TMI Blog2006 (7) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... gly challenged by the appellants. Hence they have come before the Tribunal for the relief. 3.Shri K.S. Ravi Shankar and K.S. Naveen Kumar, learned Advocates appeared for the appellants and Shri R.K. Singla, learned Jt. CDR and Shri Ganesh Havanur, learned SDR appeared on behalf of the Revenue. 4.Shri Ravi Shankar, learned Advocate urged the following points :- (i) The appellants, manufacturer of Cigarettes, has Quality Information Service Department (QUIS) situated within the factory. Samples of cigarettes sticks are sent to QUIS Department for the purpose of quality testing. The details of the nature of the tests were submitted to the department from time to time. They maintained register in which full particulars of the samples drawn were duly recorded. (ii) The durability of QUIS samples is in dispute between the appellants and the department over a long period of time. The Tribunal in the case of Godfrey Philips India Ltd. v. CCE, Bombay [1999 (114) E.L.T. 70] held that samples drawn for testing are at a pre-marketable stage and are not excisable goods. Following the above decision, the Tribunal's Kolkata Bench in the appellant's own case, reported in 2001 (137) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However the Department issued a show cause notice dated 29-9-2004 demanding duty on cigarettes sticks removed for quality testing during the period from September 1999 to November 2002 invoking proviso to Section 11A of the Central Excise Act, 1944. Interest was demanded. Penalty provisions were also invoked. The appellant's plea that the show cause notice was barred by limitation was not accepted by the Adjudicating Authority. After giving personal hearing the Adjudicating Authority passed the impugned order. (vi) The Commissioner has not taken into account the fact that for the impugned period, the judicial decision was in favour of the appellants and therefore there was no need to maintain the records of the QUIS samples drawn for testing purpose under Central Excise law. (vii) The Commissioner's finding that physical control exercised by the Department was only in relation to clearances of cigarettes from the factory and not to any removal to QUIS Department is wrong. The Departmental officers were posted in the factory and they were aware of all the activities inside the factory. (viii) The Commissioner's finding that the sample room of the appellant was not unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amples taken for quality tests, there could be no intention on the part of the appellants to evade payment of duty. The above Order-in-Appeal has not been challenged in appeal by the Department and has attained finality. The Commissioner instead of following the said order, distinguished the said order on a fallacious ground that in the said decision, the issue involved was only of those QUIS samples destroyed during testing and not those samples which after testing are reprocessed as in the present case. It was submitted that the evidence in the form of periodic show cause notices produced during adjudication wherein clearly demonstrates the above finding of the Commissioner is not justified. (xiv) The appellants stopped payment of duty and discontinued maintenance of records on samples drawn for testing only after the decision of the Tribunal's Kolkata Bench in their own case. Therefore the appellants acted in a bona fide manner. (xv) The learned Advocate cited the following decisions to urge that the extended period was not available to the Department to demand duty :- (a) ECE Industries Ltd. v. CCE [2004 (164) E.L.T. 236 (S.C.)] (b) CCE v. Pharmasia Pvt Ltd. [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of dual penalty under parallel provisions. Therefore, the impugned order is neither legal nor proper. 5.The learned Jt. CDR and SDR reiterated the order of the lower authority. 6.We have carefully considered the submissions made by both the sides. The main issue to be decided is whether the show cause notice issued to the appellants is hit by time bar or not and whether there is justification for invoking the longer period to demand duty on samples of Cigarettes removed for QUIS test for the period from September 1999 to November 2002. The question of dutiability of samples of Cigarettes removed for test has finally been decided by the Apex Court in the case of M/s. ITC Ltd. v. CCE, Patna [2003 (151) E.L.T. 246]. The above decision was delivered on 10-12-2002. The appellants have stated that till they received a favourable decision with regard to the issue from the Tribunal's Kolkata Bench in their own case in M/s. ITC Ltd. v. CE, Patna [2001 (137) E.L.T. 829 (Tri - Kolkata)], they stopped payment of duty and discontinued maintenance of the record on the samples removed for quality testing. The above decision was renderd on 10-5-2000. Only with effect from 10-5-2000, they h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber 2002 to September 2003 has been adopted by the Revenue in calculating the duty liability for the period 1999 - 2002. In other words, the demand in the show cause notice is purely based on theoretical estimate and not on the account of unearthing of any private records by the Department as recorded by the adjudicating authority in Para 13 of his findings. We reproduce the relevant extract. "On the contrary, the demand of duty of Rs. 1,65,80,915/- made in the present show cause notice is in respect of the quantities of samples of cigarettes drawn and not accounted for in the statutory records but were unearthed on verification of private records of the assessee after the pronouncement of Supreme Court judgment." When the Commissioner stated in the adjudication order that the (demand is made on the basis of private record unearthed, those record should form part of the show cause notice or the relied on document. No such document has been mentioned in the show cause notice. The records clearly reveal that the issue of dutiability of samples removed for QUIS test was under dispute. Even when the appellants were paying the duty, it was under protest. It is a fact that the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied on in the show cause notice as stated in the findings of the Commissioner in the Adjudication order. The Revenue has made use of the appellant's voluntary payment of duty to slap a demand on them for the period 1999 - 2002. The appellants had given explanation as to why they did not maintain the accounts with effect from May 2000. They have also stated that prior to May 2000, they had been paying duty for the samples under protest. These facts had not been taken into consideration by the Commissioner. Because the appellants voluntarily paid the duty, the Commissioner comes to the conclusion that they tacitly accepted the liability and states that, if they could pay from December 2002, why can't they pay for an earlier period from 1999. Our question to the Department would be when the liability was clinched in Dec. 2002 by Supreme Court, what was the Department doing till 29 September 2004. In fine, we are of the view that there is no justification for invocation of the longer period as there is no suppression of facts with intent to evade payment of duty. The records reveal that the entire issue was under dispute and the appellants kept the Department informed of their action. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
