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TMI Blog1998 (12) TMI 246X X X X Extracts X X X X X X X X Extracts X X X X ..... ad filed an stay application and have requested to grant an immediate stay as the Department is pressing for the recovery of impugned demand and penalty and threatening coercive action. The appellants have also requested to decide the appeal on merits without any personal hearing. Considering the facts and circumstances of the case I feel that the appeal itself can be disposed of finally, therefore, I proceed to decide the appeal after waiving the condition of pre-deposit of dues. 3.1 Brief facts of the case are that the appellants are engaged in the manufacture of Pan Masala sada as well as Pan Masala mixed with tobacco (Gutkha) falling under chapter sub-heading No. 2106.11 of the Central Excise Tariff. A show cause notice dated 6-4- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 as to why Central Excise duty amounting to Rs. 4,33,765.68 should not be demanded from them under Rule 9(2) of the Central Excise Rules, 1944 read with proviso to Section 11A invoking a period beyond 6 months. 4. The adjudicating authority found himself in agreement with the allegations contained in the show cause notice and accordingly confirmed the demand and also imposed penalty of Rs. 4,76,766/-. 5.1 The appellants in their grounds of appeal have inter alia stated that the adjudicating authority has not appreciated the actual facts and has passed the order without considering the catena of decisions relied upon; that the classification list was approved by the Department without any objection, RT 12 returns were assessed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bacco and perfumes and flavouring agents. The departmental officers were regularly visiting the factory and never had an occasion to find a separate identifiable product as `Flavoured tobacco' and never objected to the process of manufacture or the alleged liability of duty at any intermediate stage of production. 5.4 that the adjudicating authority has not even considered the basis of calculation of demand of Rs. 4,36,766/- fastened upon appellants in as much as there is no justification of classification of the so-called flavouring tobacco as chewing tobacco as it is not capable of being bought and sold in the market and in any case, the so-called flavoured tobacco is not chewing tobacco known in the trade and cannot be classified a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facture of Pan Masala from the Department wilfully. The adjudicating authority accepted the allegation of time bar on the ground that Shri Jai Prakash Agrawal, Director of the party in his statement dated 7-9-1995 admitted that raw tobacco purchased from open market is blended with perfumes and such blended tobacco is used captively in the manufacture of Pan Masala; that on Annual Budget day, the factory was lying closed, therefore, how the officer visiting the factory on that day could have detected the process of manufacturing; that even the other officers visiting the factory were not supposed to detect a process which was deliberately not disclosed and declared by the appellants as the visiting officers conducted the checks for which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al) = 1996 (13) RLT 645 (CEGAT), which has also been cited by the appellants, it was held that 5 year's period is applicable only for the clearances made prior to the date of knowledge of Excise Department and not for subsequent period. 8. It is also observed that in the instant case there was scope for doubt whether flavoured chewing tobacco manufactured at intermediate stage was dutiable or not, because they were already paying duty on their final product i.e., Gutkha. In the case of Collector of Central Excise, Hyderabad v. Chemphar Drugs & Liniments, Hyderabad reported in [1989 (40) E.L.T. 276 (S.C.) = 1989 (21) ECR 182 (SC)], the Hon'ble Supreme Court observed "something positive other than mere inaction or failure on the part of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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