ORDER
A.C.C. Unni, Member (J)
1. The Department is in appeal against the Order-in-Original dated 14-9-1995 passed by the Commissioner Central Excise, Meerut by which the Commissioner had held the extended period of limitation invoked by the Department is not invokable in the facts of the case since the charge of wilful suppression, etc. with intent to evade payment of duty has not been proved.
2. Arguing the appeal, ld. JDR Shri Sumit K. Das explained the facts of the case as under : The respondents herein were found to be engaged in the manufacture of Nulon branded lubricating oil additives, PTFE greases and coolant. They had not got themselves registered with the Central Excise Department claiming that the goods manufactured by them were exempted in terms of Notification No. 120/84 dated 11-5-1984. On a visit to the respondents factory, the officers of the Preventive Branch of Central Excise noticed that additives for engine oil and coolant were not items covered under exemption Notification 120/84 and on the basis of investigations and examination of the records resumed from the respondent’s factory, a show cause notice was issued to the respondents alleging, inter alia, that the respondents had wilfully suppressed the fact that they were engaged in the manufacture of engine coolant and they had deliberately mis-stated the range of their products as “lubricating oils in lieu of additives of mineral oils” with intent to evade payment of duty. On adjudication, the demand of duty on engine coolant was confirmed for a period of 5 years from the date of issue of the show cause notice. However, the extended period of limitation was held to be not invokable for certain products like engine treatment since no wilful suppression with intent to evade payment of duty had been proved. Ld. JDR has contended that the appellants were engaged in the manufacture of four products namely, (i) Engine Treatment Additives of three types, (ii) Gear Differential Additives, (iii) PTFE based grease, and (iv) Engine Coolant. For the manufacture of items (i) to (iii) different types of mineral oils and greases were being purchased from the market and further ingredients were being added for the manufacture of engine treatment oil namely PTFE, D.P. oil, Hydro Ion, Calcium, Petroleum, Sulpho-nates, and Silicon antifoam. These ingredients are blended in a mixing vessel and packed into OTS cans of different capacities. All the above raw materials other than PTFE are procured indigenously and PTFE is mainly imported from Australia. In terms of Notification No. 120/84 full exemption was available to blended or compojonded lubricating oils and grease obtained by straight blending of lubricating oils or by blending or compounding of lubricating oils with any other ingredients. The Department’s case is that the benefit of notification did not extend to products manufactured by the respondents and not for the processes engaged in by them. The products were also not commercially known as lubricating oils. Even in the market literature brought out by the respondents and in the Sales Tax Returns, the respondents had described the products as Engine Oil treatment Additives, Gear and Differential additives, etc. Market inquiries had also revealed that the products were incapable of being used as lubricating oils. The respondents leaflets and brouchure also showed that the products were being used in the nature of additives and they have to be used essentially as additives to other lubricants. The respondents having failed to explain these facts in their annual declarations for obtaining exemption from excise duty and registration, they had suppressed the information with intent to evade duty and the provisions of Section 11A(1) was rightly invoked and to the extent the impugned order had held the extended period was not invokable was not correct and proper. The Department’s prayer is for holding that the extended period invoked in the show cause notice was correct and maintainable. Prayer is for quashing that part of the impugned order which had held that the extended period was not invokable and to confirm the demand raised in the show cause notice for the said period.
3. On behalf of the respondents, Shri Ashok Sagar, ld. Advocate has contended that there was no suppression or mis-statement on the part of the respondents. It has been contended that the respondents were infact engaged in the manufacture of specially blended, compounded lubricating oils by adding and mixing and blending and other lubricating oils with a very small percentage of chemicals. Ld. Counsel submitted that the allegation that their products were incapable of being used as lubricating oils was wrong and incorrect. On the other hand, their products were specialised, lubricating, compounding certain chemicals to give them additional lubrication properties. The items in question were lubricating oils and put directly in the Engine. The additives like oxidation inhibitors, gum inhibitors, viscocity improvers etc. are used in the manufacture of lubricating oils with addition of PTFE or other chemicals in small percentage of approximately 4%. In the case of products under dispute lubricating oil content was 96% and chemicals and PTFE content was approximately 4%. “There was therefore no mis-declaration or mis-statement in the declarations filed by the respondents for claiming exemption under Notification No. 120/84. He referred to the finding in the impugned order and the detailed discussion of the technical aspects and classification of the products. Though the Commissioner had upheld the Department’s claim on the classification dispute, on the facts of the case, he had held that the extended period of limitation of 5 years is not invokable in the case of two out of the four products since the charge of wilful suppression with intent to evade payment of duty had not been proved. He further submits, that it was for the Department to examine and satisfy itself that the information given in the declaration was correct from the technical point of view before granting the respondents the status of a declarant unit. It was not open to the Department to invoke the extended period under Section 11A(1) after a lapse of many years after failing to properly verify the correctness of the claims made by a manufacturer in the declaration.
4. We have considered the submissions. To a query from the Bench as to whether the Department had come across any further information which it could not have obtained at the time of approving the declaration, the Departmental Representative was not in a position to give a specific reply. He referred to the Grounds of Appeal and submitted that the Respondent’s Chief Executive had admitted that if the products were directly poured into the engine without mixing with engine oil, it would result in engine seizure. This was sufficient to show that the respondents had intentionally mis-declared their products as engine oil in their annual declaration under Rule 174.
5. We find that this aspect has been fully dealt with by the Commissioner. He has found that the Department having received the declaration from the assessee which was complete in, all respects and which did not suffer from any infirmity, it was open to the Department to launch a full-fledged inquiry or investigate into the assessee’s activities to verify the factual position and to satisfy itself about the correct classification and applicability of the exemption Notification. The declaration under Rule 174 did not absolve the Department of the responsibility of verifying the correctness of these elements of the decal ration which have a bearing on the Revenue. The inability of the Department to verify the same at the time of considering the declaration cannot be rectified by invoking the extended period under proviso to Section 11A(1).
6. We find that the adjudicating authority has correctly relied on the Supreme Court’s decision in Pushpam Pharmaceuticals 1995 (78) E.L.T. 401 wherein it was held that where the facts were known to both parties, the omission by one to do what he might have done and not that he must have done, would not make it a case of suppression.
7. In the light of the above discussion, we do not find any merit in the present appeal and the same is rejected.