TaxTMI 
TaxTMI 
1989 (8) TMI 80
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....from the year 1979 to 1983-84. The appellants claimed exemption under Notification No. 55/75, dated 1st March, 1975. By the said notification, the Central Government had exempted goods of the description in the Schedule annexed to the notification and falling under Tariff Item 68 of the First Schedule to the Act from the whole of duty of excise leviable thereon. In the Serial No. 8 of the Schedule to the said notification, 'Handicrafts' were listed. It is, therefore, clear that 'handicrafts' were fully exempt from payment of duty of excise, according to the appellants. Under the Notification No. 111/78, dated 9th May, 1978, the appellants were exempted from licensing control. That is the case of the appellants. The provision requiring a manufacturer to take out a licence is controlled by Rule 174 of the Central Excise Rules, 1944. The relevant provision of Rule 174 at the relevant time provided, inter alia, as follows : "RULE 174. Persons requiring a licence: Every manufacturer, trader or person hereinafter mentioned, shall be required to take out a licence and shall not conduct his business in regard to such goods otherwise than by the authority, ....
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....e is extruded from the extruder it is collected on a wooden tray which is of a particular size. As it is collected on the tray it is cut on both sides to the accurate size by hand. 7. The thin long incense is then transferred by hand from the individual trays of long big tray by hand. 8. After transferring it is properly arranged by hand in a consolidated manner on the long big tray. 9. Another tray which has four slits called the cutting tray is placed on top of the long tray with the incense. 10. After placing the cutting tray a hand roller cutter is rolled along the slits of the cutting trays to cut the incense to the required sizes. 11. The extra length or width of the incense on the tray is then removed by hand. 12. The cut incense is then transferred to a drying tray by hand. 13. The incense is dried by stocking the trays in the drying yard. 14. The dried incense is broken at the cut ends. 15. The ten incense sticks are inserted into the packet. 16. The incense packets are first punched with an eyelet. 17. Then twelve packets are wrapped in a cellophane wrapper." 4. The reven....
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....fts. A letter was placed before the Tribunal which was issued by the Deputy Director, All India Handicrafts Board functioning under the Ministry of Commerce, Department of Export Production which had certified that the agarbaties were the products of the Indian Handicrafts Board, Ministry of Commerce. Certain notifications were also drawn attention to of the Tribunal which indicated that agarbaties were handicrafts eligible for exemption under Notification No. 55/75. It was, therefore, contended that dhoop sticks, coil and powder were agarbaties and agarbaties were accepted as handicrafts by various authorities including the Central Government and mere use of power in the manufacture of these did not bar them from being called as handicrafts. It was further contended that in any event, there was no warrant in invoking longer time limit of five years for raising the demand and if at all demand should be raised it should be for a period of six months reckoned from the date of six months prior to the issue of the show cause notice. In those circumstances, it was submitted that the appellants should not be made liable beyond the period of six months from the date of issue of the show c....
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....ng the findings and the trade  notices and relying on the decision of this Court in M.S. Company Private Limited v. Union of India - 1985 (19) E.L.T. 15 (S.C.) =1985 ECR 110 SC, the Tribunal in the light of the definition of "handicrafts", in the Encyclopaedia Britannica, came to the conclusion that in the manufacture of a product skill of the worker and the use of hand are two pre-requisites for a product to qualify as a handicraft. In the Encyclopaedia Britannica, handicraft has been defined as follows: "Occupation of making by hand usable products graced with visual appeal. Handicrafts encompass activities that require a broad range of skills and equipment, including needle work, lace-making, weaving printed textile, decoration, basketry, pottery, ornamental metal working, jewelling, leather working, wood working, glassblowing, and the making of stained glass." 10. It was found by the Tribunal that raw materials were mixed by hand and the first essential procedure in the manufacture of dhoop, etc., is kneading of the raw materials and the next essential stage is the formation of the dhoop into sticks or coils. Both these processes were carried out by the aid of ....
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....xtend to two thousand rupees, and such goods shall be liable to confiscation." 11. It may be mentioned that rule 9 (1) of the said Rules stipulated that no excisable goods shall be removed from any place where they are produced, except in the manner provided in the rules. Therefore, the question that arises in this appeal is whether Section 11A of the Act applies or not. The relevant provisions of Sec. 11A are as follows: "11-A. Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded. - (1) When any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, a Central Excise Officer may, within six months from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice: Provided that where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any wilful mis-statement o....
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.... sticks etc., and the Tribunal came to the conclusion that inasmuch as the appellant had manufactured the goods without informing the Central Excise authorities and had been removing these without payment of duty, these would have to be taken to attract the mischief of the provisions of rule 9(2) and the longer period of limitation was available. But the Tribunal reduced the penalty. Counsel for the appellants contended before us that in view of the trade notices which were referred to by the Tribunal, there is scope for believing that agarbaties were entitled to exemption and if that is so, then there is enough scope for believing that there was no need of taking out a licence under rule 174 of the said Rules and also that there was no need of paying duty at the time of removal of dhoop sticks, etc. Counsel further submitted that in any event apart from the fact that no licence had been taken and for which no licence was required because the whole duty was exempt in view of Notification No. 111/78, referred to hereinbefore, and in view of the fact that there was scope for believing that it was exempt under Schedule annexed to the first notification, i.e., 55/75, being handicrafts,....