TMI Blog1999 (12) TMI 696X X X X Extracts X X X X X X X X Extracts X X X X ..... mensions. Therefore, being covered under sub-heading 7101.90 of the Central Excise Tariff Act, 1985 they would be fully exempted from Excise duty under Notification No. 53/86-C.E., dated 10-2-86, as amended. The said Notification issued under Rule 8(1) of the Central Excise Rules, 1944 exempts goods fall under Chapter 71 of the said Tariff from the whole of the duty and the items mentioned in the Schedule appended thereto. Serial Number 2 of the said Schedule reads as under :- precious and semi-precious stones, synthetic stones and pearls The appellant contends that being precious stones albeit manufactured by synthetic process, they could be clearly covered by serial number 2 of the said Schedule and therefore, claimed exemption for the product. The position of the Revenue is that the size in microns of these products being less than 1000 microns, as per the HSN Explanatory Notes such products would fall outside the ambit of diamond (stones) and therefore, would automatically be classified as dust or powder thereof. Hence, the exemption claimed, which is not available to dust or powder thereof, was not available to them. 2. It is also seen that the show-cause notice dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formed them that their case was not covered by the said Notification and hence they have requested to take out a Central Excise licence and observe all the Central Excise procedures and clearances should be only on payment of duty. The learned advocate submitted that no reason was given why their classification under 7101.90 and claim for exemption under the said Notification was disallowed by the Superintendent, neither was it informed to them whether the goods were being treated as excisable under which alternative sub-heading of the Tariff. Being aggrieved by the said decision of the Superintendent, the appellants vide letter dated 27th August, 1988 approached the Additional Commissioner of Central Excise, Madurai, wherein a similar information was again given on the initial lack of response of the Superintendent and then his decision requiring them to apply for licence was also that informed. They had also claimed that the Superintendent has not assigned any reasons in his letter as to why the exemption claimed was sought to be denied. They had again submitted that countervailing duty was not being charged for imports and that they were the first pioneer industry in the country ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5-9-89 giving details required and claiming that intermediate products not being goods and not known in the trade as a commodity which was marketable, were not to be subjected to Excise duty. This was further followed up by another letter dated 13-2-90 claiming similar non-excisability. The learned advocate further submitted that the Commissioner of Central Excise of the jurisdiction visited the factory on 14-11-88 which was followed by the visit of the Assistant Commissioner on 21-6-90, then another visit by the Commissioner and the Director General of Central Excise, New Delhi on 13-1-1992 and ultimately a visit by a team of Officers headed by the Superintendent on 30-10-1993. On these set of facts, the learned advocate then took us through the show cause notice where the extended period was invoked on the grounds as follows :- (a) The appellants had not followed the directions given by the Superintendent and the Assistant Commissioner of Central Excise. (b) That they had mis-declared their product as synthetic diamond stone with an intention to evade duty in these communications, whereas the product manufactured by them was synthetic diamond dust or powder. He submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot the goods tested after drawing samples. As against this, since the appellants had got six such technical opinions and had got the production of the final product tested also, therefore, the department had not discharged the onus resting on them to prove such allegations of wilful mis-declaration with intent to evade duty. He further submitted that at the material time, the HSN Notes laid down that the particle size of diamond wouId exceed 500 microns and some of their products dimensions were more than 500 microns. It was only in 1994 that the HSN Notes were revised and this cut off limit was increased to 1000 microns. Therefore, for some of the dispute period, it cannot be said that merely on the grounds of the HSN Explanatory Notes as they existed at the relevant time, the charge of wilful mis-declaration with an intent is proved. Secondly this revision of 1994 cannot be applied with retrospective effect. 4. On merits, the learned advocate submitted that the Order-in-Original impugned has not at all considered the five test reports/technical opinions submitted before the original authority. These were to the effect that the products manufactured by them were industrial diamo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declaration tantamounted to a deliberate suppression and to illegally claimed the duty exemption and thereby with an intent to evade duty. He further submits that the decision of the Commissionerate (Headquarters) was merely based on the wrong information supplied to them and therefore, that decision cannot be held against the Revenue, while deciding on the question of applicability of the extended period or otherwise. The mis-information given to the Commissioner was only to override the decision already given to take out a licence and follow the Excise procedure and clear the goods on payment of duty, while the statutory powers to issue a licence or not lies with the Range Superintendent and the statutory power to approve a classification list therein lies with the Assistant Commissioner. He also cites the case of Alembic Glass Industries Ltd. v. CCE as reported in 1994 (73) E.L.T. 579, where the visit of Central Excise officers to assessees factory is held not to mean that all the activities of companies within the department s knowledge and that extended period could not be denied in view of this decision. He also cites the case of CCE v. Wipro Information Technology Ltd. as re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t there was no other manufacturer for the product in the country, and therefore the appellants had no precedential guidance on classification on this new product cannot be ignored. (d) In the communications to the Superintendent of Central Excise, appellants had informed the product as Industrial Diamonds (synthetic stones), and had claimed the classification and exemption as recorded above. While it is the right of a manufacturer to claim both a particular classification and exemption, and it is the duty of such a manufacturer to offer clarifications asked for in this respect to support their claim, merely because the department feels that an alternative classification would be the correct one and that therefore the exemption needs to be denied, this by itself, cannot amount to suppression of information with an intent to evade duty. [Northern Plastics Ltd. - 1998 (101) E.L.T. 549 (S.C.)]. In this case, appellants had also harboured bona fide belief that they were claiming correct classification and exemption for the reasons that they were licenced to manufacture Industrial diamonds, and because there was no other manufacturer in the country thereof which offered a precedent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sub-ordinate field officers in view of Rule 6 of the Central Excise Rules and had therefore not acted without jurisdiction. We also find that, taking into consideration the established system followed in Commissionerates, a report would have been called for from the field agency by the Commissionerate Headquarters before taking such a decision. Thus, when the Commissionerate took this decision that appellants goods were exempted, it was based not merely on the above submissions but also on a report of the Superintendent and the Asst. Commissioner, both of whom had harboured contrary opinion to the effect that the goods were excisable and had to pay duty. Therefore, the ground taken in the show cause notice and upheld in the order impugned that Commissionerate's order confirming duty exemption was based on merely one sided and misdeclared information supplied by the appellants does not hold water. 9. Learned DR cites the decision in the case of Limenaph Chemicals v. U.O.I. of Hon ble High Court of at Madras (supra). We find that the same is not applicable to the facts of this case because in that case samples had been repeatedly taken by the department of the goods manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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