1994 (3) TMI 187

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... 1944, the Central Government hereby exempts, from the whole of the duty of excise leviable thereon, such quantities of pasteurised butter, falling under item No. 1-C of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), as are used for regeneration of liquid milk within the premises of the same factory of production, or in a factory elsewhere than in the factory of production : Provided that where such use is elsewhere than in the factory of production, the exemption shall be allowable, if - (i) It is proved to the satisfaction of the Collector of Central Excise that such pasteurised butter is intended for use for the regeneration of liquid milk; and (ii) the procedure set out in Chapter X of the Central Excise Rules, 1944 is followed." 3. M/s. Kwality Ice Creams (Pvt.) Limited (The respondents), obtained L-6 Licence under Chapter X of the rules for the manufacture of regenerated liquid milk from pasteurised butter and availed of the exemption under Notification No. 247/77-C.E., dated 23-7-1977. The pasteurised butter so received was, however, used for the manufacture of ice creams. 4. The process of manufacture as given by the respondents is ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....hout payment of duty went into production of `Ice-cream' and not the liquid milk which came into existence as an intermediate product in the continuous process of manufacture of `Ice-cream'. The Notification No. 247/77-C.E., dated 23-7-1977 has not extended the benefit of exemption for such use of the `Pasteurised Butter'. (4) In this connection Notification No. 38/78-C.E., dated 1-3-1978 can be cited. Although this Notification has been issued allowing exemption in respect of "Skimmed Milk Powder" which falls under a different tariff item but the purposes of the benefit are identical as that under the Notification No. 247/77-C.E., dated 23-7-1977. The Hon'ble High Court of Gujarat in the case of M/s. Vadilal Dairy Frozen Food Industries, Ahmedabad v. Union of India and Ors. [1983 (12) E.L.T. 672] held that `Skimmed Milk Powder' which is not utilised in the regeneration of liquid milk will not be eligible for exemption under Notification No. 38/78-C.E., dated 1-3-1978 if such `Skimmed Milk Powder' is used in the Manufacture of Ice-cream irrespective of the fact whether at the intermediate stage such `Skimmed Milk Powder' is made into Milk or not. This order is relied upon in the....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....f Section 11A for raising the demand under Rule 196 - demand not hit by limitation even if made after a period of two years (Majority decision). (3) Collector, Central Excise v. Madras Radiators and Pressing Ltd. - 1994 (69) E.L.T. 409 = 1988 (15) E.C.C. T-15 - removal of goods free of duty under Chapter X, - buyer - manufacturer not accounting for goods in prescribed manner - duty liability on buyer - manufacturer, not on seller, Section 11A has no application to seller in such case. (4) Bajaj Auto Ltd. v. Collector, Central Excise - 1987 (31) E.L.T. 970 (Tribunal) - clearances under exemption - scope of Rule 196 - buyer also answerable for duty where exemption wrongly availed of by manufacturer - relevant date immaterial under Rule 196 of the Rules. (5) Bajaj Tempo Ltd. v. Collector, Central Excise - 1984 (17) E.L.T. 205 (Tribunal) - no limitation under Rule 196 of the Rules for breach of the Rules - interpretation of Chapter X procedure. (6) Collector, Central Excise v. Amber Paints - 1985 (22) E.L.T. 297 (Tribunal) - demand not circumscribed by any limitation when made under Rule 196. 14. Sh. Lachman Dev, the learned Consultant submitted that the demand was hit b....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....    *      *      *      * 21. This decision have been followed by the Five members' Bench of this Tribunal in the case of Collector, Central Excise, Chandigarh v. H.M.M. Ltd. Final Order No. E/57/93-D, dated 17-2-1993. The Tribunal held in that case that the respondents were not eligible for exemption under Notification No. 38/78-C.E., for the skimmed milk powder which is ultimately used in the products such as Horlicks, and the exemption thereunder was applicable only where the skimmed milk was regenerated into liquid milk, as such. 22. As regards the point of limitation we find that the respondents had not declared correctly the process of manufacture of ice-creams. They started with the pasteurised butter and ended with its dissolution in water. They did not declare that this dissolution in water was for the purpose of manufacturing ice-creams. 23. The period involved in the case is from March 1980 to May, 1984 and the show cause notice was issued on 25-5-1984. In the show cause notice, the provisions of Section 11A of the Central Excises and Salt Act, 1944 (hereinafter referred t....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... makes a mis-declaration or suppression of facts. 29. Thus, in the circumstances of the case, the charge of suppression is established, and the extended period of limitation has been correctly invoked for demanding Central Excise duty under Section 11A of the Act. 30. As a result, the appeal filed by the Revenue is allowed and the impugned order is set aside. 31. [Contra per : S.L. Peeran, Member (J)]. - I agree with the findings given by my ld. brother, in so far as merit of the case is concerned. As regards the question of extending the larger period is concerned, I beg to disagree with my ld. brother's finding on account of the following reasons. 32. The Asstt. Collector has confirmed the duty under Rule 196 read with Section 11A of the Central Excises & Salt Act, 1944. The assessee denied the plea of mis-statement or suppression on the ground that the pasteurised butter has been and still used by them for the regeneration of liquid milk which is a continuous process, in the manufacture of Ice Cream. It is their plea that this process is in existence since 1978 and the department is fully aware of their process of manufacture. That the benefit had been granted after ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....old that demands beyond 6 months are not recoverable and are time-barred, by applying the above rulings, for the reasons given by me. Dt. : 13-9-1993 (S.L. Peeran) Member (J) POINTS OF DIFFERENCE OF OPINION In view of difference of opinion between the members, following question arises for determination and reference to third Member by Hon'ble President, as per law. i. whether the demand is enforceable for larger period as held by ld. Member (Technical) or ii. whether the demand is not enforceable for extended period for the reasons given by ld. Member (J). Dt. : 13-9-1993 (S.L. Peeran) Member (J) (Lajja Ram) Member (T)  36. [Order  per  :  K.S.  Venkataramani,  Member  (T)]. - Addressing arguments on the point of difference learned Senior Departmental Representative Smt. J.M.S. Sundaram contended that the demand in this case under Rule 196 is valid since the respondents had taken the exemption without in fact being entitled thereto. The learned Senior Departmental Representative urged that the facts of the present case differ from those of Arti Paints & Chemicals Industries, Bombay and that of Rajasthan N....