TMI Blog1990 (2) TMI 214X X X X Extracts X X X X X X X X Extracts X X X X ..... are as follows :- During the course of a surprise visit by CE (Preventive) Officers to the factory premises of the appellants on 21-12-1983, it was found that their unit was engaged in the manufacture of Phenolic Moulding Compound (Powdery) with the aid of power as a final finished product under Tariff Item 15 A(i) of the I Schedule to the CESA 1944. It was also noticed that the unit was firstly manufacturing Phenolic resins also falling under the same tariff item utilised for captive consumption for the manufacture of phenolic moulding compound (Powder). The Dept. found that the unit had manufactured and cleared phenolic moulding compound (Powder) valued at Rs. 9.8 lakhs during the period from 15-5-1983 to 21-12-1983 in the financial year 1983-84 without payment of any excise duty in excess of exemption limit of Rs. 7.5 lakhs as per the terms of Notification 83/83 CE dated 1-3-1983 and that the unit had not obtained a CE licence on crossing the Rs. 6 lakhs limit. It was also found that no declaration had been filed under Notn. 2/81 dated 17-1-1981. The Dept. further noticed removal of 64,921 kgs of phenolic moulding compound (Powder) during the period 15-5-1983 to 20-12-198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nolic moulding compound (Powder) without CE licence and without accounting for its production. 5. We have heard Shri B.B. Gujral, learned Advocate for the appellant and Shri S. Chakravorty, JDR for the respondent. 6. The counsel for the appellant submits that the appellants are registered small scale units manufacturing Phenolic Resin and Phenolic Moulding (Powder) both falling under Tariff Item 15A(1) of the erstwhile Central Excise Tariff. The production commenced on 15-5-83 and as the value of the financial production was less that 7.5 lakhs the unit was totally exempt under Notification under 83/83 dated 1-3-1983. He submits that 24196 kgs. of Phenolic Resin valued at Rs. 477852 was cleared to the bonded store room and subsequently cleared for captive consumption of Phenolic Moulding (Powder) of a total quantity of 64921 kgs. valued at Rs. 993570. The unit was exempted from licensing control under Notification 2/81 CE dated 17-1-1981. The unit was paying nil rate of duty (appropriate duty) as it never reached the duty paying stage. The appellant believed that, having paid duty on Phenolic Resin, they need not discharge duty liability on phenolic moulding (Powder). 7. Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersion of Phenolic Resin to Phenolic Moulding (Powder) amounts to manufacture. 10. The clarification referred to by him act as promissory estoppel against the collection of duty. 11. The learned counsel cites a CATENA of decisions on promissory estoppel, namely, the following :- (a) 1985 22 E.L.T. 306 (Union of India v. Godfrey Philips); (b) 1985 20 E.L.T. 302 (Bengal Paper Mill Company v. Superintendent of Central Excise); (c) 1980 E.L.T. 639 (Modem Mills Ltd. v. Union of India); (d) 1983 E.L.T. 484 (Shakti Sugar v. Union of India); (e) 1981 E.L.T. 870 (Ravindra Hindustan Platinum v. Union of India). 12. Shri B.B. Gujral stated that the appellants cannot be charged with suppression of facts when the Government itself was in doubt as to whether the process of converting phenolic resin to Phenolic Moulding (Powder) amounted to a process of manufacture. 13. Shri B.B. Gujral next refers to Rules 9 and 49 of Central Excise Rules as amended in 1982 and submits that the appellants discharge the duty burden at resin stage and this resin has been captively consumed for the manufacture of Phenolic Moulding (Powder) and therefore no further duty is liable as the process of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... phenolic moulding powder, he contends that this confiscation is not justified as there was no clandestine removal of this quantity warranting confiscation. 17. Shri S. Chakravorty, learned JDR at the very outset submits that the issue in dispute in this appeal, namely, whether the process of conversion of Phenolic Resin to Phenolic Moulding Powder amounts to manufacture, has already been decided by this Tribunal in the case of Satyakam Rasayan Udyog. Regarding the clarifications issued by Central Board of Excise and Customs dated 6-10-1982, 7-5-1983 and 10-5-1983 he submits that the ground raised by Shri Gujral that the clarifications operate as estoppel against the department, is a new ground taken for the first time only at this stage and this ground was not urged either before the adjudicating authority or in the grounds of appeal and therefore should not be allowed to be urged at this late stage. He further submits that if this ground is permitted to be raised before the Tribunal in the course of arguments, then he would submit that the circulars are in the nature of trade notices which have no statutory force and are not binding in nature. He relies upon the decision referre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 11 A of the CESA 1944 i.e. invoking the extended period of limitation of 5 years. 23. The appellants contention is that there was no fraud or willful mis-statement or suppression of facts on their part as they had filed a declaration with the Dept on 20-3-1983 regarding manufacture of Phenolic Resin . The declaration has been filed in terms of para 3 (a) of Notification 83/83 dated 1-3-1983 which reads as follows:- Para-3 the : Where a manufacturer has not cleared any specified goods in the preceding financial year or has cleared any such goods for the first time on or after the 1st day of August, in the preceding financial year, the exemption contained in this Notification shall be applicable to such manufacturer Para-3(a)the : If he files a declaration with the Asst. Collector of Central Excise that the aggregate value of clearances of all excisable goods by him or on his behalf for home consumption, from one or more factories, during the financial year is not likely to exceed rupees twenty five lakhs 24. The declaration is as follows:- To The Assistant Collector of C. Ex. Harish Appartment, Halar Rd. Bulsar. (GUJARAT) Dear Sir, Sub: Notice of manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, the Dept. itself has admitted the receipt of this letter. 27. The appellants argument regarding non-mention of phenolic moulding compound (powder) in the above mentioned declaration is two-fold. 1) they were under the bona fide impression that they were not required to declare phenolic moulding compound as phenolic moulding compound was nothing but a modified form of phenolic resin (manufacture of which had been declared) 2) in the alternative they initially manufactured only phenolic resin and only later on converted it into phenolic moulding compound by addition of fillers etc. and that there was still time till the end of the financial year to declare the fact of conversion of phenolic moulding compound if it was required to be declared as no time-limit for such declaration was stipulated in Notification 83/83, and the process of conversion of phenolic resin to phenolic moulding compound was not a process of manufacture as clarified by Board s instructions. 28. We find great force in the arguments of the appellants that there has been no suppression of facts or misdeclaration so as to justify the invoking of the proviso to sub-section (1) of Sec. 11-A. The Govt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been paid on the phenolic resins under Item 15 A (1) read with any Notification(s) in force. 5. Receipt of this letter may please be acknowledged. Yours faithfully, Sd/-x xxx (Rajendra Prasad) Under Secretary to the Government of India. 29. Another instruction was issued on 7-5-1983 regarding conversion of urea/melamine/polyester resins into powders. This reads as follows :- Board s orders regarding conversion of urea/melamine/polyester resins into powders. The Trade has represented that the process of making moulding powders from urea/melamine/polyester resins by the addition of fillers/additives would not constitute manufacture under Section 2(f) of the Central Excises and Salt Act. The matter has since been examined in consultation with the Chief Chemist, who has opined that the process of making urea/melamine/polyester, moulding powders by addition of fillers additives to the corresponding resins, is similar to that of making phenolic moulding powders. In view of the opinion of the Chief Chemist the ratio contained in Government of India Order Revision No. 270 of 1982 dated 26-1-82 copy of which was forwarded by Board s letter F. No. 93/2/82-CX. 3 dated 6-10 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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