Full Judgment
2. A. No. E/798/89-C is directed against order dated 10-4-1989 of Additional Collector, Aurangabad.
3. Issue in both these cases falls within the narrow compass :- admissibility of exemption in case of Steam, under Notification No.118/75, produced and supplied by M/s. Brima Sugar Limited, Shreepur to the Brihan Maharashtra Sugar Syndicate Ltd., Pune, a factory situated in the same compound.
3A. Arguing for the Revenue Ld. JDR, in case of A. No. E/3053/86-C, submits that 5 Show Cause Notices demanding duty of Rs. 1,22,569.55 were issued to M/s. Brima Sugar Limited, Shreepur on the ground that they had produced and supplied steam to M/s. Brihan Maharashtra Sugar Syndicate Limited, another factory which was not a factory within the definition of Rule 10E of the Central Excise Act. Moreover the Chapter X procedure as envisaged in Notification No. 118/75, even assuming that the two factories belong to the same manufacturer, was not followed.
Under these circumstances, therefore, the Brima Sugar Ltd., Shreepur could not be given the benefit of exemption . He submits that Collector (Appeals) has erred in holding that Assistant Collector could not review his orders. The well settled position in law is that classification list can always be changed prospectively and demand of duty cannot go beyond six months. In the present case since extended period was not invoked the fact that earlier order of Assistant Collector could be revoked or modified was not of much significance.
There could be no estoppel against law and a classification of the product can always be revoked if there are valid reasons of doing so.
4. He cited the case reported in 1988 (38) E.L.T. 488 in support of his contention.
5. Ld. Advocate for the respondents Shri K.P. Joshi, draws our attention to Show Cause Notice issued and submits that all of them are identical. He submits that the charge in the Show Cause Notice is since M/s. Brihan Maharashtra Sugar Syndicate Ltd. to which the steam has been supplied did not fall within the definition of the factory as contemplated under Section 2(f), (he submits that it should be under Section 2(e) of the Central Excises and Salt Act, 1944) being engaged in the production of alcohol which is not excisable item, the exemption specified under the Notification is not available to them. In other words, the main charge against the respondents is that M/s. Brima Sugar factory supplied steam to the Brihan Maharashtra Sugar Syndicate Ltd., a factory which does not conform to definition of factory given in Section 2(e) of Central Excises and Salt Act, 1944 for the reasons that the factory does not produce excisable goods. Ld. counsel submits that this factory is producing excisable goods and they have been duly licensed by Central Excise Authorities for this purpose. Collector (Appeals), therefore, was right in relying on this fact that the factory satisfies the definition of factory under Central Excises and Salt Act. He also draws our attention to Circular issued by Central Board of Excise and Customs to the effect that so long as Distillery manufactures any excisable goods even if they are fully exempt, it would be a factory for the purpose of the Central Excises and Salt Act.
This circular in fact was issued only in the context of Notification No. 118/75 as applicable in the case of factories supplying mollases to the distilleries and, therefore, is relatable to their case directly.
In view of this the Revenue cannot rely on grounds not mentioned in the Show Cause Notice.
6. The main grounds of appeal of Revenue are that two factories are separate factories and procedure under Chapter 10 was not followed.
From the Show Cause Notice we find that it was proposed to deny exemption to M/s. Brima Sugar Limited on the ground only that they produced and supplied steam to a factory which is engaged in production of alcohol which is non-excisable item. Such a factory according to Revenue does not satisfy the definition of factory given in Central Excises and Salt Act, 1944. We find that this factory is also making Fusel Oil and in fact this was correctly relied upon by Collector (Appeals) in holding in their favour. Since the only ground on which it was proposed to deny exemption to them has been squarely met we cannot travel beyond Show Cause Notice in giving a finding. In the case of Rephael Pharmaceuticals Pvt. Ltd. v. Superintendent of Distilleries, 1988 (38) E.L.T. 11 (AP) it was held by Hon'ble High Court of Judicature, Andhra Predesh that, since the basis on which the Appellate Authority or the assessing authority gave the finding is not the basis mentioned in the demand notice, the orders of authorities below are quashable. On this ground, therefore, we reject the Revenue appeal and uphold the impugned order. For the reasons mentioned while dealing with Appeal No. E/3053/86-C we allow Appeal No. E/798/89-C and set aside the impugned order.