TaxTMI 
TaxTMI 
1989 (11) TMI 170
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....ured with two basic ingredients -Glass cloth and resin. The resin used as per requirement is either epoxy resin or phenolic resin besides other inputs. The glass cloth is impregnated in a special plant with diluted resins. It is cut into correct size and the stacks are pressed in a high pressure and high temperature multi-day-light press to form laminates. These laminates are used by BHEL for various insulating purposes. 3. The facts involved in this case as enumerated in the show cause notice dated 9-3-1986 are that the appellants were engaged in the production and clearance of Phenolic resin falling under Tariff Item 15A(1) from 28-2-1979 without obtaining the Central Excise licence and without paying duty leviable thereon. The factory had installed one S.S. Resin Modulating plant which started production on 28-2-1979 and which was being used for the manufacture of phenolic resin. From the raw material accounts maintained by the factory, it was found that they had used 28,991.40 kg of Phenol and 42,543 kgs. of Formaldehyde for the manufacture of phenolic resin from 28-2-1979 to 5-8-1983. It was further stated in the notice that for manufacture of 100 kgs of phenolic resin, 50 ....
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....oduct was not chemically examined and without the test report, the Department cannot presume the product to be Phenol Formaldehyde resin. The appellants had also filed certain documents in support of their case and urged the Bench to consider them during the hearing of the appeal. The Departmental Representative objected to the filing of the fresh documents as the same amounted to additional evidence, which was not presented before the lower adjudicating authorities and the same could not be looked into here. The documents which are in the nature of additional evidence cannot be seen by the Bench at this late stage barring those which are herein referred to in the order which are not in the nature of any additional evidence. In the list of the documents produced are also previous show cause notices issued and orders passed thereon, which are not in the nature of additional evidence of which due notice can be taken of by the Bench. 5. The issue of the show cause notice was as a result of visit by the Central Excise officers on 30-7-1983 who had found the appellants having used a S.S. Resin Modulating plant which had been scrapped and sold at the time of their visit; for manufactu....
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....urther relied upon large number of citations and rulings of Supreme Court, High Court and Tribunal in support of his contentions. 7. Shri A.S. Sunder Rajan, Departmental Representative stoutly supported the impugned order of the Collector and strongly relied upon the ruling in 1987 (29) E.L.T. 288-T and submitted that in a similar case, the Tribunal had held that the intermediate product which was capable of captively consumed, was dutiable and the facts and circumstances of this citation squarely applied to the case in hand and that since the appellants had neither applied for licence nor had filed classification list but had mis-declared to the Department the captive production and utilisation of such intermediate product, therefore, the Collector was justified in invoking the larger period of five years under Section 11A of the Act. Shri D.N. Kohli, Consultant referred to the following rulings - ADDITIONAL EVIDENCE "Additional evidence-contemporaneous documents, vital to the issue in appeal allowed to be produced Collector of Central Excise, Madras v. Chengalrayan Coop. Sugar Mills Ltd. - 1988 (22) ECR 21 New-point - additional evidence produced in appeal admissib....
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....ed was not applied by the Tribunal. In that view of the matter (paras 8,9,13 and 14) Bhor Industries Ltd., Bombay v. Collector of Central Excise, Bombay - (1989 (21) ECR 273 (S.C.)) = 1989 (40) E.L.T. 200 (S.C.) Classification - Clay tiles an intermediate product after manufacture of glazed tiles, not dutiable if these are unverified porous unglazed tiles described in CBEC Circular Collector of Central Excise, Jaipur v. Ceramic (India) Ltd. - (1989 (21) ECR 289) The matter has been examined. It is observed that the container as such does not come into existence in an identifiable form and as a separate entry in a marketable condition-and the question of assessing the container separately does not arise 1989 (22) ECR 41-C Trade Notice Duty was sought to be levied on a product, namely, varnish.... a brown viscous sticky mess in an unfinished condition, incapable of being marketed in that condition Union of India v. Shakti Industries Pvt. Ltd. - (1989 (22) ECR 233) = 1989 (39) E.L.T. 509 (Bom.) TIME BAR : SUPPRESSION CANNOT BE RETROSPECTIVE Limitation goes to the root of the matter hence case to be disposed of at the preliminary stage without going into matt....
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.... - (1986 (9) ECR 452 CEGAT) = 1986 (26) E.L.T. 1025 (Tri.) Retrospective amendment of Rule 9 and 49 declares that no person shall be punishable retrospectively Modem Cot Storage - 1984ECR 1890 = 1985 (19) E.L.T. 265 (Tri.) Retrospective effect cannot be given to an amendment such as later specification of width of lining materials at 87/2 cm in the 1984 policy, if it creates new offences or increases penalties or attracts confiscation for existing offences retrospectively. M/s. East Punjab Traders M/s. P.O. Jain &Co. M/s. Janta Traders v. Collector of Customs, Bombay - (1987 (12) ECR 354) = 1988 (34) E.L.T. 98 (Tri.) If the violation of the provisions of a licence is not an offence, at the time of the contravention, it is not punishable in terms of a subsequent amendment of the Act Bharat Shivji & Aur v. State - (1988 (17) ECR 463) 8. Shri A.S. Sunder Rajan the learned Departmental Representative, relied upon the following rulings :- Formica India Division Pune v. Collector of Central Excise, Bombay - (1984 ECR 1284) = 1984 (17) E.L.T. 590 (Tri.) Hindustan Petroleum Corp. Ltd. v. Collector of Central Excise, Bombay - (1984 ECR 712) = 1984 (18) E.L.T....
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....epartment and had always been fair, bona fide and at every point of time, had shown to the officials on visit the entire manufacturing process. On the mere perusal of these materials produced before us and also which was before the Collector, it is abundantly clear that the appellants had clearly indicated in classification lists that the Glass textolite was to be manufactured from different synthetic resins viz. Epoxy (includingsemi-conducting of magnetic varieties) phenolic, polyester and silicone. It had declared 4hat treated glass cloth and derivatives therefrom, treated with epoxy, phenolic, silicon and other resins/resin formulations. In the annexures to the classification lists filed by the appellants they had clearly indicated the principal raw materials used in the manufacture of finished product was "Resins (epoxy, phenolic, polyesters etc)". Even in the enclosure to the letter dated 11-3-1981 to Assistant Collector seeking proforma credit, the appellants had made out in the column final finished product as follows - "Insulation articles in sheets form based on different synthetics resins viz. epoxy (including semi-constructing and magnetic varieties). Phenolic polyest....
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....d goods and a demand had been raised. By an order dated 9-11-1981 by the same Collector who passed the impugned order, had dropped the proceedings taking into consideration the letter of Supdt. dated 30-1-1978 and letters dated 1-5-1979 and 22-12-1978 referred supra, letter of the appellants dated 27-4-1975 and the classification lists filed by them. In this order, the Collector has referred to the use of epoxy resins or phenolic resins by the appellants in the manufacture of their product glass textolite. 16. Another proceedings by show cause notice dated 17-3-1981 had been commenced by the officers of the Central Excise Department against the appellants under Rules 9,197,173-B, 173-F, 173-G, 52-A of the Central Excise Rules 1944 and demanded duty for the period 10-5-1979 to 14-1-1980. Again the same Collector by his order dated 2-11-1981, confirmed the demand for Rs. 2,47,987.23 P. for the period 10-5-1979 to 14-1-1980. The appellants appealed to the Central Board of Excise & Customs. The Board by its order dated 24-4-1982 held that 'The Board is not satisfied that there has been any reasonable case made out for suppression of information or misdeclaration in the face of the f....
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.... any taxes. 18. The materials and records clearly show that the appellants had not suppressed any fact and also that the show cause notice dated 9-3-1984 has not clearly made out a case of appellants installing one S.S. Resin modulating plant and having produced and manufactured phenolic resin for the period 28-2-1979 to 5-8-1983. The appellants succeed on the ground of time bar as the Department has not succeeded in showing that they were in dark about the appellants' manufacture and producing phenolic resin for the said period. The Department had been making regular visits, raids, searches and had initiated two proceedings during this very period and having remained silent without making out a case they now cannot raise a demand and put up an innocent plea of the Department being kept in dark about the activities of the appellants. 19. The next question does not remain for determination when we hold that the Department has failed to make out a clear case for extended period of limitation to claim duty for the period 28-2-1979 to 5-8-1983. However, we wish to discuss in brief these points also. 20. The Department has not put forth any evidence of the appellants having pro....
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....bility. In our opinion such conclusions are too far fetched. 21. Sh. A.S. Sunder Rajan referred to a citation in the case of Collector of Central Excise, Ahmedabad v. Jay Enterprises & 5 others (1987 (29) E.L.T. 288) and persuaded us to draw the anology and infer that the intermediate product produced by the appellants is the same as referred to in this citation wherein the Tribunal had held that the intermediate product was marketable. We are unable to apply the ruling as there is a serious dispute raised with regard to the intermediate product produced by the appellants and also about its shelf life and marketability. In absence of test samples, no such conclusions can be drawn. 22. As we have held, the show cause notice dated 9-3-1984 as time barred, the recovery is bad in law. We have examined in short the rival contentions and also concluded that no findings can be based in absence of the test samples and the exact material produced by the appellants. In absence of the materials, the benefit has to be given to the assessee as the Revenue cannot be said to be unaware of such production in view of overwhelming evidence of the presence of Revenue officials in the appellants....