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TMI Blog2004 (6) TMI 169X X X X Extracts X X X X X X X X Extracts X X X X ..... e, further, mentioned that Notification No. 181/88-C.E. grants complete exemption from payment of duty to metal containers intended to be used for packing of goods specified therein namely (i) whole milk powder, (ii) Skimmed milk powder (SMP), and (iii) Milk powder including SMP for infants and baby foods; that they were granted a L 6 licence for availing the benefit of the Notification; that in the licence, milk powder was specifically indicated as the product for the packing of which the metal containers would be bought duty free. 3.1.In respect of Appeal No. E/ 2586/2001-D, the learned Advocate submitted that when the issue regarding the classification of Dairy Whitner was pending decision before the Supreme Court, three show cause notices dated 9-10-91 and 10-4-92 proposing to demand duty on the metal containers used during the period from 30-7-1991 to 31-12-1991 under Rule 196 of Central Excise Rules, 1944 were issued to them; that the Assistant Collector confirmed the demand of duty under Adjudication Orders dated 14-5-1992 and 29-5-92; that, however, on Appeal, the Collector (Appeals) under Order-in-Appeal Nos. 865 to 867/CE/CHD/92, dated 30-10-92 allowed their appeals and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be made from the manufacturer and not from L-6 holders; that the said Appeal was allowed on technical grounds and not on merits; that accordingly the issue cannot be held to have attained finality in view of the decision in the case of T. Tobacco Co. v. A.C., AIR 1961 AP 324 and CCE v. T.K. Paleap A. Naidu, AIR 1964 Mad 111 wherein it has been held that an order set aside in Appeal not on merits but on technical grounds, open to Adjudicating Authority to initiate fresh proceedings on the same grounds with a view to observe correct procedure; that hence the present proceeding is not hit by res judicata; that further, the period covered under earlier order was from 19-1-91 to 31-10-91 whereas the present show cause notice covers period from 24-2-89 to 31-12-91. 6.1.In respect of Appeal No. E/1760/2001-D, the learned Advocate mentioned that a show cause notice dated 24-2-1994 was issued by the Commissioner contending that since 'Everyday Dairy Whitner' is not skimmed milk powder, they are not entitled to receive the metal containers duty free under Notification No. 181/88-C.E; that the show cause notice also invoked the extended period of limitation under Proviso to Section 11A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation Ltd. v. Union of India, 1996 (86) E.L.T. 6 (All); that the Special Leave Petition filed by Union of India has been dismissed by the Supreme Court as reported in 1999 (112) E.L.T. A44. Reliance has also been placed on the decision in the case of Laxmi Tobacco Co. v. C.C.E., Raipur, 2000 (125) E.L.T. 1105 (T). 7.Countering the arguments, the learned Senior Departmental Representative submitted that the Appellants were granted L 6 licence in form L 6 for obtaining metal container for packing of Milk Powder, Baby Foods and skimmed milk powder; they had nowhere declared that the Metal containers obtained under Notification No. 181/88-C.E. would be used to Pack Partially Skimmed Milk Powder; that thus they had misdeclared the facts regarding packing of partially skimmed milk powder to the Department; that CT 2 issued to them clearly mentions that Metal containers are for packing whole milk powder, skimmed milk powder, infant foods, baby foods and ghee. The learned Senior Departmental Representative also submitted that the time-limit specified in Section 11A(1) of the Central Excise Act for demanding duty is not applicable to the demand of duty made under Rule 196 of the Central Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 126) E.L.T. 1141 (T) wherein it has been held that "we agree with the learned Advocate's view that after the culmination of the proceedings by one show cause notice dated 30-7-1981, the department cannot re-open the matter again by issue of fresh show cause notice dated 19-7-1984." The present show cause notice dated 19-12-1994 is not for a different period as claimed by the Revenue. It is for the same period that is 30-7-91 to 31-12-91 for which earlier three show cause notices had been issued. Following the ratio of the decisions relied upon by the learned Advocate we set aside the impugned Order-in-Appeal No. 306/CE/CHD-II/2001, dated 31-8-2001 and allow the Appeal No. E/2586/2001-D. 9.1.Coming to Appeal No. E/1760/2001-D, we observe that Hon'ble Punjab & Haryana High Court in their own case [Food Specialties Ltd. v. Union of India, 1991 (51) E.L.T. 310 (P&H)] has held that Everyday Daily Whitner is partly skimmed milk powder. This judgment has been upheld by the Supreme Court in Union of India v. Food Specialties Ltd., 1998 (97) E.L.T. 402 (S.C.), Notification No. 181/88-C.E., dated 13-5-1988 exempts, inter alia, Metal Containers from whole of the duty of excise if- (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or packing whole milk powder, skimmed milk powder (up to one Kg. Nett), Infant Foods, Baby foods and Ghee." It is thus apparent that the Metal containers were to be used for the purpose of packing the specified products and "Partly Skimmed Milk Powder" is not one of such specified products. The manufacturers of the metal containers have supplied the metal containers on the strength of such CT 2 Certificates and in these circumstances it cannot be claimed that they have short-paid the duty. The onus is on the Appellants to use the metal containers for the intended purposes mentioned in the Notification No. 181/88-C.E. Rule 196 of the Central Excise Rules, 1944 provides in clear terms that "if any excisable goods obtained under Rule 192 are not duly accounted for as having been used for the purpose and in the manner stated in the application ...........the Applicants shall on demand by the proper officer, immediately pay the duty leviable on such goods." As the Appellants have not used the metal containers for the purpose of packing whole milk powder, skimmed milk baby foods and ghee, the duty liability is cast on them under Rule 196 of the Central Excise Rules, 1944. The decisions r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttracted necessitating the raising of the demand within six months under Rule 57-I of the Central Excise Rules, 1944 before its amendment on 5-10-88. Rule 57-I provided that if the Modvat credit has been wrongly availed of or utilized in an irregular manner, the credit so taken may be disallowed by the proper officer and the amount so disallowed shall be adjusted in the credit account or current account by the manufacturers or if such adjustments are not possible by cash recovery from the manufacturer. The Supreme Court has held as under : "Any law or stipulation prescribing a period of limitation to do or not to do a thing after the expiry of period so stipulated has the consequence of creation and destruction of rights and, therefore, must be specifically enacted and prescribed therefor. It is not for the Courts to import any specific period of limitation by implication, where there is really none .... Section 11A is not an omnibus provision which provides any period of limitation for all or any and every kind of action to be taken under the Act or the Rules but will be attracted only to cases where any duty of excise has not been levied or paid or has been short-levied or short ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpreting Rule 196 of the Central Excise Rules, 1944. Chapter X of the Central Excise Rules, 1944 in which Rule 196 is found included provides a special procedure for remission of Central Excise duty used in a specified industrial process and thus enables a manufacturer to procure the excisable goods without payment of duty or on payment of concessional duty for use in the manufacture of final product. The recovery of duty on the excisable goods used in breach of faith and mutual trust and in violation of the provisions of Chapter X has therefore to be made under the provisions of Rule 196 as Chapter X which is a Special beneficial scheme has self-contained procedure, manner and method for its implementation providing for its own remedies to undo any mischief committed by the Appellants. We, therefore, hold that the time-limit provided in Section 11A of the Central Excise Act cannot be read into provisions of Rule 196 of the Central Excise Rules. Accordingly, the demand of duty is upheld. The amount of penalty, which is imposable on the Appellants under Rule 196 for the breach committed by them, is however, on the higher side. We reduce the penalty to Rs. One lakh only. 13.Both the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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