TMI Blog2003 (2) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... reafter by the letter dated 21st of April, 1987, it is pointed out that these intermediate products are being manufactured. There was thus no deliberate act of fraud, collusion, misstatement, suppression or contravention of the Act. Mere fact of not filing of the classification lists is not sufficient to bring into play the extended period of limitation. It is therefore held that the extended period of limitation, under the proviso to Section 11A, was not available. In favour of assesse. - 6745 of 1999 - - - Dated:- 13-2-2003 - S.N. Variava and B.N. Agarwal, JJ. [Judgment per : S.N. Variava, J.]. - Civil Appeal No. 6745 of 1999 is against the judgment of the Customs Excise Gold (Control) Appellate Tribunal (CEGAT), dated 20th July, 1999, whereas Civil Appeal No. 6922 of 1999 is against the judgment of CEGAT, dated 30th July, 1999. 2.The Appellants in these Appeals manufacture various drugs. In Civil Appeal No. 6745 of 1999 the concerned drugs are Mebendazole, Thrimethoprim, Tinidazole and Dexa-methazone. In the process of manufacture of above drugs certain intermediate products come into existence. For the purposes of this Appeal the intermediate products are Thiourea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se Bombay reported in 1989 (1) SCC 602, the Appellants manufactured leather clothes, laminated jute mattings and PVC tapes. In the process of manufacture of such products, an intermediate product viz. a PVC film was manufactured. The question was whether the Appellant (therein) was liable to pay excise duty on such PVC film. The department had shown that PVC films or sheets were available in the market. However, what was available in the market was a finished, embossed and printed PVC films whereas what was manufactured by the Appellant was a crude PVC film which had much less tensile strength than that of the PVC film available in the market. On behalf of the department it was submitted that if the good was one which fell within the Schedule, then excise duty would be payable. This argument was repelled. It was held that for the goods to be excisable they must be known in the market and must be capable of being sold in the market as goods. It was held that actual sale in the market was not necessary and that even though it may be used for captive consumption, they would be liable to excise provided they were capable of being sold in the market or known in the market as goods. It w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... termediate product "calcium carbide" was excisable. It was shown that the calcium carbide manufactured by the Respondents was not of a purity that rendered it marketable. It was held that the rationale for levying excise duty is that the goods, which are manufactured, must be a distinct commodity as such known in common parlance or to the commercial community for the purposes of buying' and selling. It was held that the manufacture of calcium carbide by the Respondents was not of the purity nor was it packed in air-tight container so as to make it marketable. It was held that the commodity must be marketable as it is and not become marketable by a further process. 8.In the case of Collector of Central Excise, Baroda v. United Phosphorus Ltd. reported in 2000 (4) SCC 18 certain intermediate products came into existence in the process of manufacture of insecticides, fungicides, weedicides and pesticides. The question was whether those intermediate products were excisable. It was held that even though an intermediate product may be one which is specified in the Schedule it was still not subject to duly unless it satisfied the test of marketability. It was held that the burden of sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be sold to another industrial user who needs that kind of product". 12.It is an admitted position that the department has (1) made no efforts to ascertain whether any of the intermediate products are available in the market; (2) even if available whether or not products available in the market are the same as that produced by the Appellant; (3) none of the intermediate products manufactured by the Appellants were got analysed by a chemical analyser. It is admitted that the Report of the chemical analyser, relied on, was based only on the write up given by the Appellant. In his cross-examination the chemical analyser admits that there was no facility available in his laboratory to carry out tests to establish the identity of the products. He also admits that, except for 3-4 Diamino Benzophenone there was no reference available, regarding other intermediate products, in the technical literature available in the laboratory. 13.At this stage it must be mentioned that the Customs Notification relied upon does not refer to all the products. Reliance on such a Notification may be relevant and may show marketability if the goods are identical. However where a question is raised that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise and Salt Act was not available to the Revenue. The law on the subject is also very clear. 18.In the case of Collector of Central Excise, Hyderabad v. M/s. Chemphar Drugs and Liniments, Hyderabad reported in 1989 (2) SCC 127 the Assessee had not declared the goods under a belief that the exempted goods were not required to be declared. It has been held that the period of five years, under the proviso to Section 11A, requires the commission of some positive and deliberate act of fraud, collusion, misstatement, suppression or contravention of a provision of the Act. It is held that mere inaction or failure on the part of the manufacturer or producer is not sufficient to extend the period of limitation. It is held that whether there was any fraud or collusion or wilful misstatement or suppression, is a question of fact depending on the facts and circumstances of each particular case. It is held that mere non-declaration of goods did not amount to any conscious or deliberate withholding of information. 19.In the case of M/s. Padmini Products v. Collector of Central Excise, Bangalore reported in 1989 (4) SCC 275, the question was whether dhoop sticks were excisable. The Assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to meet. It was held that mere failure to make a declaration would not justify an inference that the intention was to evade payment of duty. 22.In this case, the Appellants had pointed out that in the same compound they have a sister concern which is also manufacturing identical intermediate product. That sister concern had been examined by the officers of the same Circle. That sister concern had disclosed what intermediate products were coming into existence. Thereafter no show cause notice was issued to the sister concern nor were they told that these products were excisable. The Appellants have contended that they were therefore under a bona fide belief that these intermediate products were not excisable. It was also pointed out that prior to 1-3-1986, all the intermediate products were exempted from payment of excise duty. Thereafter the final product was exempted with the intention of regulating price of these drugs. The Appellants claim that they were under a belief that intermediate products continued to be also exempted as otherwise the price of the final product would go up. The Appellants also claim that they were under a belief that as their intermediate products we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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