Judgment:
1. This appeal is against the order of the Collector of Central Excise (Judicial), Madras, dated 27-1-1992, levying duty on the appellant for the period 1-8-1987 to 29-2-1988 by invoking the longer period of limitation in terms of Proviso to Section 11A of Central Excises and Salt Act, 1944, the 'Act' for short, on the goods viz. MMAA Oil manufactured and cleared by the appellants.
2. Shri Rajagopalan, the learned Counsel for the appellants, submitted that as early as on 19-6-1987 the appellants addressed a communication to the Asstt. Collector of Central Excise (Preventive), Madras, bringing out all the details in regard to the manufacture of the goods, viz. Analgin IP and other goods and also the emergence of the intermediate product like MMAA Oil, which is the subject matter in the present appeal. The learned Counsel in particular referred to the internal page 3 of the said communication wherein the appellants clearly wrote to the Department about the emergence of the intermediate product MMAA Oil during the manufacture of Analgin IP and also sought a clarification as to whether any Central Excise duty is leviable on that. It was submitted that the receipt of this letter is admitted and reference to the same is made in the impugned order and the Collector has also observed that "The party's contention that he has sought clarification from the headquarters preventive cannot be disputed". The learned Counsel further submitted that the Collector is alleging suppression on the ground that the appellants did not remind the Asstt.
Collector or seek further clarification from the competent authority and this act would bring out suppression and assailed the correctness of the same.
3. Shri Subramanian, the learned DR while not disputing the existence and receipt of the letter dated 19-6-1987 addressed by the appellants to the Asstt. Collector (Preventive) bringing out the details in regard to the manufacture of Analgin and also the emergence of the intermediate product like MMAA Oil and seeking clarification as to whether any duty is leviable on the intermediate product, submitted that the appellants should have pursued the matter before the competent and proper authority and filed a classification list as was done in respect of some other items.
4. We have considered the submissions made before us. The short issue for consideration is as to whether the appellants can be said to be guilty of any suppression in the facts and circumstances of this case justifying the Department invoking the longer period of limitation for levying duty. As rightly contended by the learned Counsel, as early as 19-6-1987 the appellants addressed a communication to the Asstt.
Collector of Central Excise (Preventive), Madras giving all the details about the manufacture of the bulk drugs Analgin and other goods and also the emergence of the intermediate products such as MMAA Oil, with which we are concerned in this appeal and seeking a clarification from the Department as to whether any duty at all would be leviable therein.
The letter at the relevant portion reads as under : "e. Two more drug intermediates namely Di Sodium Salt and Mono Methyl Amino Antipyrine also come into existence in the process of Analgin I.P. Powder. These two are also organic compounds falling under Chapter 29 and are available in the market or can be imported from abroad or can be used in the process of Analgin I.P. Powder. We request you to issue a necessary clarification order whether the Central Excise duty is applicable on these two compounds also." The learned Collector has admitted the receipt of this letter and has observed as under: "The party's contention that he has sought clarification from the headquarters preventive cannot be disputed." "In that situation, it is not understood as to how he can write a letter to the Asstt. Collector (Preventive) and keep silent without even pursuing the matter. He could have at least reminded the Asstt.
Collector (Preventive) or sought for clarification from the competent authority namely the Asstt. Collector of the division.
This act of his makes it appear that his action of not filing the classification list and suppressing the fact of production to the concerned Asstt. Collector is a deliberate act of suppression for not paying the duty." We are afraid we cannot subscribe to the views of the learned Collector extracted above. When the appellants had admittedly sent a communication to the authorities giving all the details about the manufacture of the goods and also emergence of the intermediate product MMAA Oil with which we are concerned in this appeal, and also sought clarification, we are at loss to understand as to how the Department could justifiably contend that the party should follow up with a series of reminders with the Department. We are also not able to understand as to why the Departmental authorities in the light of the letter of the appellant did not pursue the matter to find out as to whether any classification list was filed or not. Be that as it may, the main point to be considered in dealing with an allegation of suppression is as to whether the manufacturer concerned was actuated by bona fides or mala fides. It cannot be contended in the facts of the present case that the appellant was actuated by any mala fides particularly in the light of the detailed letter written by the appellants way back on 19-6-1987 to the departmental authorities. We also note that there is no finding of any mala fides against the appellants and the Supreme Court in the case of C.C.E. v. Chemphar Drugs & Liniments reported in 1989 (40) E.L.T.276, dealing with suppression has held as under : "In order to make the demand for duty sustainable beyond a period of six months and up to a period of 5 years in view of the proviso to Sub-section 11A of the Act, it has to be established that the duty of excise has not been levied or paid or short-levied or short-paid, or erroneously refunded by reasons of either fraud or collusion or wilful misstatement or suppression of facts or contravention of any provision of the Act or Rules made thereunder, with intent to evade payment of duty. Something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required before it is saddled with any liability, beyond the period of six months." We also refer to similar observations of the Supreme Court reported in 1989 (43) E.L.T. 195 in the case of Padmini Products v. Collector of Central Excise, "...These ingredients postulate a positive act. Failure to pay duty or take out a licence is not necessarily due to fraud or collusion or wilful misstatement or suppression of facts or contravention of any provision of the Act. Suppression of facts is not failure to disclose the legal consequences of a certain provision...." "...mere failure or negligence on the part of the producer or manufacturer either not to take out a licence in case where there was scope for doubt as to whether licence was required to be taken out or where there was scope for doubt whether goods were dutiable or not, would not attract Section 11A of the Act...." Therefore, in the light of the evidence available on record, particularly in the context of the letter of the appellants disclosing all the relevant details with reference to manufacture of the goods in question to the Department and seeking clarification and also bona fide entertaining a doubt with reference to the dutiability of the goods in question and in the absence of any response from the Department, the charge of suppression against the appellant cannot be levelled and in this view of the matter the impugned order is set aside and the appeal is allowed with consequential relief, as per law.