| SooperKanoon Citation | sooperkanoon.com/4203 |
| Court | Customs Excise and Service Tax Appellate Tribunal CESTAT Delhi |
| Decided On | Feb-26-1988 |
| Reported in | (1988)(19)LC416Tri(Delhi) |
| Appellant | Associated Cement Companies Ltd. |
| Respondent | Collector of C. Ex. |
Singareni Collieries Ltd., in Appeal Nos. E/462/88-C, E/2577/87-C and the matter was argued by another advocate on behalf of the appellants in that case.
2. In the proceedings in this case, a show cause notice was issued on 7.4.1987 and the duty was demanded in respect of ANFO produced and captively consumed by the appellants for the period upto 9th February, 1987 as prepared explosives under Heading 3601.00 upto 9.2.1987 and Heading 3602.00 from 10.2.1987. They were alleged to have manufactured the goods without the Central Excise licence and cleared the same without payment of duty and observing the necessary Central Excise formalities as required under the Central Excise Law. Contravention of Rules, 9(1), 173B, 173C, 52A, 173G, 174 of the Central Excise Rules, 1944 was indicated and the duty was demanded under Rule 9(2) read with Section 11A of the Central Excises and Salt Act based on the value under Rule 6A(ii) of the Central Excise Valuation Rules,1975. Two show cause notices were issued by the Assistant Collector. The Collector adjudicated the case and duty was demanded from the appellants for the period set out in the show cause notice and also levied a penalty of Rs.5,000/- on the appellants.
3. The learned Consultant for the appellants pleaded that the goods produced by the appellants were a simple mixture of ammonium nitrate and furnace oil and that the Collector himself is not clear as to the nature of the goods produced as at one place he has described the goods as compound while at the other place, he has described the same as a mixture. He pleaded that the goods are only a simple mixture of the two ingredients and the same has not been refuted by the Collector. He pleaded that the appellants plea that the goods were not an explosive was not refuted by the Collector and he referred to para 7 of the order of the Collector. He pleaded that the Collector took note of the goods as described in the Chemical Dictionary by Gessner G. Hawley without communicating the same to the appellants in the show cause notice and to that extent, he pleaded that the appellants were denied the benefit of meeting the point in this regard. He also pleaded that the goods were not marketable and these were prepared for immediate use by the appellants. He pleaded that it was for the Department to prove that the goods were marketable. The learned Consultant during the course of arguments, also pleaded that the appellants were eligible to benefit of Notification No. 281/86 dated 24.4.1986 but when it was pointed out to him that this claim was not made before the lower authorities and also this ground has not been taken in the grounds of appeal and that no basis has also been laid by the appellants in the facts of the case, he withdrew his plea stating that he does not press the same.
4. He pleaded that the part of the demand was barred by limitation as in their case, the demand could be raised only for 6 months period reckoned from the date of receipt of show cause notice by them and that there was no warrant for raising demand for extended time limit under Section 11A. He pleaded that the Department itself was in doubt as to whether the goods were leviable to duty or not. In this connection, he cited the letter of the Inspector of Central Excise, Mancherial sent to the appellants and drew our attention to the relevant portion reproduced below for convenience of reference.
"It has been clarified by the Central Board of Excise & Customs that ANFO is appropriately classifiable under Chapter 36 of Central Excise Tariff Act, 1985 as explosive. Hence, you are requested to observe all the Central Excise formalities and pay necessary duty immediately." He pleaded that the very fact that the question was taken up with the Central Board of Excise & Customs for clarification and a clarification was necessary in the matter showed that the authorities themselves were not sure as to whether ANFO was chargeable to duty or not. He pleaded that the appellants were in the bonafide belief that no duty was leviable on the ANFO, the same being not manufactured goods for the purpose of Central Excise levy. He pleaded that there was no basis for holding any suppression of fact on their part as they were carrying out the manufacture openly. He pleaded that in the facts and circumstances of the case, levy of penalty was also not warranted.
5. The learned Departmental Representative for the Department pleaded that the ANFO was chargeable to duty as prepared explosive and in this connection, he cited the Tribunal Order No. 103/82 in the case of Kesoram Cement v Collector of Central Excise, Hyderabad (sic.) 6. We observe that the facts and circumstances in the present case are similar to those in the case of Singareni Collieries dealt with in Appeal No. 462/88-C = 1988 (37) ELT 361 (Tri). The pleas made are generally the same as in the case of Singareni Collieries. The merits of the case have been dealt with in detail in our order in that appeal.
We have held in that case that the goods are chargeable to duty as prepared explosives for reasons set out in the order under Chapter 36 as held by the Collector.
7. Following the ratio and decision in that case, we hold that the goods have been correctly held to be chargeable to duty under Chapter 36 of the C.E.T. as prepared explosives as held by the Collector in the impugned order.
8. SO far as the question of time bar is concerned, we observe that circumstances under which the appellants cleared the goods without complying with the requirements of Central Excise law and procedure, are similar as in the case of Singareni Collieries. In that case, we have held taking into consideration the pleas made and facts and circumstances of the case that there was no warrant for invoking the a longer time limit under Section 11A of Central Excise Act, 1944 for raising the demand. We observe that there are no findings in the order that the appellants had not complied with the Central Excise formalities for clearance of goods with the intent to evade payment of the duty. In the facts and circumstances of the case and the pleas made, it is reasonable to accept that the appellants were under the bonafide belief that there was no duty leviable on the goods. For the reasons set out in that order, we hold that in the present case also, there was no warrant for demanding duty beyond the period of 6 months from the date of the receipt of the show cause notice.
9. We find in the present case a penalty of Rs.5,000/- has been levied on the appellants. In the case of Singareni Collieries, we observe that in similar circumstances, the Collector refrained from levying any penalty. In view of this inasmuch as the facts and circumstances are similar to those in the other case and also in view of our findings, we do not find that it is a fit case where penalty should be levied.
10. In view of this, we set aside the order of penalty and allow the appeal, with this regard.
The appeal is thus partially allowed in the above terms with consequential relief.