in their declaration dated 10-4-1979 addressed to the Superintendent, Central Excise Range No. VI, Division II, Ahmedabad under notification No. 111/78 dated 9-5-1978, the learned Departmental Representative has stated that the said declaration was submitted for a different purpose under different notification, and the same does not hold good for the purpose of classification list filed under statutory rules. The appellants' omission to furnish clearance figures in the classification list was deliberate suppression of facts and as such, longer period of limitation of 5 years is applicable in this case. The demand for duty was not, therefore, barred by limitation. In support of this argument, the learned JDR has relied on the decision of this Tribunal .
5. For proper appreciation of point No. (i) we would like to reproduce below the relevant portions of notification No. 71/78-CE dated 1-3-1978, as amended by notification No. 141/79 dated 30-3-1979: In exercise of the powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts the excisable goods of the description specified in column (3) of the Table hereto annexed (hereinafter referred to as the "specified goods"), and falling under such item number of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), as is specified in the corresponding entry in column (2) of the said Table, in respect of the first clearance of such excisable goods for home consumption up to an aggregate value not exceeding rupees five lakhs and cleared on or after the 1st day of April in any financial year by or on behalf of a manufacturer, from one or more factories, from the whole of the duty of excise leviable thereon, subject to the following conditions, namely:-- (a) the exemption contained in this notification shall not be applicable to a manufacturer:-- (i) during the financial year 1978-79, if the aggregate value of the specified goods cleared, if any, by him or on his behalf for home consumption, from one or more factories, during the period commencing on the 1st day of April, 1977 and ending on the 28th day of February, 1978, had exceeded Rs. 13.75 lakhs; (ii) During financial years subsequent to the financial year 1978-79, if such clearances, if any, of the specified goods, during the preceding financial year, had exceeded rupees fifteen lakhs; and (iii) who manufactures excisable goods falling under more than one item number of the said First Schedule and the aggregate value of all excisable goods cleared by him or on his behalf for home consumption, from one or more factories, during the preceding financial year, had exceeded rupees twenty lakhs; b) the value of clearances made during any financial year shall be calculated separately for all the goods specified in column (3) of the said Table against each serial number specified in the corresponding entry in column (1) thereof; c) where a factory producing the specified goods is run at different times of any financial year by different manufacturers, the value of the specified goods so cleared from such factory in any such year at nil rate of duty shall not exceed rupees five lakhs.
Explanation I.--For the purposes of this notification, the expression 'value' means the value as determined in accordance with the provisions of Section 4 of the Central Excises and Salt Act, 1944 (1 of 1944).
Explanation IV.--For the purposes of computing the aggregate value of clearances under this notification, the clearances of any specified goods, which are exempted from the whole of the duty of excise leviable thereon by any other notification issued under Sub-rule (1) of Rule 8 of the aforesaid Rules and for the time being in force, shall not be taken into account.
__________________________________________________________________________ Sl. No. Item No. in the Description __________________________________________________________________________ ** ** ***** 9.
14D Synthetic organic dyestuffs (including pig- ment dyestuffs) synthetic organic deriva 10.
14DD Synthetic organic products of a kind used as organic luminophores; products of the 6. Notification No. 71/78-CE was effective from 1-4-1978. Condition (iii) in (a) of paragraph 1 and Explanation IV were introduced by the amending notification No. 141/79 dated 30-3-1979 and the same were effective from 1-4-1979.
7. According to the definition in Section 2(d) of the Central Excises and Salt Act, 1944, "excisable goods" means goods specified in the First Schedule as being subject to a duty of excise and include salt.
8. Similar questions as in the present case came up for consideration before this Tribunal in Piya Pharmaceutical v. Collector of Central Excise, Meerut and the Tribunal examined the matter in detail and held in its Order No. 171/ 84-C dated 28-3-1984, , that even if the goods were exempted from duty, they continued to be excisable goods and the character of products as excisable goods did not depend on the actual levy of duty, but to their description as excisable goods in the Tariff Schedule. In holding this view, the Tribunal followed the judgments of Delhi High Court in Vishal Andhra Industries v. Union of India 1983 ELT 2269 and of Madras High Court in the case of Handloom Weavers Co-operative Society v. Asstt.
Collector of Central Excise, Erode, 1978 ELT-J 57. In this connection, paragraph 21 of the Tribunal's decision referred to herein is quoted below:-- 21. The fact that stands out in this case is that M/s. Piya Pharmaceutical who was required to make a proper declaration after the coming into force of notification 141/79 did not do so. It merely filed a classification list in March, 1979 saying that it would avail exemption of the first 5 lakhs clearance under notification No. 71/78. The factory cannot seriously claim that when notification 141/79-CE was promulgated, its position and status under the exemption notification remained the same. The amendment brought about very important changes in the manner of calculating the total value of clearances and also wrote in a new condition in respect of past clearances. Henceforth, the aggregate value of clearances would not include values of clearances of specified goods totally exempted under other exemption notifications; while, in order to arrive at. past clearances, a limit of 20 lakhs was imposed as the disqualifying border if the manufacturer cleared goods falling under more than one central excise tariff item. M/s. Piya Pharmaceuticals manufactured goods which fell under item HE and under item 68. It said that goods under item 68 were free of duty and therefore were not required to be included in arriving at the value of Rs. 20 lakhs in calculating past clearances. In doing so it claims, that it was supported by the judgments of Delhi High Court in the Sulekh Ram case and by the Allahabad High Court in Nagrath Paints judgment. But it was correctly pointed out by the Learned Counsel for the department that there does not seem to be any sign of M/s. Piya Pharmaceuticals having relied on these judgment in the past; at least not till after the matter went before the Collector for his decision. We are ourselves not convinced that the factory had been led to believe that exempted goods were not to be considered excisable goods for the purpose of arriving at the Rs. 20 lakhs calculation. The true reason appears to be that before the amendment, there was no cut off limit of Rs. 20 lakhs for past clearances of heterogeneous goods nor was there any explanation of the type introduced by notification 141/79-CE. Therefore, the factory continued in its belief that it could still claim the exemption that it had apparently been enjoying in the past years.
The Delhi High Court held in Vishal Andhra Industries v. Union of India 1983 ELT 2260 that even if the goods are exempted from excise duty they did not cease to be excisable goods. The Madras High Court also decided in Handloom Weavers Cooperative Society v. Assistant Collector of Central Excise, Erode, 1978 ELT-J 57 that even if the goods are exempted from duty it continued to be excisable goods and the character of products as excisable goods does not depend on the actual levy of duty but on the description as excisable goods in the tariff schedule. The judgments we have quoted here were later judgments than the one that M/s. Piya Pharmaceuticals claim they relied upon. This is to say nothing of our doubt that M/s. Piya Pharmaceuticals actually relied upon the judgment as they claim they did.
9. The learned Departmental Representative has also relied upon other decisions in support of his argument that the goods falling under item 68 of the central excise tariff, though exempted by separate notification issued under Section 8(1) of the Central Excise Rules, were excisable goods within the meaning of notification No. 71/78-CE, as amended. The gists of the decisions in those cases are given below:-- Industrial Estate v. Superintendent of Central Excise and Anr. In this judgment the Hon'ble High Court held that under Section 2(d) of the Central Excises and Salt Act, "excisable goods" is defined to mean goods specified in the First Schedule to the Act as being subject to excise duty. The words "as being subject to a duty of excise" means the character of a product as "excisable goods" and does not depend on the actual levy of duty but depends on the description as excisable goods in the First Schedule to the Act.
Therefore,, if exemption is given from payment of full or part of duty under Rule 8 of the Central Excise Rules, it cannot be said that the goods in question have ceased to be "excisable goods". The contention that the moment a manufacturer is allowed exemption in respect of any goods by virtue of notification under Rule 8, it ceases to be "excisable goods" for all other purposes is not sustainable in law. In holding the above view the Hon'ble High Court of Karnataka relied on the decision of Allahabad High Court in E. Septon & Co. (P) Ltd. v. Superintendent of Central Excise and Anr.
, judgment of Andhra Pradesh High Court in Andhra Pradesh Paper Mills Ltd. v. Asstt. Collector of Central Excise 1980-ELT-210 (AP) and judgment of Madras High Court in Tamil nadu Handloom Weavers Society v. Assistant Collector of Central Exciss, Madras 1978 ELT J 57.
Private Limited v. Collector of Central Excise, Madras. It was held by this Tribunal that the excisable goods on their being exempted by a notification under Rule 8 of the Central Excise Rules do not cease to be excisable goods. If a notification issued under Rule 8 grants exemption, then though the article is excisable, liability to pay excise duty is removed for the time being. Therefore, even on exemption, excisable goods continue to be excisable goods.
Accordingly, their value was includable in the aggregate value of clearances for purposes of notification No. 89/79-CE.ECR-45 (CEGAT), Indye Chemicals, Ahmedabad v. Collector of Central Excise, Ahmedabad. The findings of this Tribunal were inter alia as follows: In view of these specific provisions as regards exclusions, there is a natural presumption that there was a deliberate decision not to bring within the purview of such relief, exemptions available under other notifications which have not found mention in this notification for purposes of the aforesaid exclusion in the computation of value limits.
In the case referred to herein M/s. Indye Chemicals, Ahmedabad, were manufacturers of synthetic organic dyestuffs, falling under central excise tariff item No. 14D. Under notification No. 180/61-CE dated 23-11-1961, rapidogens, falling under item No. 14D, CET, were exempted from whole of duty of excise leviable thereon, if such rapidogens were manufactured from other dyes on which excise duty or countervailing customs duty, as the case may be, has already been paid. The appellants in that case were availing of the exemption of central excise duty under notification No. 180/61-CE. During the period from April, 1978 to November, 1978, the said appellants cleared for home consumption synthetic organic dyes, other than rapidogens, up to an aggregate value of Rs. 4,98,436.00 and also cleared during the same period, rapidogens of the value of Rs. 1,07,384.00. The total value of clearances of these two commodities exceeded Rs. 5 lakhs, as provided in notification No. 71/78-CE dated 1-3-1978. The central excise authorities demanded central excise duty denying the benefit of exemption under notification No. 71/78-CE. The matter came up in appeal before this Tribunal and while disposing of the said appeal this Tribunal gave the above findings.
In this case also the Tribunal held that aggregate value of clearances should include the value of clearances of rapidogens and of synthetic dyestuff for the purpose of benefit of notification No. 71/78-CE.10. Our considered view is that the goods which appear in the First Schedule to the Central Excises and Salt Act, 1944 are excisable goods.
In view of this, the goods falling under item 68 of CET, though exempted for the time being by virtue of notification issued under Rule 8(1) of the Central Excise Rules, continued to be excisable goods, and as such, the value of the same should be included in the value of the clearances of the "excisable goods" of the previous year for availing of the benefit of notification No. 71/78-CE, as amended by the notification No. 141/79-CE. The same view has been held by the High Courts and this Tribunal earlier in the judgments/decisions cited (supra). The benefit of these exemption notifications was not, therefore, admissible to the present appellants during the year 1979-80.
11. In support of his argument that the value of the goods falling under item 68 should not be included in the computation of the value for the purpose of notification No. 71/78-CE, as amended by notification separately issued under Rule 8(1) of Central Excises Rules, the learned Consultant relied on the judgment of Patna High Court in the case of Madhav Mills Pvt. Lid. v. Collector of Central Excise and Ors. We are not relying on that judgment as there is a contrary judgment of Karnataka High Court in the case of Karnataka Cement Pipe Factory, Industrial Estate v. Supdt. of Central Excise and Anr. decided on 18-10-1985, whereas Patna High Court decided the case of Madhav Mills Pvt. Ltd. on 21-1-1981. Besides, the decision has been noticed by the Tribunal in its decisions and Tribunal has followed the Delhi High Court decision in Vishal Andhra Industries case and the Karnataka High Court decision for inclusion of value of such clearance.
12. Regarding the question of limitation, the learned Departmental Representative relied on the decision of this Tribunal in the case of Piya Pharmaceutical Works v. Collector of Central Excise, Meerut and theNeksha Pharmaceuticals, Vapi v. Collector of Central Excise, Baroda, . In the latter decision, this Tribunal held that extended time-limit under Section 11-A of the Central Excises and Salt Act, 1944 was not applicable unless any fraud or misstatement or suppression of facts could be alleged. In the present case, the Department's allegation is that the appellants suppressed the clearances of goods falling under item 68. On the other hand, the appellants' contention is that they are not guilty of suppression of facts as the clearance figures of the goods falling under item 68 of the tariff were furnished to the Department in their declaration dated 10-4-1979 addressed to the Supdt. of Central Excise, Range VI, Division II, Ahmedabad. We observe that the said declaration was submitted under notification No. 111/78 dated 9-5-1978. They did not, however, furnish figures of clearances of goods falling under item 68 in the relevant price list althogh the figures were available with them. In the similar situation in the case of Piya Pharmaceutical Works this Tribunal held that there was suppression of facts 'on the part of the appellants and as such, the longer period of time limit would apply. In this connection, paragraph 25 of the said decision is reproduced below:-- 25. The counsel for M/s. Piya Pharmaceuticals argued that the notice was barred by time which must be taken as the normal time of six months, as they have not suppressed nor misstated nor falsified anything. All the details of production and clearances were available to the Central Excise and they cannot say there was anything they did not know or did not have to arrive at any conclusion that they might need to arrive. We are not able to accept this. To have all details of clearances, production, etc., etc., is not the same thing as having a sheet or a statement or a declaration for a particular purpose designed to meet that one purpose. If the Central Excise were to know that from 79/80, M/s. Piya Pharmaceuticals would not be entitled to the free first five lakhs, they must be given a declaration for that purpose with relevant totals of clearances of the different goods, whether 14E or-68, so that they can calculate for themselves if the limits are being exceeded or not. And even if we say the Central Excise were at fault when they had all the details, M/s. Piya Pharmaceuticals was at greater fault for failing to do what they surely knew they need to do, or must do in the changed circumstances, to ensure that they were still entitled to the exemption. It is well for all to remember that in taxation there are no permanent benefits to be permanently enjoyed. They can change and the exemption or benefit seeker must keep his title bright if he wants to, continue to enjoy the bounty, always keeping in mind the fact that the time may come when the subsidy will be withdrawn, whereupon at such time, as a beneficiary under the law, he must desist from eating the fruits when they are no longer meant for him, The right thing for him is to forbear and to abstain--it is not right that he should reason with himself and say 'I shan't stop unless I am stopped'. The line between this and deception is very thin.
We do not find sufficient justification to take a different view than the one already taken by this Tribunal in the above decision. We, therefore, hold that there was suppression of facts on the part of the appellants in the present case and the demand for duty beyond a period of six months was valid according to law. The appellants' contention regarding limitation is, therefore, rejected.
13. The learned consultant for the appellants raised a point that the amount of excise duty should be deducted from the assessable value if the central excise duty demanded from them is required to be paid. He has cited judgment of Supreme Court in support of his contention. In the case of Bata Shoe Company (P) Ltd. and Anr. covered by the said judgment of Supreme Court, duty element was included in the cost structure, as is apparent from paragraph 5 of the judgment. This aspect of the matter is left for examination to Assistant Collector of Central Excise. He shall examine the same in the light of Supreme Court decision in Bata Shoe Company case and after hearing the appellants. If he finds that as a result of such examination any relief on the point of valuation and consequent reduction in duty is available to appellants, he shall grant the same.
14. Subject to what we have said in paragraph 13 above, we uphold the impugned order and dismiss the appeal.