TMI Blog2007 (9) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacturing the products 'CRC 2-26 Aerosol' and 'CRC Acryform Aerosol' since 1983. They were claiming exemption under Notification No. 120/84-CE dated 11.5.1984 for the product 'CRC 2-26' and SSI exemption under Notification No. 175/86-CE dated 1.3.1986 for the product 'CRC Acryform'. In their declarations they claimed the classification of the products 'CRC 2-26' under Chapter 2710.99 and 'CRC Acryform' under Chapter 3203.40. 4. On the basis of the material gathered during the routine transit checks and other information the Department issued show cause notice dated 12.2.1993 to the respondent-assessee calling upon it to show cause as to why Central Excise duty of Rs. 56,69,872.80p should not be demanded and recovered for the period 26.2.1988 to 24.10.1992. In the said show cause notice mainly 4 issues were raised, namely: (i) That the product 'CRC 2-26' was not a blended lubricating oil and was, therefore, not entitled to the benefit of Notification No. 120/84-CE dated 11.5.1984; (ii) That the product 'CRC Acryform' was not entitled to the benefit of Notification No. 175/86CE dated 1.3.1986 inasmuch as the product carried on it the brand name/trade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as it was predominantly anticorrosive in nature and was used for air conditioners, panel boards and other electrical and electronic gadgets primarily to prevent corrosion and for improving electrical properties. It was also submitted that the respondent-assessee was not entitled to SSI exemption for 'CRC Acryform' since the respondent-assessee manufactured and cleared goods in the brand name of M/s. BBL and also the logo of M/s. CRC Chemicals Europe. Further submission was that DCPL and BBL are related persons and relation led to under valuation of the goods. The respondent-assessee is guilty of suppression of facts warranting invocation of the extended period. 11. Shri D.B. Shroff, learned senior counsel for the respondent-assessee supported the findings and conclusion recorded by the Tribunal and reiterated the case of the respondent-assessee that he is entitled for the benefit of both the Notifications referred to hereinabove. 12. Broadly, the following issues arise for our consideration in these appeals namely: 1. Whether the product 'CRC 2-26' is a blended lubricating oil and thus is entitled to exemption under Notification No. 120/84? 2. Whether t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Indian Standards requirements. The Department did not controvert the expert opinion given by the Professor. 14. Be that as it may, the Department itself drew samples on the said products on more than one occasion i.e. in 1984, 1990 and 1993. The Deputy Chief Chemist has given the test reports and communicated the same vide letter dated 3.5.1985 stating that the sample which forms of a liquid is composed of mineral oil and small amount of additives; 1990 analysis has been communicated vide letter dated 15.4.1991 stating that the sample is composed of mineral oils and additives, the percentage of mineral oil is more than 70% and the result of 1993 analysis was communicated vide letter dated 10.1.1994 specifically stating that it is a product primarily used as lubricant though it has anticorrosive properties also. It is well settled and needs no restatement at our hands that the test reports given by the Chemical Examiner are binding upon the Department in the absence of any other acceptable evidence produced by it in rebuttal. In the present case, the Department has neither produced any evidence to rebut the reports of the Chemical Examiner nor impeached the findings of the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as early as in the year 1992. The Trademark Registrar has registered 'CRC Acryform' as respondent's trademark on 14.10.1992 with retrospective effect from the date of use in the year 1987. It is true the registration of the trademark on 14.10.1992 after the commencement of lis between the parties by itself may not be binding on the Department but its evidentiary value cannot be altogether ignored. So far as the CRC Chemicals Europe is concerned it had given an affidavit and a certificate specifically stating that they do not manufacture and have not manufactured or sold any product under the name and style "Acryform" or "CRC Acryform" either in India or abroad and they have not claimed any title, right or ownership in the aforesaid names. This affidavit has been ignored altogether by the Commissioner on the ground that it was procured by the respondent-assessee and it was a false document. There is no evidence made available by the Department that the same trade name or brand name is used by some other company apart from the respondent-assessee. There is also no evidence available on record indicating any connection between the 'CRC Acryform' and CRC Chemicals Europe. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icating oil manufactured by blending mineral turpentine oil with anti-corrosive in a base of corrosive oil. The stand taken by the assessee is consistent as is evident from the letter dated 20.3.1985 addressed to the Superintendent of Central Excise that they were the manufacturers of 'CRC 2-26' which was a blended lubricant comprising of various anticorrosive oils and mineral turpentine oil and that the same was fully exempted under Notification No. 120/84. The required information was supplied to the Superintendent of Central Excise when he visited the factory of the respondent-assessee. Samples were again drawn in 1990 and 1993 to determine whether the product was not a lubricating oil. We have already referred to the analysis of the Deputy Chief Chemist who opined that the samples contained mineral oil which was more than 70% and additives. The chemical test reports so obtained by the Department were never put in issue. No dispute has been raised in this regard. The declarations furnished by the respondent-assessee were totally inconformity with what has been stated in the test reports of the Deputy Chief Chemist. It is true that the exemption under Notification No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The relevant facts were very much within the knowledge of the Department Authorities. The Department did not make any attempt to lead any evidence that there was any willful misstatement or suppression of facts with intent to evade payment of duty. 20. For the reasons aforesaid, we are of the view that the Tribunal did not commit any error in holding that the extended period of limitation was not available to the Department for initiating the recovery proceedings under Section 11A (1) of the Act. 21. So far as 'CRC Acryform' is concerned, the allegation was that the respondent-assessee did not mention about the license agreement in the classification lists. But the fact remains the copies of the labels on the product which were furnished to the Department at the time of filing declarations and classification lists contain information that 'CRC Acryform' was manufactured under the license of CRC Chemicals Europe. The Department had even taken samples of 'CRC 2-26' which had contained labels of the aforesaid product. This Court in O.K. Play (India) Ltd. vs. Commissioner of Central Excise, Delhi-III, Gurgaon [2005 (188) ELT 300 (SC)] while dealing with the effect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the respondent-company. The required raw materials and packing materials for manufacturing and packing the products were always purchased from its own resources and BBL in no manner exercises any supervision or control over the affairs of the respondent-company. 26. It is no doubt true that the registered office of BBL and the respondent-company was located in the same premises. The BBL owns the industrial gala in which respondent's factory exists for which the respondent-company pays market rent for its operation. The BBL before entering into a lease agreement on each occasion obtained a valuation report from an independent Valuer for the purposes of fixing the quantum of rent. The BBL entered into a lease agreement with the respondent-company under the Board Resolution of the company. Mere fact that both the registered offices are situated in the same premises and the manufacturing unit of the respondent-company is situated in the industrial gala owned by the BBL would not make both the companies are related to each other. There is no mutuality of interest between both the companies. 27. BBL admittedly does not hold any shares in respondent-company nor the respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs. Collector of Central Excise, Madras [1995 (75) ELT 449 (SC)] held that: "If a special trade discount is given to such a customer who is a buyer of 90% of goods, it would amount to a normal trade practice. At any rate it would not be an impermissible trade practice. In fact such type of concessions are usually given by manufacturers whose goods are lifted by whole-buyers whose availability avoids lot of marketing and advertising costs for the manufacturer and also ensures a guaranteed quantity of sales year after year. In order to keep such a wholesale monopolistic buyer attached to it, if under such circumstances by way of business expediency, the manufacturer offers him a special trade discount, it cannot be said that it is not in accordance with normal practice of wholesale trade." 30. There is no evidence available on record that the respondent-assessee received something further from BBL other than the price charged. There is no evidence to suggest that the profit made by the BBL had flown into the respondent-company. BBL obviously is a distributor and not a relative within the meaning of Section 4 (a) and 4 (3) (b) of the Act. 31. This Court in Union of I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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