Jagdamba Sahakari Sakhar Vs. C.C.E. - Court Judgment

Excerpt:
1. this appeal arises against order-in-original dated 12-1-1990 passed by additional collector of central excise, aurangabad confirming the duty amount of rs. 79,013.10 under rule 9(2) of central excise rules read with proviso to section 11a of the central excises and salt act and also imposed penalty of rs. 20,000/- under rule 173q of the said rules.2. it was alleged in the show cause notice dated 1-9-1989 that the appellants had manufactured steel tanks and removed the same for storage of molasses in the sugar factory without informing the department wilfully with intention to evade duty of excise. it was contended by the appellants that they had sent letter dated 24-10-1984 to the superintendent, central excise, shrigonda intimating the construction of steel tank for storage of molasses and also seeking permission to store molasses in steel tanks. the said letter was acknowledged and the superintendent of central excise vide his letter dated 7-11-1984 approved ground plan to store the molasses in the steel tank. the ground plan was also approved and the superintendent has put his seal on the said plan and therefore it was contended by the appellants that there was no question of clandestine removal or for extending the larger period as the department had granted them licence and had approved the plan for erection of steel tank for storage of molasses.3. however, the additional collector rejected their pleas and confirmed the demand. ld. counsel submits that the steel tank was constructed by cement concrete foundation and the said steel tank is an immovable property and they are not excisable goods. he submits that the steel tank is huge tank of 4,000 m.ts. and the same had been intimated and approval and licence obtained before the construction. the larger period in this connection cannot be invoked nor there can be allegation of clandestinely manufacturing and setting up of the steel tank for such storage of molasses.5. on careful consideration of the submissions made by both sides and after perusal of the records we notice that the appellants had intimated to the department about the construction of steel tank for storage of molasses vide their letter dated 24-10-1984. the plan had been approved by the superintendent and he had granted them permission for storage of molasses in the steel tank to be manufactured by them.it can be seen from the letter dated 7-11-1984 about the approval of the ground plan. in that view of the matter, it cannot be said that the appellants clandestinely manufactured and got erected the steel tank.therefore the proviso to section 11a or rule 9(a) cannot be invoked in the present case and the demand is hit by time bar. therefore, without going into the merits of the matter, we set aside the duty demand and imposition of penalty, only on the ground of limitation. we allow the appeal.

Judgment:
1. This Appeal arises against order-in-original dated 12-1-1990 passed by Additional Collector of Central Excise, Aurangabad confirming the duty amount of Rs. 79,013.10 under Rule 9(2) of Central Excise Rules read with proviso to Section 11A of the Central Excises and Salt Act and also imposed penalty of Rs. 20,000/- under Rule 173Q of the said Rules.

2. It was alleged in the show cause notice dated 1-9-1989 that the appellants had manufactured steel tanks and removed the same for storage of molasses in the sugar factory without informing the department wilfully with intention to evade duty of excise. It was contended by the Appellants that they had sent letter dated 24-10-1984 to the Superintendent, Central Excise, Shrigonda intimating the construction of steel tank for storage of molasses and also seeking permission to store molasses in steel tanks. The said letter was acknowledged and the Superintendent of Central Excise vide his letter dated 7-11-1984 approved ground plan to store the molasses in the steel tank. The ground plan was also approved and the Superintendent has put his seal on the said plan and therefore it was contended by the appellants that there was no question of clandestine removal or for extending the larger period as the Department had granted them licence and had approved the plan for erection of steel tank for storage of molasses.

3. However, the Additional Collector rejected their pleas and confirmed the demand. Ld. Counsel submits that the steel tank was constructed by cement concrete foundation and the said steel tank is an immovable property and they are not excisable goods. He submits that the steel tank is huge tank of 4,000 M.Ts. and the same had been intimated and approval and licence obtained before the construction. The larger period in this connection cannot be invoked nor there can be allegation of clandestinely manufacturing and setting up of the steel tank for such storage of molasses.

5. On careful consideration of the submissions made by both sides and after perusal of the records we notice that the appellants had intimated to the department about the construction of steel tank for storage of molasses vide their letter dated 24-10-1984. The plan had been approved by the Superintendent and he had granted them permission for storage of molasses in the steel tank to be manufactured by them.

It can be seen from the letter dated 7-11-1984 about the approval of the ground plan. In that view of the matter, it cannot be said that the appellants clandestinely manufactured and got erected the steel tank.

Therefore the proviso to Section 11A or Rule 9(a) cannot be invoked in the present case and the demand is hit by time bar. Therefore, without going into the merits of the matter, we set aside the duty demand and imposition of penalty, only on the ground of limitation. We allow the appeal.