TMI Blog1994 (9) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 - S.P. Bharucha and Suhas C. Sen, JJ. [Judgment per : Bharucha, J.]. - The appellants manufacture liquid paraffin I.P. It is the case of the appellants that the said liquid paraffin is packed in drums which are labelled. The labels bear the appellant's monogram "Lubri-Chem". The said liquid paraffin is supplied to pharmaceutical industries. The pharmaceutical industries use the said liquid paraffin as an intermediate in the manufacture of drugs. The said liquid paraffin was classified for the purposes of payment of excise duty under T.I. 68 and as a drug intermediate, cleared without payment of excise duty by reason of an exemption notification. 2. On 6th August, 1981, the Superintendent of Central Excise issued to the appellants a notice which stated that they had manufactured and cleared the said liquid paraffin, which fell under T.I. 8, without payment of excise duty thereon. For the period 1st February, 1981 to 31st July, 1981, they were required to show cause why duty in the sum of Rs. 30.677.04 should not be recovered from them and why penalty should not be imposed upon them. An identical notice was issued on the same day for the period 19th June, 1980 to 31st Ja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition of the products falling thereunder. The product manufactured by the assessee had, on test, been found to satisfy such specifications, which fact had not been denied. In view thereof the product was classifiable first under T.I. 8. After the first stage of manufacture the product was packed, labelled and sold for pharmaceutical purposes. On the appellants' own admission, the product was of pharmacopoeia grade. The product was sold in a drum bearing the appellants' monogram. During the personal hearing it was claimed that the product did not bear any proprietary name, but this denial had not been substantiated and was not sufficient to disprove the specific observation of the Assistant Collector that the labelling or marketing on the drum bore the monogram of the assessee showing the proprietary nexus of the assessee with the product. As packing amounted to manufacture so far as T.I. 14E was concerned the product was liable to pay further duty under T.I. 14E after packing and labelling, in addition to duty under T.I. 8 before such packing or labelling. As the appellants had misdeclared the product as a drug intermediate falling under T.I. 68 and had suppressed the fact that a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the part of the assessee or conscious or deliberate withholding of information when the assessee knew otherwise was required before the assessee could be saddled with any liability beyond the period of six months. Very fairly, Mr. M. Chandrasekharan, learned Additional Solicitor General, appearing for the excise authorities, did not contend that the appellants had been guilty of any fraud or collusion or wilful misstatement or suppression of facts with intent to evade the payment of excise duty. The demand for payment of excise duty for the period 19th June, 1980 to 31st January, 1981, in the sum of Rs. 84,836.35 upon 1,93,056 liters made on 6th August, 1981 must, therefore, fall. 7. Now, it will be remembered that both notices dated 6th August, 1981, were issued by the Assistant Collector upon the basis that the appellants had cleared the said liquid paraffin which fell under T.I. 8 without payment of excise duty. Upon these notices the Assistant Collector passed the order dated 2nd December, 1981, confirming the demands. On 3rd September, 1981, upon classification lists that were filed by the appellants, the Assistant Collector came to the conclusion that classification of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. T.I. 8 read thus at the relevant time : Item Description of goods Rate of duty 8. Refined diesel oils and vaporising oil-that is to say, any mineral oil (excluding mineral colza oil and turpentine substitute/, which has its flashing point at or above seventy-six degrees of Fahrenheit's thermometer, and satisfies either of the following requirements :- (i) the oil has a flame height of ten millimeters or more but less than eighteen millimeters; or (ii) the oil has a flame height of less than ten millimeters but has a viscosity of less than one hundred seconds by Redwood I Viscometer at one hundred degrees of Fahrenheit's thermometer, and contains less than one quarter of any one per cent, by weight of any bituminous substance. (a) Refined diesel oils. One thousand rupees per kilolitre at fifteen degrees of Centigrade thermometer (b) Vaporizing oil Five hundred rupees per kilolitre at fifteen degrees of Centigrade thermometer. Explanation 1 - The expression "mineral oil", "flashing point" and "flame height" have the meanings respectively assigned to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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