ORDER
J.H. Joglekar, Member (T)
1. The appellants were engaged in the activity of crimping/texturising of duty paid man-made and synthetic yarn. They were manufacturing yarn commercially known as “Taspa yarn”. At the material time, crimped textured yarn falling under Chapter 54 was fully exempted provided the base yarn was duty paid. In the years 1986,1987 and 1988, the appellants had filed declarations claiming exemption from licensing control stating that the yarn manufactured by them was not leviable to further duty. The process of manufacture declared in all the three statements was identically worded and read as under:
“The filament or POY yarn is feeded to rotating shaft (Over feed or underfeed) at a constant tension with extra device (tension device) at a different speed. Either it is single end or two ends together into one spindle assembly into magnetic spinner. The yarn is heated into heater before it is going to spinner. This spinner is rotating in between two rollers of spindle assembly. In the spinner yarn is CIMPED. This gives crimp or other special visual effects depending upon the speed of the spinner. This spinner can also develop fancy yarn like slub crimped yarn, when two ends at different speed is feeded in on spinner. This yarn then travels to another shaft which is rotating at constant speed. Then final produce is wound on the paper tube spool.”
2. In June, 1987, the jurisdictional officers paid a visit to the appellants’ unit. On examination of the process of manufacture, they formed the opinion that the yarn manufactured was classifiable under Heading 5606.00. A sample of the yarn was drawn. The Chemical Examiner, Central Excise, Baroda, under his office letter No. BD/54/Yarn/87-88, dated 19-10-1987 communicated the test result of the sample as under :
“The sample is in the form of combination of two polyester filament yarns combined in such a way as to produce uniform slubs along its length by increased delivery of one of its components, such yarns are described in technical literatures under “Fancy Yarn”.”
3. On the basis of the report cited above, show cause notice dated 9-6-1988 was issued demanding duty as leviable under T.I. No. 68 under the old tariff and under Heading 5606 of the CET, 1985 on the texturised yarn cleared during the period January, 1984 to March, 1987. The proposal of imposition of penalty was also made. The Collector, after hearing the assessees and after permitting the assessees to cross-examine the Chemical Examiner, who had given the technical opinion, upheld the allegations in the show cause notice. He confirmed the demand amounting to Rs. 27,80,004.60 and also imposed a penalty of Rs. 10 lakh on the assessees. The appeal before us arises out of this order.
4. Shri Willingdon, ld. Advocate stated that it was his case that “Taspa yarn” produced by his clients was a fancy yarn classifiable under T.I. 18 H(b) under the old tariff, whereas the department claimed it to be classifiable under T.I. 68. Under the new tariff, his claim is that it is classifiable under Heading 5403 as ‘fancy yarn’ as against the department’s case of its being a ‘special yarn’ under Heading 5606. In reply to a query, the ld. Advocate clarified that the term “Taspa yarn” was a local name for a fancy yarn with slubs. He argued that the mere presence of slubs does not classify the yarn as a special yarn. Quoting from the HSN, he claimed that the presence of a core yarn was a must for classification as a special yarn. He stated that the Chemical Examiner in his cross-examination had specifically deposed that the contested goods were manufactured without a core yarn. In this connection, he relied upon the Board’s clarification issued under F. No. 56/2/88-CX-I, dated 19-10-1988. He cited the case law to the effect that the Board’s instructions were mandatorily to be followed by the officers subordinate to the Board. He stated that in the advice, the Board has clearly laid down that where core yarn did not exist, the resultant yarn could not be called special yarn. He stated that the Collector was wrong in holding that the HSN Explanatory Note did not apply to the CET because the wording of the two tariffs, as far as Heading 5606 was concerned, was not identical. It was his case that there is no substantial difference between these two definitions.
5. Apart from the merits, ld. Advocate submitted that the demand was hit by limitation. He stated that the fact that they were manufacturing fancy yarn and also the process of manufacture had been communicated to the department from time to time. The invocation of Rule 9(2) for raising the demand was, therefore, misplaced. He stated that on the classification of Taspa yarn, the department, itself, was not clear. Whereas in the Board’s instructions vide Circular No. 16/Spl. yarn/88 F. No. 56/3/87-CX-I, dated 26-4-1988, it was ruled that Taspa yarn would fall under 5606, in the cited circular of a later date, it was ruled that such yarn would merit classification as per constituent material. In such a situation, the department was wrong in holding the assessee to have the intention to evade revenue. He claimed that both on merits and on point of limitation, the demand is not sustainable.
6. Shri R.S. Sangia, ld. DR arguing for the department, claimed that the issue was fully covered by the judgment of the Tribunal in the case of Garden Silk Mills Ltd. reported in 1995 (78) E.L.T. 580. In this judgment, taspa yarn was held to be a special yarn classifiable under Heading 5606.
7. As regards the classification under old tariff, he admitted that the goods stood fully covered by the definition under the Tariff Item No. 18 and the claim of the department for the residuary classification was not warranted.
8. The ld. Counsel in his counter claimed that he was relying upon the cross-examination of the Chemical Examiner in which on seeing the samples and on studying the process of manufacture, the Chemical Examiner had opined that there was no core yarn. Since the core yarn was a necessary ingredient for yarn to be classified as special yarn, the finding of the Tribunal in the cited case did not go against this case.
9. We have carefully considered the arguments made before us after examining the various citations made by both the sides.
10. For greater appreciation of the issue before us, it is necessary to keep in mind the coverage of the definitions both under the old tariff and under the new tariff, as claimed by the appellants and as held by the department.
11. Tariff Item No. 18 in the old tariff covered man-made fibres and yarn. Sub-item II(i)(b) covered textured non-cellulosic man-made filament yarn.
12. The Tariff Item No. 18(ii) of the old Tariff had defined the expression “textured yarn” as yarn that had been processed to introduce crimps, coils, loops, or curls, along the length of the filament and which included bulked yarn and stretch yarn. We observe that as per the test report cited above, the sample had uniform slugs along its length. The Tariff description thus covered the yarn.
13. Tariff Item No. 68 covered all other goods not elsewhere specified. This phrase had been interpreted by the Calcutta High Court in their judgment in the case of Gopal Hosiery reported in 1989 (41) E.L.T. 35. The Court observed that the word “elsewhere” must mean “elsewhere specified in the first schedule”, both for the purpose of imposition of duty as well as of granting exemption from duty. Thus where a particular item was specifically shown as falling under any of the precedent tariff items, it could not be made to fall under the residuary classification. This was highlighted by the Supreme Court in their judgment in the case of Plasmac Machine Manufacturing Co. (P) Ltd.’ reported in 1991 (51) E.L.T. 161. Citing the judgment of the Supreme Court in the case of Dunlop India reported in 1976 (2) SCC 241, the Court observed that if an article was classifiable under a specific item, it would be against the very principle of classification to deny it the proper parentage and consign it to the residuary item. We find that the Collector has not discussed how the contested goods attracted the residuary classification. In his order, after discussing the merits of the alternative classifications, under the new Tariff, he has simply held that under the old tariff, these goods were classifiable under T.I. 68.
14. We have to hold that the yarn manufactured by the assessees in the present case prior to 1-3-1986, was classifiable under Item No. 18(ii) and the benefit of the Notification No. 178/83 was available to the goods. The portion of the demand for this period cannot sustain.
15. We now come to the dispute under the new tariff after 1-3-1986. The heading claimed by the appellants reads as under:
“5403.00 synthetic filament yarn, including the, synthetic mono-filament of less than of 60 deniers, textured”
The department’s case is that the following entries attracted namely:
“5606.00 – Other special yarn including gimped yarn and strip; chenille yarn (including flock chenille yarn)”
The old tariff had defined the term “textured yarn”. No such definition is available in the CET, 1985. The definition is, however, available in Chapter 54 of the HSN. The following is the extracted portion from the sub-heading Explanatory Notes:
“Textured yarns are yarns that had been altered by a mechanical or physical process (e.g. twisting, untwisting, false-twisting compression, ruffling, heat-setting or a combination of several of these processes), which results in individual fibres being set with introduced curls, crimps, loops, etc. These distortions may be partially or completely straightened by a stretching force but resume the shape into which they have been set upon being released.
Textured yarns texturised by having either a high bulk or a very high extensibility. The high elasticity of both types makes them especially suitable for use in the manufacture of stretch garments (e.g., tights, hose, underwear) while the high bulk yarns give fabrics softness and warmth of touch.
Textured yarns may be distinguished from non-textured (flat) filament yarns by the presence of special twist characteristics, small loops or reduced parallel orientation of the filaments in the yarn.”
16. The CET, 1985 is based on the HSN. The Andhra Pradesh High Court in their judgment in the case of Reckitt & Colman of India Ltd. reported in 1994 (72) E.L.T. 263 (A.P.) held that the judicial authorities are entitled to look into the Explanatory Notes of the HSN to understand the scope of an identical Chapter heading. We find that except for the adjustments necessary to make the chapter conformed to the needs of the Central Excise department, Chapter 54 in the HSN and the CET are identical. The Supreme Court in their judgment in the case of C.C.E. v. Woodcraft Products Ltd. reported in 1995 (77) E.L.T. 23, had observed that any dispute relating to tariff classification, must, as far as possible, be resolved with reference to the Nomenclature indicated by the HSN unless there is an express different intention indicated by the CET, 1985. There is no different intention manifest in the Indian Tariff. The Supreme Court in their judgment in the case of Bakelite Hylam Ltd. reported in 1997 (91) E.L.T. 13 had reiterated the view held in the Woodcraft judgment. Therefore, in this case, guidance can be had from the HSN Notes.
17. We had earlier referred to the opinion of the Chemical Examiner in his test report. The test report had certified the existence of slubs along the length of the yarn. This “distinction” is as per the description of textured yarn given in HSN. Reading the Chemical Examiner’s opinion and the definition in the HSN, it becomes clear that the goods manufactured by the appellants were textured synthetic filament yarn of polyester.
18. Coming to the Chapter 56, we find that during the relevant period, the chapter heading in both the HSN and the CET are identical. The chapter notes are also exactly identical. The Headings 5601 to 5605 are identically worded in both the tariffs and so is the wording of 5607 identical. Heading 5609 in the HSN is identical to Heading 5608 of the CET and goods falling under Heading 5608 of the HSN are adjusted elsewhere. However, the wording of the Heading 5606 is slightly different. Whereas the HSN has limited the scope of the entry to three yarns, namely, gimped, chenille and loopwale, the CET entry has a wider ambit thereby covering under, this sub-heading “other special yarns” and then illustrating the types of special yarn as named in the HSN. In other words, for coverage under Tariff Item 5606 in the CET, it is not necessary that the yarns produced should be only those three nominated in the HSN, but that any other yarn, if it can be termed as “special yarn” can be listed thereunder. We are, however, unable to find any definition of the wording “special yarn” in either of the tariffs. The HSN does not specify as to which of the products described under the Chapter, are “special yarns”. It is also significant that in 1995, the wording of the entry under Heading 5606 in the CET was later brought on par with that in the HSN thereby removing the legend of “special yarn” from the entry, restricting its coverage to the three specified yarns. In fact, in 1995, the whole Chapter was aligned fully with HSN.
19. Where the definitions are not available in the HSN, guidance must be had from alternate sources. No ISI specifications have been cited by either side. Although the dictionary meaning can be looked into, almost all the Courts as well as the Tribunal have recommended placing reliance on commercial understanding. The Tribunal in their judgment in the case of Singareni Collieries Co. Ltd. v. C.C.E. reported in 1988 (37) E.L.T. 361 for permitted reliance to be placed on technical dictionaries to understand the scope of technical and chemical terms. However, the technical meaning can be restricted to where such intention is manifest in the entry itself [Nocil v. C.C.E. reported in 1987 (30) E.L.T. 463]. The Supreme Court, however, in several judgments have preferred reliance to be placed in trade and commercial parlance to interpret the tariff entry. In their judgment in the case of Chemical & Fibres of India Ltd. v. U.O.I. reported in 1997 (89) E.L.T. 633, the entire approach to be taken by the authorities, has been given by the Supreme Court in the following words:
“It is, however, urged on behalf of the Revenue that the chemical composition of the polymer chips (Nylon 6 Chips) which are produced by the assessee is similar to the chemical composition of material used in plastic industry. And hence, going by the chemical composition of this material, it can be appropriately classified as a plastic. This contention will have to be examined in the light of the wording of Entry 15A. Entry 15A does not use any scientific or technical term. It deals with “plastics, all sorts”. As Encyclopaedia Britannica has described, the term ‘plastic’ is a commercial classification. When this kind of a term in commercial use is used in an excise entry which deals with marketable commodities which are manufactured and which are subject to the levy of excise, we will have to examine that term in the light of how it is understood in the trade. If, however, strictly technical or scientific words are used, the approach for their interpretation may be different.”
20. In the light of these guidelines, we would now seek to interpret the word “special yarn”.
The assessees have called this yarn as fancy yarn. Fancy yarn is also titled as Novelty yarn. A number of text books, refer to fancy yarn. In the book ‘Man-Made Fibres’ by R.W. Moncrieff some of the textured yarns are termed as fancy yarn.
21. Fairchild’s Dictionary of Textiles equates the terms fancy yarn, effect yarn and novelty yarn. The effect yarn is defined thereunder as :
“Effect Yarn -1. A yarn introduced into a fabric to produce an effect or pattern. It may be a different color or a different fibre. 2. A single yarn in ply novelty yarn which produces the effect or pattern such as nots, loops, and numbs. Color, material, and construction vary greatly. Synonym: Effect thread.”
The term novelty yarn is described as under:
“Novelty Yarn. – A yarn with unusual or special effects, e.g. nubs, flakes, loops, beads, lumps. The term is a broad classification and, in addition to surface or texture, novelty often refers to novel color combinations or effects which differ from standard yarn colors. It also includes man-made fibre yarns outside of standard types, such as thick-and-thin yarns, inflated filament.”
22. In the Wattsons Textile Design and Colour Elementry Weaves & … Fabrics (VTI Edition) the following information is given:
“Fancy, novelty or effect yarns. – These are chiefly produced by blending different colours or materials in the fibre state; by printing or dyeing a pattern on the sliver yarn; by introducing spots or neps of coloured fibres which are twisted in with the threads; by twisting together threads which are different in material, colour, softness, thickness, length, and amount and direction of twist; and by forming curls, snarls, lumps, knops, and thick and thin places at intervals in the yarn. The principal types of yarns are illustrated in Figure Al.l, and described in the following, but there is practically no limit to the diverse ways in which the different effects may be combined and utilised.”
23. Looking at the description of the contested goods, in the test result, it would appear that they qualify for the term ‘fancy yarn’ or ‘novelty yarn’ in terms of these definitions.
24. The Revenue, on the other hand, have not stated anywhere as to how the charge that the goods are special yarns sustains. The show cause notice gives the process of manufacture. It gives the finding of the chemical test and straightaway makes the allegation that the yarn is a special yarn. Before the Collector, the assessees had cited the Encyclopaedia of Textile Fabrics by the Editor of American magazine whereby examples of special yarn were shown as aluminium yarn, acid resistant yarn, glass fibre yarn, asbestos yarn, etc. This citation must be relevant because these varieties are elsewhere classified under the CET.
25. We, thus, find that except for the three illustrations given in Tariff Heading No. 5606, there is no other nomenclature or example of special yarn.
26. Of the three varieties in the exclusive definition in the HSN and the inclusive definition in the CET, the description of loopwale yarn as well as chenille yarn does not apply to the contested goods. This is obvious from the process of manufacture which is not contested. The 3rd variety, namely, gimped yarn, is described as yarn composed of a core around which other yarn is wound spirally. Thus, for a yarn to be classified as gimped yarn, the presence of core yarn is a must. The Chemical Examiner was specifically questioned before the Collector as to whether the sample of the contested goods was cored yarn or not. The entire proceeding is worth reproducing here :
“Cross-examination of Shri A.J. Vidhwans, Chemical Examiner Gr-I, by the learned advocate of the Noticee firm. –
Q. I say mere presence of slub or loop in the yarn does not make the product a special yarn, classifiable under 56.06. It is true?
A. It is true provided the said yarn is not a core yarn.
Q. What do you understand by core yarn?
A. Core yarn is a combination of yarn where the cover yarn is wound spirally on a yarn which is a core yarn.
Q. I take you to your report which was vide your letter No. BD/54 /Yarn/87-88/1034, dated 19-10-1987. Whether you took into consideration the Board’s guidelines published some time in October, 1988 regarding classification about Taspa yarn?
A. Obviously not, as my report was given prior to the guidelines given by the Board subsequently.
Q. Did you find presence of any core yarn in the samples tested by you as per your report dated 19-10-1987?
A. In my report of 19-10-1987, there is no comment on the presence or absence of core yarn in the product. However, subsequently, on the direction of the Collector vide his letter dated 4-7-1989,1 visited M/s. Pratik Crimpers Unit and examined the process of manufacture and the equipment used for the same. I have opined vide my letter No. RCL/Teh/1989-90/T.O.17, dated 28-7-1989 that the Taspa yarn manufactured by M/s. Pratik Crimpers does not contain any core yarn.
Q. I take you to para 4 of the SCN dated 9-6-1988 which contains process of manufacture of Taspa yarn carried out by the Noticee. Is it possible to manufacture special yarn of Heading 56.06 with the machinery and nature of process as explained in the aforesaid para 4 of the SCN?
A. It is not possible to manufacture special yarn which is a core yarn by the said machinery in para 4 of the SCN.”
27. The cross-examination establishes that the contested goods did not have a core. Therefore, the goods were not gimped yarn and in the absence of any general definition of the term ‘special yarn’ could not be called to be a special yarn.
28. In the cross-examination and also in the arguments, the instructions given by the Board have figured prominently. The Board’s Circular No. 25/Spl. Yarn/88 CX-I, dated 10-10-1988 in paragraph 4 stated as follows :-
“In the Board’s Circular letter F. No. 56/3/87-CX-I, dated 26-4-1988, it is clarified that taspa yarn is classifiable as a special yarn in Heading 56.06 and it was so clarified mainly on the consideration that taspa yarn consists of a core yarn. Thus if there is no core yarn, in a fancy yarn the instructions contained in F. No. 56/3/87-CX-I, dated 26-4-1988 would not be applicable.”
29. The circular further refers to the Explanatory Notes in the HSN under Heading 56.06 cited by us above and rules that multiple cabled or fancy yarns, although having the appearance of gimped yarn, would continue to fall outside the Heading 56.
30. The circular also seeks to answer the query as to the difference between the wording of the HSN and the wording in the CET prior to 1995 of Heading 5606. Paragraph 9 of the circular reads as under:
“From this extract, it would appear that the Board themselves have accepted parity between two headings.”
In their conclusion, the Board had ruled that unless yarns satisfied the characteristics of named yarn in Heading 5606, they would continue to fall under the earlier headings.
31. The ld. Advocate relied upon a number of judgments where it was held that the departmental clarifications or instructions, “although not binding on the Tribunal or Courts, were directory in nature for departmental officers. In the judgment in the case of Kores (India) Ltd. reported in 1997 (89) E.L.T. 441, the Supreme Court held that the Revenue could not advance arguments contrary to the terms of the tariff advice or trade notice issued by the Board. This judgment is one of several such judgments.
32. It is, therefore, clear that as per the process of manufacture given in the proceedings and as verified by the Chemical Examiner, contested yarn did not have a core, that the yarn was admittedly not chenille yarn or loopwale yarn and in terms of the Board’s advice it could not be classified as special yarn.
33. We now come to the judgment of the Tribunal in the case of Garden Silk Mills Ltd. reported in 1995 (78) E.L.T. 580 on which great reliance was placed by the Departmental Representative. In this judgment, the Tribunal had held that taspa yarn was a special yarn classifiable under Heading 5606. We have carefully examined this judgment. The ld. Advocate before us had made it clear that the term ‘taspa’ did not have any specific technical definition but that a variety of fancy or novelty yarn was known in the market as ‘taspa yarn’. We have, therefore, no means of knowing whether the yarn before us was identical to the yarn before the Tribunal when they gave the cited judgments. In para 32, we find that the submissions made by the SDR was as under:
“One of the yarns acted as a core yarn and other yarn was having gimps to produce folded knops and curls at regular intervals. Thus the yarn which was moving at a slower speed, according to the position admitted by the appellants, the ld. SDR submitted that it was factually the core yarn.”
34. It would appear that the Tribunal had placed reliance on this submission in arriving at the conclusion that ‘taspa yarn’ was a special yarn. We further find that in paragraph 38 of the cited judgment, the Tribunal had observed the process of manufacture and had based their decision as under:
“Now examining the process of manufacture of taspa yarn, we notice that there is a yarn which moves at a slower speed. There is another yarn which moves at a faster speed to deliberately create irregularities. This yarn moves at a faster speed over the first yarn. The consumption of the faster moving yarn is higher than the consumption of the slower moving yarn and therefore the yarn which moves at the slower speed can be termed as a core yarn and the yarn which moves at the higher speed is the yarn which covers the slow moving yarn by producing curls and knops. Thus, examining the process of manufacture of taspa yarn in the light of the Explanatory Notes on HSN under the relevant chapter, we find that taspa yarn is not ordinarily textured yarn but a special yarn.”
35. As the matters stood before the Advice of the Board dated 10-10-1988 this conclusion was inevitable. In the cited advice from the Board a caution was given that in such circumstances, the yarn may given an effect of being a special yarn which it would not be. The proceeding in the Garden Silk Mills case (supra) show that this advice was not cited before the Tribunal. If it had been, then, the conclusion may have been otherwise. As regards the submission by the department before the Tribunal, in the cited case, we find that in view of the categorical statement made by the Chemical Examiner as to the absence of core yarn, the finding of the Tribunal in the cited case, cannot apply to the case before us.
36. On the basis of the material available before us and our discussions above, we hold that the contested goods were correctly classifiable under Chapter 54 and not under Chapter 56.
37. We now come to the arguments as to the limitation. The assessees have placed reliance on declarations filed by them to rebut the charge of suppression made in the show cause notice. We have cited earlier the process of manufacture given by the assessees in their declarations for the years 1986, 1987 and 1988. It was claimed that the process would result in the production of fancy yarn. The classification claimed was either under Chapter 54 or 55. The benefit of the notification also had been claimed. The department had for three years accepted and acknowledged these declarations. Such declarations would have the same effect as the classification lists filed from time to time by an assessee not in the exempted sector. In their judgment in the case of McGraw Ravindra Laboratories (India) Ltd. v. Union of India reported in 1992 (60) E.L.T. 71 (Guj.), the Gujarat High Court held that since the officers knew which articles were manufactured by the assessees and by which process they were manufactured, the department could not later claim that the assessees had suppressed any information. The Supreme Court in their judgment in the case of TISCO reported in 1988 (35) E.L.T. 605 had held that where the classification lists were accepted and approved, the extended period could not be invoked. The same view was expressed in the Tribunal judgment in the case of Polychem Ltd. v. C.C.E. reported in 1997 (90) E.L.T. 156. In their judgment in the case of Shroff Textiles reported in 1997 (89) E.L.T. 516, the Tribunal held that where the department was aware of the manufacturing process, suppression could not be alleged. The same view was held by the Tribunal in the case of Sarabhai Chemicals reported in 1997 (89) E.L.T. 540 where classification lists had been filed regularly for several orders. Since the declarations in the case of the assessees were at par with classification lists, the ratio of this judgment would apply. In view of the fact that the department was kept aware of the process of manufacture, it cannot be held that the assessees had deliberately mis-represented or had suppressed any information with intent to evade duty. In this case, assessees had claimed classification under Chapter 54 or 55. On the alleged mis-classification, it is relevant to refer to the observation of the Mad-hya Pradesh High Court in the case of Hindustan Electro Graphites Ltd. v. Union of India reported in 1990 (50) E.L.T. 15:
“Now the only allegation in this behalf made by the respondents in the impugned notice Annexure ‘A’ is that the assessee had misclassified the graphite products under the Tariff Item 68 against their correct classification under Tariff Item 67 of the Central Excise Tariff. It is not the case of the respondents that full description of excisable goods produced or manufactured by the petitioner company, was not given in the classification lists or that the description given of these items in those lists was misleading. The duty of the assessee is to give full description of excisable goods so as to enable the excise authorities to determine the item number of the First Schedule to the Act under which such goods fall. If according to the petitioners, the goods in question were covered by Item No. 68, their interpretation of Item No. 67 or 68 of the First Schedule to the Act cannot be held to be so unjustified as to raise the inference of fraud or wilful misrepresentation. Item No. 67 refers only to graphite electrodes, all sorts, and it is not the case of the respondents that graphite dust, flakes, etc., the goods in question, were graphite electrodes. The case of the respondents is that Item No. 67 covers all graphite products which serve as conductors of electricity. Whether the interpretation of Item No. 67 by the petitioners or the interpretation of that item by the Excise authorities is correct, is not decisive for raising an inference of fraud or wilful misrepresentation on the part of the petitioners. The interpretation of Item No. 67 by the petitioners is a plausible interpretation. Moreover, their interpretation was subject to scrutiny by the Excise officials who accorded their approval to the classification.”
In this case, the High Court observed that the duty of the assessee was to give full description of the goods so as to enable the authorities to determine the classification thereof. It was held that if, according to them the goods were covered under the particular item, their logic could not be held to be so unjustified as to raise the inference of fraud or suppression of facts or wilful mis-representation.
38. In their judgments in the case of Cosmic Dye Chemical v. C.C.E. reported in 1995 (75) E.L.T. 721 (S.C.) as also Pushpam Pharma reported in 1995 (78) E.L.T. 401, the Supreme Court had defined the parameters within which the revenue had to operate when invoking the ingredients leading to extended period of demand. In the case of Pushpam, the Supreme Court have ruled that in order to qualify, the act of the assessee must be shown to be deliberate. Such is not the case before us.
39. We, therefore, accept the contention of the ld. Advocate that the demand confirmed by the ld. Collector is hit by limitation.
40. In conclusion, we find that the orders of the Collector do hot sustain on merits as well as on the points of limitation. The order is set aside, appeal is allowed and consequential relief, if any, is ordered.