ORDER
Archana Wadhwa, Member (J)
1. The appellants are engaged in packing of bulk detergent powder under the brand name – ‘OK’ of M/s. TOMCO. The activity of packing of bulk detergent powder into small packs, was brought under the levy of excise with effect from 1-3-94 by a deeming fiction that such activity would amount to manufacture under Central Excise Act, 1944. Vide their letter, dated 4-3-94 addressed to the jurisdictional Central Excise Authorities, the appellants disclosed that they are clearing and manufacturing the small packs of detergent powder under the brand name – ‘OK’ owned by M/s. TOMCO, and claimed the benefit of Notification No. 1/93 till 31-3-94. Thereafter, with effect from April, 1994, the appellants
started paying duty on the product in question by debiting the same from their Modvat Credit Account.
2. The appellants were issued a show cause notice on 27-3-95 raising the demand of duty for the period from 1-3-94 to 31-3-94 on the ground that whereas the appellants were required to pay duty, no duty was paid by them. The amount of duty proposed to be confirmed in respect of clearances made during the said period was to tune of Rs. 5,30,935.00 and an amount of Rs. 6,91,597.00 was raised as differential for the period from 1-4-94 to 31-10-94. The said show cause notice was confirmed by the adjudicating authority and a penalty of Rs. 5,000.00 was also imposed upon the appellant company. The said order of the Commissioner is impugned before us.
3. Shri K.K. Bhattacharjee, learned Consultant for the appellants submitted that the demand of duty for the period from 1-3-94 to 31-3-94 is barred by limitation, inasmuch as the show cause notice having been issued on 27-3-95, is beyond the normal period of six months. He submitted that the entire facts were disclosed to the Revenue, vide their declaration made on 4-3-94 and in their letter, dated 4-3-94, it was clearly mentioned that the appellants were engaged in the manufacture of detergent powder under the brand name – ‘OK’ which belonged to M/s. TOMCO. In the self-same letter, the adjudicating authority claimed the benefit of SSI exemption under Notification No. 1/93, under the bona fide belief that the said benefit is available to them till 31-3-94 as they have not crossed the exemption limit of Rs. 30.00 lakhs. No objection, whatsoever, was raised by the Revenue Authorities.
4. As regards the confirmation of demand of duty for the period from 1-4-94 to 31-10-94, he concedes that the same is payable by the appellants, but assails the quantification of the same. It is argued that the total duty paid by them during the said period, has been taken in the show cause notice as Rs. 27,67,128.95 as against the actual duty paid by them during the said period to the extent of Rs. 28,15, 271.26. As such, he submits that the amount of Rs. 6,91,597.00 confirmed by the adjudicating authority would come down by Rs. 48,142.31. He also draws our attention to another amount of Rs. 75,291.90 included in the confirmed amount which, according to him, is required to be deducted as the goods in question were not actually removed. Shri Bhattacharjee, further, submits that an amount of Rs. 2.25 lakhs was adjusted by the adjudicating authority towards duty out of the amount taken up by them at the time of provisional release of the seized goods.
5. Shri D.K. Bhowmick, learned JDR has appeared for the Revenue. As regards plea of limitation raised by the appellants in respect of the duty confirmed for the first period, learned JDR submitted that the appellants on their own should have started paying duty with effect from 1-3-94 instead of approaching the Revenue. The benefit of the notification was wrongly claimed in the said letter and as such, the same should not be extended to the appellants.
6. As regards plea of adjustment of certain duty out of the total confirmed demand for the next period, Sri Bhowmick, learned JDR submits that it is a matter of verification and quantification which can only be done at the level of original adjudicating authority.
7. As regards the prayer of Shri Bhattacharjee, learned Consultant, that an amount of Rs. 2.5 lakhs adjusted against the duty by the adjudicating authority, Shri Bhowmick, learned JDR submits that the said adjustment is not towards duty, but towards fine, as is clear from the order of the Commissioner that the same is demanded in lieu of confiscation of the seized goods. He submits that the duty is never demanded in lieu of confiscation and the use of the word – ‘duty’ – is a typographical error and the same should have been typed as fine. As such, he submits that the amount of Rs. 2.25 lakhs should not be taken towards the deposit 6f duty.
8. We have considered the submissions made from both sides. It is seen chat the duty for the first time was imposed on the re-packed small packages of detergent powder with effect from 1-3-94. The appellants have drawn our attention to a letter, dated 4-3-94 written to the Assistant Commissioner. A perusal of the said letter shows that the fact of packaging of detergent powder under the brand name of TATA’s ‘OK’ was brought to the notice of the Assistant Commissioner. The said letter, further, prays that the benefit of Notification No. 1/93, should be extended to them upto 31-3-94, inasmuch as they have not reached the limit of Rs. 30.00 lakhs, though the brand name and trade name of other person, is used. It is seen that the appellants were never advised by the jurisdictional Central Excise Authorities to start paying duty in respect of their products, in spite of the fact that use of another person’s brand name has been brought to their notice by the appellants vide their letter, dated 4-3-94. The contents of the said letter clearly show that the appellants were under a belief that in spite of use of the brand name of other person, they are still eligible for concession under the small scale exemption Notification, till they reach up to Rs. 30.00 lakhs clearance value. In these circumstances, it cannot be said that there was any intention on the part of the appellants to evade duty thus justifying invocation of longer period of limitation against them. Accordingly, we hold that the demand of duty of Rs. 5,30,935.00 raised for the period from 1-3-94 to 31-3-94, is barred by limitation.
9. As regards the balance amount of duty, the appellants have not disputed that the same is required to be paid by them. However, the dispute is in respect of quantification of the same, by submitting that certain deductions have not been allowed and the actual duty paid by them has been taken on the lower side than what was actually paid by them. As rightly contended by the learned JDR, the said discrepancy in the quantification of the duty can only be solved at the level of the original adjudicating authority. Accordingly, we remand the matter to the Commissioner for quantification of the duty to be paid by the appellants for the period from 1-4-94 to 31-10-94. Needless to say that the appellants would be given an opportunity to put forth their case before quantification of the duty to be paid by the appellants.
10. We also agree with the learned JDR that the Quantum of a sum of Rs. 2.25 lakhs mentioned in the impugned Order of the Commissioner, has been demanded by him in lieu of confiscation of the goods as redemption fine and not duty. There seems to be a typographical error when the Commissioner says – “….. I order appropriation of the said amount of Rs. 2,25,000/- as adjustment towards duty demand in lieu of confiscation of the said goods.” Inasmuch as duty is not demanded in lieu of confiscation, the
said word – ‘duty’ – has to be read as ‘fine’. However, keeping in view the overall facts and circumstances of the case, we reduce the redemption fine from Rs. 2.25 lakhs to a sum of Rs. 1.10 lakhs (Rupees one lakh ten thousand) only. Penalty of Rs. 5,000.00 (Rupees five thousand) only is, however, upheld. The appeal is disposed of in the above terms.