Tribunal bars duty demand on Calcium-bi-Sulphite Solution under Section 11-A

The Tribunal held that the demand for duty on Calcium-bi-Sulphite Solution, based on the extended period of limitation under Section 11-A of the Central Excises and Salt Act, 1944, was barred by limitation. The Tribunal found no deliberate suppression by the appellants and concluded that the solution was not marketable and therefore not liable to excise duty. Consequently, the impugned order was set aside, and the appeal was allowed.

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Issues Involved:
1. Applicability of the extended period of limitation under Section 11-A of the Central Excises and Salt Act, 1944.
2. Excisability and marketability of Calcium-bi-Sulphite Solution.

Detailed Analysis:

1. Applicability of the Extended Period of Limitation:

The appeal arises from the Collector of Central Excise's order demanding duty of Rs. 3,24,91,945.43 on Calcium-bi-Sulphite Solution and imposing a penalty of Rs. 10,000. The duty demand was based on the extended period of limitation under Section 11-A of the Central Excises and Salt Act, 1944, due to alleged suppression of production figures by the appellants.

Appellant's Argument:
The appellants argued that the demand is barred by limitation as there was no suppression on their part. They consistently informed the authorities that Calcium-bi-Sulphite Solution was unstable, not marketable, and hence not excisable. They cited several Supreme Court decisions, including CCE v. Chemphar Drugs and Liniments, to support their argument that the extended period of limitation cannot be invoked without proof of deliberate suppression or misstatement.

Respondent's Argument:
The respondent contended that the appellants failed to maintain production records and did not disclose the actual quantity of production, amounting to suppression. They argued that the letters dated 20-2-1990 and 28-12-1990 indicated higher production figures than previously disclosed.

Tribunal's Finding:
The Tribunal found that the Department was aware of the preparation and captive consumption of Calcium-bi-Sulphite Solution since 1986. The letters dated 20-2-1990 and 28-12-1990 could not be applied retrospectively to the entire period in dispute. The Tribunal cited the Supreme Court's decision in CCE v. Chemphar Drugs and Liniments, which held that mere inaction or failure to act does not justify invoking the extended period of limitation. The Tribunal concluded that there was no deliberate withholding of information by the appellants and, therefore, the demand was barred by limitation.

2. Excisability and Marketability of Calcium-bi-Sulphite Solution:

Appellant's Argument:
The appellants argued that Calcium-bi-Sulphite Solution is not "goods" within the meaning of the Central Excises and Salt Act, 1944, as it is unstable, cannot be stored or transported, and is not marketable. They provided technical literature and an affidavit from their Chief Chemist to support their claim. They cited several Supreme Court decisions, including Bhor Industries Ltd. v. CCE, to argue that marketability is an essential ingredient for an item to be considered excisable.

Respondent's Argument:
The respondent argued that the solution is marketable if kept under regulated temperature and in durable containers. They cited technical literature indicating the solution's various uses and shipping regulations to support their claim of marketability.

Tribunal's Finding:
The Tribunal found that the appellants consistently maintained that the solution was not marketable and provided substantial evidence to support their claim. The Department failed to rebut this evidence or provide proof of marketability. The Tribunal cited several Supreme Court decisions, including Union Carbide India Ltd. v. Union of India, which held that marketability is an essential ingredient for an item to be considered excisable. The Tribunal concluded that the Calcium-bi-Sulphite Solution prepared and captively consumed by the appellants is not "goods" and, therefore, not liable to excise duty.

Conclusion:
The Tribunal held that the entire demand is barred by limitation and that Calcium-bi-Sulphite Solution is not "goods" exigible to duty. The impugned order was set aside, and the appeal was allowed.

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