Judgment:
Jyoti Balasundaram
The assessees herein are engaged in the manufacture of fruit pulp based beverages under the brand name Frooti, Pingo etc. in tetrapacks. The same falls for classification under CET Subheading 2202.90 chargeable to duty until they were exempted from payment of duty vide Notification No.87/91 dt. 1.9.91. It was noticed that the assessees were manufacturing sugar syrup at the intermediate stage and were consuming the same captively without payment of duty in the manufacture of exempted final product. Therefore, show-cause notice dt. 28.4.97 was issued to them demanding duty of Rs.19,62,273/- for the period Dec94 to 22.7.96. The notice was adjudicated by the Addl. Commissioner; Commissioner (Appeals) dismissed the appeal of the assessees for non-compliance with the direction to predeposit duty; vide order dt. 27.7.99, the Tribunal remanded the case to Commissioner (Appeals) to decide the case on merits and he, in turn, remitted the case to the lower authority namely Addl. Commissioner who once again confirmed the demand rejecting the contention of the assessees that sugar syrup was not a stable product and did not have shelf life beyond 72 hours and also rejected the contention of the assessees that the demand was barred by limitation. The Commissioner (Appeals) accepted the contention of the assessees both on merits as well as on limitation; hence this appeal by the Revenue.
2. We have heard both sides. Although the arguments are advanced that product is not marketable for the reason that although citric acid is added to the sugar syrup, the solid soluble content of sugar is not in excess of 65% and such percentage would render the product unstable with limited shelf life (although test report shows that solid soluble content of sugar is a little over 67%, ld. counsel for the respondents submits that this is due to the testing being carried out by Lane and Eynon method which is not a reliable method and the correct method of testing was the Refractory Index method as prescribed by BIS and if such method was adopted for testing, the solid soluble content of sugar would be less than 65%), we find that we are able to dispose of this appeal on the limited question of time-bar. The finding of the Commissioner (Appeals) on this aspect is contained in para 9 (c) of the impugned order which is reproduced herein below :-
As regards the charge of suppression of facts regarding manufacture and excisability of Sugar Syrup and applicability of extended period of limitation, I find from the records that the appellants have submitted the ground plan clearly showing the location of plant and machinery for manufacture of Sugar Syrup emerging at the intermediate stage while taking the L4 licence. The Superintendent of Central Excise has approved the said ground plan by putting his signature dt. 10.4.90. The appellants have also submitted Modvat declarations dt. 5.4.90 wherein the Sugar was shown as one of the ingredients on which they have availed Modvat Credit. The department has acknowledged the said declarations and informed the appellants also about the same vide Assistant Collector of Central Excise, Madras Dn VIII letter dt. 5.4.91 (File No IV/16/79/91 T2). Therefore, it can be concluded that the department was having full knowledge about the preparation of Sugar Syrup by the appellant at the intermediate stage and no charge of suppression can be alleged against the appellants. The CEGAT in CCE, Indore Vs Venkatesh Beverages had held a similar view in identical circumstances in regard to suppression of facts. Respectfully following the ratio held by Tribunal, I, therefore, hold that extended period of limitation under proviso to Section 11A (1) cannot be invoked in the appellants case.
3. We find that in the case of Venkatesh Beverages reported in 2001 (42) RLT 740, (relied upon in the present impugned order for setting aside the demand on merits), the Tribunal upheld the finding of the Commissioner (Appeals) that since L4 licence and the ground plan clearly showed that intermediate product sugar syrup arose in the manufacture of fruit pulp based beverages, it cannot be said that the assessees had suppressed anything from the department so as to make the extended period of limitation available to the department. Therefore, the finding of the Commissioner (Appeals) in the present order on limitation is in consonance with the finding of the Tribunal in the Venkatesh Beverages case cited supra and following the same we uphold the finding of the lower appellate authority that the demand raised in 1997 for the period 1994 to July96 is time-barred, uphold the impugned order on this ground alone and reject the appeal.
4. In the cross objection filed by respondents, no relief is sought for as the impugned order is accepted in their favour. The cross objection is, therefore, to be treated as comments of and reply to the revenues appeal and is, accordingly, dismissed.