TaxTMI 
TaxTMI 
1991 (9) TMI 242
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed 1-3-1984. They also contended that they were not liable to pay any duty and that the proviso to Section 11A(1) of the Central Excises and Salt Act did not apply to them since there was no suppression or misstatement of facts on their part. By the impugned order, the Collector of Central Excise, Patna - (a) classified the subject pitch under the residuary item No. 68 of the Central Excise Tariff Schedule (CET) and not under Item No. 11(5) ("CET"); (b) held that all the three products were not eligible for duty exemption , in terms of Notification No. 121 /62-C.E. as amended, and Notification No. 75/84-C.E. {c) held that there was suppression of facts on the appellants' part and the extended period of limitation of 5 years under Section 11A of the Act was attracted; (d) demanded duty for the period from 6-9-1980 to 6-9-1985; and (e) imposed a penalty of Rs. 1 lakh on the appellants under Rule 173Q of the Central Excise Rules, 1944. It is against this order that the appellants are before this Tribunal in the present appeal. 2. We have heard Shri A.N. Haksar, advocate, for the appellants and Shri S. Chakraborti, DR, for the respondent-Collector. 3. At the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tice, the relevant rules concerning the offence having been cited in the notice, it should be deemed that the allegation of suppression etc., had been mentioned though indirectly. However, he stressed the fact that no classification list had been filed by the appellants which would show their intent to evade duty. 6. We have carefully considered the rival submissions and perused the record. In so far as pitch and blends of pitch are concerned, we see no reason to deviate from the Tribunal's decision in the S.T.P. Ltd. case. 7. As regards "Coal Oil", we observe that while the show cause notice dated 6-7-1985 specifies the tariff classification of pitch and blends of pitch, it does not specify that of "Coal Oil". In the list of goods mentioned in the appellant's letter dated 22/24-3-1980 to the Superintendent, there is no mention of 'Coal Oil'. Creosote oil is mentioned but that is not among the goods specified in the notice although the DR would have us to consider that 'Coal Oil' really stands for creosote oil. In the reply dated 20-11-1985/7-12-1985 to the notice, the appellants seem to have treated coal oil and coal tar as synonymous and contended that it was covered by Ite....
X X X X Extracts X X X X
X X X X Extracts X X X X
....titled to enforce the duty demand against the appellants only for the normal period of 6 months from the date of the show cause notice. The demand for the remaining period is set aside; and (d) Having regard to our findings above, there is no case for imposition of a penalty on the appellants since there was no mens rea or intent to evade duty. The penalty imposed on the appellants is, therefore, set aside. 10. The appeal is disposed of in the above terms with consequential relief to the appellants. [Order per : S.L. Peeran, Member (J)]. - I am agreeable to the findings and reasoning given by learned President in so far as applying the ratio of the decision of S.T.P. Ltd. case in respect of goods pitch and blends of pitch. However, with regard to remand of the matter for consideration of classification for the products "Coal Oil" in my view the order in so far as "Coal Oil" is concerned, it requires to be set aside, as admittedly from both sides, there is no product emerging in their manufacturing process by name "Coal Oil", for the following reasons:- 12. The appellants by their letter dated 22/24-3-1980 to the Superintendent, Central Excise ES City, inter alia, intima....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e been manufacturing and taking TI 68, (ii) 'Blend of pitch' falling under TI 11(5) and (iii) 'Coal Oil' without payment of appropriate amount of duty of excise in violation of Rules 9, 52A, 173B, 173C, 173G. 226, 173Q and 174 of the Central Excise Rules read with Section 6 and 11A of the Central Excises and Salt Act, 1944; 2. Now, therefore, M/s. Bokaro Steel Plant are called upon to show cause to the Collector, Central Excise, Central Revenue Building, Patna by 30-9-1985 as to why the duty on 'pitch' TI 68, 'blend of pitch' TI 11(5) and 'Coal oil' not paid from 6-9-1980 onward should not be demanded under Rule 9, read with Section 11A and why penalty should not be imposed upon them under Rule 9 and Rule 173Q of the Central Excise Rules. 3. M/s. Bokaro Steel Plant are also called upon to furnish particulars of the said pitch, blend pitch and coal tar manufactured and cleared for captive consumption or outside factory, alongwith their value for the period 6-9-1980 onward to this office by 25-9-1985; 4. M/s. Bokaro Steel Plant may indicate in their written reply to the notice as to whether they intend to be heard in person before the Adjudicating Authority; 5. The action....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Order-in-Original records the reply given to Show Cause Notice in respect of this "Coal Oil". In the finding portion the Collector has recorded the entire process undertaken by plant in manufacture of their products at paras 3. 2.1 to 4.1. In these paras there is no mention of 'Coal Tar' emerging in the manufacturing process recorded by learned Collector. In para 7 the Collector has mentioned that "I find that Bokaro Steel Plant has not declared the products 'pitch', 'blends of pitch' and 'tar oil' in the classification list submitted to the Department." 20. Shri S. Chakraborty has filed the detailed process of manufacture and the products emerging therefrom which is noted below:- 21. Shri A.K. Haksar, learned Counsel produced technical literature to show that there is no product like 'coal oil' emerging in the distillation process. The extracts from Shreve's Chemical Process Industries Fifth Edition by George T. Austin published by McGraw-Hill International Editions. Extracts from Kirk-Othmer Encyclopedia of Chemical Technology Vol. 22 pages 569 to 581 dealing with Chapter Tar and Pitch. A careful consideration and perusal of the records shows that there is no product like '....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at there is no product known in the market as Coal Oil. Reference made by the Collector to Coal Oil is nothing but Creosote Oil on which duty was already being paid under T.I.9 of the erstwhile Central Excise Tariff. In order to elaborate his point, Shri Haksar, has drawn attention to page 72 of Shreve's Chemical Process Industries Fifth Edition by George T. Austite. In the diagram on page 72 Coal in the first instance is broken into the following four components :- (1) Coke (2) Coal Tar (3) Light Oil (4) Coal Gas Coal Tar is then further broken into a large number of products apart from products coming out of the other components of Coal as mentioned above. One of the products therein is Creosote Oil. He has also invited attention to the process of manufacture given in the impugned order which is reproduced below:- "3.2.1. By burning of coke in absence of oxygen in Coke Oven Batteries, Bokaro Steel Plant gets : (i) Hard coke and (ii) Coke oven gas. Coke oven gas is subjected to various processes and different products are obtained. 3.2.2. The first product obtained from coke oven gas is crude coal tar. this is obtained by cooling coke oven gas from 700°C -....
X X X X Extracts X X X X
X X X X Extracts X X X X
....olumn down through the super-heated steaming section to establish the desired pitch hardness and to strip this pitch of the higher-boiling volatile oils. It is then withdrawn from above the middle of the distillation column and conducted through the pitch-tar heat exchanger to storage. The products are: Product Boiling Point °C Side stream 1 Light oil to 170 Side stream 2 Carbolic oil 170-205 Side stream 3 Napthalene oil 205-240 Side stream 4 Creosote or wash oil 240-280 Side stream 5 The residue or anthracene 270-340 Side stream 6 Residuum or pitch 325-400 He, therefore, urges that the coal oil referred to by the adjudicating authority in the impugned order is nothing but Creosote oil which is already being made liable to duty. Apart from this Shri Haksar has drawn attention to Shri Sankaran's order dated 'nil' ( -11-1990). In para 5 of the said order Shri Sankaran has recorded as follows:- "In reply, the learned DR, submitted that coal oil was nothing but Creosote Oil in view of the process of manufacture." In view of this clear admission, urges the learned advocate, there is no scope of remanding the matter....