Full Judgment
2. Shri Gurdeep Singh, the Id. JDR mainly pleads that though the show cause notice dated 30-3-1984 covers the period 1-4-1977 to 31-8-1982, the Asst. Collector confirmed the demand only for the period from 1-4-1979 to 31-8-1982 limited to 5 years, which is available under the law under proviso to Section 11A of the Central Excise Act. Though he agrees that in reply to the departmental query, the declaration was filed by the respondent on 16-2-1981 giving all the particulars including the process of manufacture and the sample was also tested by the Chemical Examiner and his report was available in June 1982, the demand came to be issued only in March 1984. This is mainly on account of the fact that the appellants did not co-operate with the dept. in furnishing the figures of clearances and prior to 16-2-1981, there was no intimation regarding the manufacturing activities carried out by the respondent. Hence the Collector (A) is not justified in setting aside the demand for the entire period.
3. Shri Willingdon Christian the Id. Adv. pleads that during the period there was a genuine doubt even among the officers regarding classification of master batches and the matter was discussed in the Collectors' conference and the Tariff advice was issued under Board's letter No. 93/3/80/CX. Ill, dated 3-10-1991. Hence during the period, the appellants had the bonafide belief that the master batches predominantly consisting of plastic resins would not attract further levy. Moreover, subsequently, the Tribunal have held that such master batches are classifiable under Tariff Item 68 instead of under Tariff Item 14, as per the Board's circular - vide 1988 (35) E.L.T. 414 in the case of Kirit Packaging Industries. This decision also has been upheld by the Supreme Court. In the circumstances, ultimately if the classification is to be considered by the Collector (A), he has to give the benefit of Notification for Tariff Item 68 and the value of clearances have never exceeded Rs. 30 lakhs ... in one year, namely 1981-82. He therefore pleads that there was no wilful intention of suppressing any material factors. They also furnished all the figures and in the declaration filed by them, the value of clearances have been given for the previous year 1979-80.
4. After hearing both the sides, we find that in this case as seen from the deliberations of the Collectors' conference that in regard to the question of classification of master batches, there was a genuine doubt even among the departmental officers. Hence the plea of Shri Willingdon Christian that the appellants were under the bona fide belief that they were not liable to any further duty, cannot be brushed aside. Moreover when the declaration has been filed giving all the particulars from 16-2-1981 and even the Chemical Examiner's report was available in June 1982, there was no justifiable reason for issue of show cause notice only on 30-3-1984 that too covering the period even extending beyond 5 years. In the circumstances, the Collector's order holding that the entire demand is in fact time barred cannot be interfered with. We therefore dismiss the appeal from the Revenue.