1991 (9) TMI 242 - AT - Central Excise

Coal Tar Pitch and Blends of Pitch not entitled to benefit of exemption under Notification No. 121/62-C.E.

Summary

Issues Involved:
1. Classification of Pitch, Blend of Pitch, and Coal Oil under the Central Excises and Salt Act, 1944.
2. Eligibility for duty exemption under Notification No. 121/62-C.E. and subsequent amendments.
3. Allegation of suppression of facts and applicability of the extended period of limitation under Section 11A of the Act.
4. Demand for duty from 6-9-1980 to 6-9-1985.
5. Imposition of penalty under Rule 173Q of the Central Excise Rules, 1944.

Issue-wise Detailed Analysis:

1. Classification of Pitch, Blend of Pitch, and Coal Oil:
The main issue in the appeal was the classification of three products-Pitch, Blend of Pitch, and Coal Oil. The appellants contended that the products were exempt from duty under various notifications. The Collector of Central Excise, Patna, classified Pitch under the residuary item No. 68 of the Central Excise Tariff Schedule (CET) and not under Item No. 11(5). The Tribunal upheld the classification of Pitch and Blends of Pitch under Item No. 11(5), CET, and noted that the benefit of Notification No. 121/62-C.E. was not admissible. Regarding Coal Oil, the Tribunal observed that the show cause notice did not specify its classification, and there was no mention of Coal Oil in the appellant's letter or the impugned order. Consequently, the Tribunal set aside the impugned order concerning Coal Oil and remanded the matter to the Collector for de novo adjudication.

2. Eligibility for Duty Exemption:
The appellants argued that their products were exempt from duty under Notification No. 121/62-C.E. and its amendments. The Collector held that all three products were not eligible for duty exemption. The Tribunal upheld this decision for Pitch and Blends of Pitch, stating that the benefit of Notification No. 121/62-C.E. was not admissible. The eligibility of Coal Oil for exemption was left to be determined by the Collector upon remand.

3. Allegation of Suppression of Facts:
The Collector found that there was suppression of facts by the appellants, thus attracting the extended period of limitation of five years under Section 11A of the Act. The appellants contended that there was no suppression or misstatement of facts. The Tribunal noted that the show cause notice did not allege suppression of material facts or any other ingredients necessary to invoke the extended period of limitation. The Tribunal held that the department was not entitled to invoke the extended period of five years and that the duty demand could only be enforced for the normal period of six months from the date of the show cause notice.

4. Demand for Duty:
The Collector demanded duty for the period from 6-9-1980 to 6-9-1985. The Tribunal, however, limited the enforceable duty demand to the normal period of six months from the date of the show cause notice, setting aside the demand for the remaining period.

5. Imposition of Penalty:
The Collector imposed a penalty of Rs. 1 lakh on the appellants under Rule 173Q of the Central Excise Rules, 1944. The Tribunal found no case for the imposition of a penalty, as there was no mens rea or intent to evade duty. Consequently, the penalty imposed on the appellants was set aside.

Conclusion:
The appeal was disposed of with the following orders:
- Pitch and blends of pitch fell under Item No. 11(5), CET, and the benefit of Notification No. 121/62-C.E. was not admissible.
- The classification and dutiability of Coal Oil were to be adjudicated de novo by the Collector.
- The department could enforce the duty demand only for the normal period of six months from the date of the show cause notice, with the demand for the remaining period being set aside.
- The penalty imposed on the appellants was set aside, as there was no intent to evade duty.

Separate Judgments:
- The President and Member (T) agreed on remanding the matter concerning Coal Oil for de novo adjudication.
- Member (J) opined that the demand for duty on Coal Oil was not sustainable and should be set aside, as there was no product known as Coal Oil emerging from the manufacturing process.