1993 (1) TMI 184 - AT - Central Excise

Tribunal allows appeal, products not exempt, no justification for extended demand period, fines imposed unjustified

AMRIT PROTEIN LTD. Versus COLLECTOR OF CENTRAL EXCISE, MEERUT

AMRIT PROTEIN LTD. Versus COLLECTOR OF CENTRAL EXCISE, MEERUT - 1995 (80) E.L.T. 856 (Tribunal) Issues Involved:1. Confiscation and fine of seized goods.2. Imposition of penalty under Rule 173Q(1)(d) of the Central Excise Rules, 1944.3. Classification of Soya Milk products.4. Extension of the larger period under Section 11A of the Central Excises & Salt Act, 1944.5. Justification for imposition of redemption fine and penalty.Detailed Analysis:1. Confiscation and Fine of Seized Goods:The appellants were aggrieved by the order of confiscation of 3893 cartons of Soya products under Rule 173Q(1)(d) of the Central Excise Rules, 1944. The goods were released provisionally, and a fine of Rs. 50,000/- was imposed in lieu of confiscation. The products were seized because they were manufactured without obtaining a Central Excise license and were claimed to be exempt under Notification No. 20/89-C.E., dated 1-3-1989 at nil rate of duty. The Collector held that the products were Soya Beverages containing flavors and fruit pulp, thus not exempt under the said notification.2. Imposition of Penalty under Rule 173Q(1)(d):A penalty of Rs. 10,000/- was imposed under Rule 173Q(1)(d) of the Central Excise Rules, 1944. The appellants contended that they had filed a Classification List and were under the bona fide belief that their products were exempt from duty. They argued that the department was aware of their manufacturing activities and thus, no penalty should be levied.3. Classification of Soya Milk Products:The main dispute was whether the products manufactured by the appellants were Soya Milk or Soya Beverages. The Collector concluded that the products, including Golden Glow, Big Sipp, Mango, Rose, Pinakool, and Banana, were Soya Milk products and not Soya Milk, thus not covered under the exemption Notification No. 20/89-C.E. The Tribunal referred to a similar case (Noble Soya House Ltd. v. CCE) where it was held that such products were non-alcoholic beverages and not entitled to the exemption.4. Extension of the Larger Period under Section 11A:The Collector extended the period for demand under the proviso of Section 11A of the Act, alleging misdeclaration or suppression of facts by the appellants. The appellants argued that they had no intent to evade duty and their belief in the exemption was bona fide. They had filed a Classification List and informed the department about their products. The Tribunal found that the department had failed to make sufficient inquiries before returning the Classification List and informing the appellants that their product was exempted. Thus, the extension of the larger period was not justified.5. Justification for Imposition of Redemption Fine and Penalty:The Tribunal found that the imposition of redemption fine was not justified as the appellants had filed the Classification List and had no intent to evade duty. The penalty of Rs. 10,000/- was also not confirmed, as there was no mens rea on the part of the appellants to evade duty. The Tribunal relied on the Supreme Court's observation in Hindustan Steels Ltd. v. State of Orissa, stating that penalty should not be imposed for a mere technical or venial breach of legal provisions.Conclusion:The appeal was allowed in favor of the appellants. The Tribunal concluded that the products were not entitled to the exemption under Notification No. 20/89-C.E., but the extension of the larger period for demand and the imposition of redemption fine and penalty were not justified. The appellants' bona fide belief and the department's failure to make sufficient inquiries were crucial factors in the decision.