Exemption for oil-mill industries denied to incidental fish oil from a fish meal plant; extended limitation upheld for non-compliance.

Fish oil produced only incidentally as a by-product in a fish meal plant was held not to fall within an exemption for goods manufactured in an "Oil Mill and Solvent Extraction Industry", because the factory's essential character was that of a fish meal plant rather than an oil mill of the kind contemplated by the notification. On limitation, repeated intimation that the goods were excisable, coupled with failure to obtain a licence and file a classification list, supported invocation of the extended period for contravention with intent to evade duty. The demand was therefore treated as within time, and the appeal failed.

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Issues: (i) Whether fish oil manufactured as a by-product in a fish meal plant was covered by Notification No. 115/75-CE granting exemption to goods manufactured in an "Oil Mill and Solvent Extraction Industry". (ii) Whether the demand was barred by limitation or the extended period under the proviso to section 11A of the Central Excises and Salt Act was available.

Issue (i): Whether fish oil manufactured as a by-product in a fish meal plant was covered by Notification No. 115/75-CE granting exemption to goods manufactured in an "Oil Mill and Solvent Extraction Industry".

Analysis: The exemption depended on the nature of the factory as one falling within the notified industry. Although fish oil is an oil, the factory was found on the appellants' own correspondence to be essentially a fish meal plant, with fish oil produced only incidentally as a by-product. The scale and character of production showed that the plant was not an oil mill in the ordinary sense contemplated by the notification, which covered factories engaged in oil-milling activity of the relevant kind.

Conclusion: The claim for exemption under Notification No. 115/75-CE was rejected and the issue was decided against the assessee.

Issue (ii): Whether the demand was barred by limitation or the extended period under the proviso to section 11A of the Central Excises and Salt Act was available.

Analysis: The correspondence between the parties showed that the appellants were repeatedly informed that the goods were excisable and that a licence and classification list were required, yet no licence was taken and no classification list was filed. The Tribunal held that mere correspondence did not negate contravention where the conduct showed failure to comply with the statutory requirements with intent to evade duty. On that basis, the ingredients for invoking the extended limitation period were satisfied.

Conclusion: The demand was held to be within time under the proviso to section 11A and the plea of limitation failed.

Final Conclusion: The appeal was dismissed and the order confirming duty and penalties was sustained.

Ratio Decidendi: A factory producing fish oil only incidentally as a by-product of a fish meal plant is not an "oil mill" for purposes of an exemption notification directed to oil-mill industries, and failure to obtain the required licence and file classification particulars despite notice can amount to contravention with intent to evade duty, justifying invocation of the extended limitation period.

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