ORDER
V.P. Gulati, Member
1. These are appeals against the order of the Collector of Central Excise (Appeals) who has upheld the lower authority’s order that masterbatches are assessable under item l4(1)(ii) CET as against assessment under item 15-A(1)(ii) claimed by the appellants. The appellants main contention before the lower authority was that the PVC masterbatches were only a specie of PVC compound which includes concentrates with additives depending on the product which is intended to be ultimately produced and that PVC Masterbatches contain the same basic ingredients as PVC compounds. The Department however held that PVC masterbatches were used as colourant for the basic resin for mixture with the same in the desired proportion to provide clear and convenient method of achieving accurate colour shades. The use of the masterbatches has been held to be not as a resin, but as a colourant. The appellant while claiming the assessment under 15-A(1) also claimed the benefit under notification No. 167/79 available in respect of PVC compounds.
2. The learned counsel for the appellants has pleaded before us that the PVC masterbatches or PVC compounds having a number of ingredients like plasticizers and stabilizers in addition to the colour added to it. In support of his plea he read out from page 848 of the Encyclopaedia of PVC Vol. 2 by Leonard Nass 1977 Edition. The relevant portion is reproduced as under :
“Compounding PVC essentially involves adding to the base PVC resin the components that will allow it to be processed into a finished product with desired properties, at minimum cost. The “families” of materials that will be chosen will probably fall into one of the following classifications, each of which is discussed in detail elsewhere in these volumes :
(a) Plasticizers
(b) Stabilizers
(c) Lubricants
(d) Impact modifiers
(e) Processing aid resins
(f) Fillers
(g) Colorants
(h) Miscellaneous (antistatic agents, tackifiers, antiblocking agents, foaming agents, flame-retardants, fugicides, odorants)”.
His plea is that the pigments are required to be added to the PVC compound to impart colour to the PVC resin and colouration of the PVC can only be done properly if the pigments are dispersed uniformally in it. According to him, pigments for coloration of PVC are as predispersed in a variety of vehicles and forms and one such form is in the PVC in high concentration. The PVC compound thus obtained is called masterbatch and can be mixed in the desired proportion with the PVC resin to get the desired colour effect. He cited the reference in the book about it at page 757 and the relevant portion is reproduced as under :
“It is frequently useful to ‘masterbatch1 pigments by predispersing them as a concentrate in a portion of the binder, both to attain maximum dispersion and effectiveness and to permit more accurate portioning.”
He has stated that masterbatches which are in the nature of PVC compound, cannot be considered as pigments as held by the Department. According to him, the term pigment as understood in the trade and in the technical parlance is not as held by the Department in the instant case. He drew our attention to the definition of term ‘Pigment’ as given in the “Condensed Chemical Dictionary : Tenth Edition : Revised by Gessner G. Hawley which is reproduced as under :
“Any substance, usually in the form of a dry powder, that imparts colour to another substance or mixture. Most pigments are insoluble in organic solvents and water; exceptions are the natural organic pigments, such as chlorophyll, (q.v.) which are generally organosoluble. To qualify as a pigment, a material must have positive colorant value. This definition excludes whiting, barytes, clays, and tale (seefillers, extenders). Some pigments (zinc oxide, carbon black) are also reinforcing agents, but the two terms are not synonymous; in the parlance of the paint and rubber industries these distinctions are not always observed.”
He also cited in support of his plea, the Tribunal decision reported 1984 (17) ELT 135 : Devarsons Private Limited v. Collector of Central Excise, Ahmedabad and has stated that in para 29 of this decision of the Tribunal, the scope of the term ‘Pigment’ as used in the Tariff has been amplified by the Tribunal. For convenience of reference this para is re-produced as under :
“A pigment is a substance that imparts colour, but in a way different from that of a dye. Many pigments are metallic inorganic substances and from the industrial point of view, these account for the largest proportion of pigments used, though some organic pigments are also used. Pigments must have colouring ability to hide, to impart aesthetic appeal, to protect. Pigments are deposited on the surface of the material to be coloured as a constituent of other substances, the principal one being the carrier or vehicle or the medium. This is the liquid that dries on application leaving a smooth protective film. The other constituents are the thinner, and, in some cases, extenders or fillers, without the polymerising film forming resins, the pigments will not be held on the surface. However, unlike dyes, a pigment that is a constituent of a coating preparation such as a paint, does not penetrate the material coated or coloured. It can be removed by scrapping and other coating/paint can be applied to give the surface a new or different coat of paint or colour.”
3. The learned counsel of the appellants further pleaded that the addition of pigment in the PVC has not changed the character of the PVC inasmuch as the PVC compound formed and termed as masterbatch continues to retain moulding properties of PVC. The method of colouration of the PVC by addition of masterbatch is with a view to get proper dispersion of colour in the PVC for making different products. According to him by mixing of dry pigment with the PVC resin, the desired colour effect cannot be obtained as the dispersion of pigment is not uniform. He quoted in this regard Chapter on Pigment Dispersion as contained in the Encyclopaedia of PVC Vol. 2. The relevant portion cited by him is reproduced for convenience of reference :
“The science of pigment dispersion has become a specialised technology, and as a result, the vinyl formulator has available a series of predispersed pigments in a variety of vehicles and forms. They may be prepared as pigment pastes (high-viscosity liquids) in any of the plasticizers that are required for specific formulations, or as chips, powders, or pellets, in compounded vinyl, which are handled like any other solid ingredient in the formula.”
4. On a query from the Bench, he has stated that PVC masterbatches are not used for the manufacture of any goods directly. He also stated that the masterbatches cost about 50% more than the ordinary PVC compound and the cost of the same is in the range of Rs. 30,000 per tonne as against Rs. 20,000 per tonne of ordinary PVC compound.
5. He pleaded that the masterbatches continue to fall under item 15-A(1)(ii), for other reasons also inasmuch as in the masterbatches it is the PVC which predominates by weight. He pleaded that the percentage of pigment in the masterbatches varies from about 1% to 20% depending upon product for which PVC is required to be used. He cited Bombay High Court decision in the case of Chemicals and Fibres India Limited v. Union of India : 1982 ELT 917. He pleaded the fact that the masterbatches were used for imparting colour to PVC does not, in any way, prejudice his case as the end-use, according to him is no criterion for assessment under the tariff. He cited in this regard the case of Dunlop India Limited & Madras Rubber Factory Ltd. v. Union of India and Ors. : 1983 ELT 1566 (SC). He pleaded that if the classi-fication was to be based on end-use, the tariff entry itself would have specified so. He further pleaded that the addition of the pigment in the PVC masterbatches was a physical mixture and by addition of the pigment in this manner no new product came into existence. This view, he stated, is supported by the Bombay High Court decision reported in 1980 ELT 696 in the case of Sandoz India Ltd. v. Union of India and Ors. He has stated that the Hon’ble Bombay High Court has held change in physical form does not amount to manufacture in the context of the dye which has been formed into liquid solution by adding diluent. He further pleaded that the process of manufacture of ordinary PVC resin and the master-batches is similar and that PVC masterbatches are only pigmented form of PVC but cannot be said to be pigment as such.
6. On a query from the Bench, he stated, that both ordinary PVC without the pigment and the masterbatches are manufactured in a single stream operation and is not as if first the PVC resin is prepared and then pigment is mixed therein.
7. The learned Consultant stated that the demand raised is also time barred. He stated that until 1979, the PVC resin was being assessed under 15A(1)(ii). It was only after the issue of Tariff Advice that the practice of assessment was changed. The demand was raised for November 1978 till May 1979 and first show cause notice was issued on 7-5-1979, and a second show cause notice for the same period was issued on 29-9-1980. He pleaded that the first show cause notice was very perfunctory and it is the second show cause notice which should be taken as the proper show cause notice for the purpose of these proceedings. Since this second show cause notice was issued on 29-9-1980, and the demand for the period from November 1978 to May 1979, he pleaded, the demand was out of time bar. He cited in support of his plea case of Food Corporation of India v. Collector of Customs, Bombay : 1984(15) ELT 417 (Tri.). He further pleaded that the assessment was sought to be changed and a demand in pursuance, of a Tariff Advice should not have retrospective effect. In the end, he reiterated his plea that PVC masterbatches are only PVC compounds and are marketed so and are not known and marketed as pigments.
8. In reply Shri A.S. Sunder Rajan, stated that PVC masterbatches were different from PVC compounds and the technical books recognised it so. He cited in support of this, the definition of masterbatches given in the Condensed Chemical Dictionary which is reproduced for convenience of reference :
“A previously prepared mixture comprised a base material and a high percentage of an ingredient (usually a dry powder) that this is critical to the product being manufactured. Aliquot parts of this mixture are added to production-size quantities (batches) during the mixing operation. This method permits uniform dispersion of very small amounts (less than 1%) of such additives as dry curing agents in rubber and colorants in plastics and paints. Modifying elements may be incorporated in alloys in this way. Masterbatches of organic dyes dispersed in rubber or plastic are prepared by manufacturers of colorants for direct use. M asterbatched accelerators (mixtures of rubber, zinc oxide, and accelerator) are commonly used in rubber mixes.”
He further pleaded that tariff entry as read at the relevant time is as follows :
“Artificial or synthetic resin and plastic materials and cellulose esters and others, and articles thereof –
(1) The following artificial or synthetic resins and plastic materials, and cellulose esters and others, in any form, whether solid, liquid or pasty, or as power, granules or flakes, or in the form of moulding powders, namely :-
(i) …
(ii) Polymerisation and copolymerisation prodcuts such as Polyethylene, Polytetrahaloethylenes, .Polyisobutylene,’ Polystyrene, Polyvinyl chloride, Polyvinyl acetate, Polyvinyl chlorocatate and other Polyvyinyl derivatives, Polyacriylic and Polyme-thacrylic derivatives and Coumarone-Indene Resins.”
He stated that masterbatches can only be pleaded by the appellants to be covered under term polyvyinyl derivatives. This term as such does not cover masterbatches by its very nature being only a mixture of pigment and PVC resin. He stated that the materbatches is intended only for imparting colours to PVC for the manufacture of various products and has no other use. Be colorant in nature, it had to be considered only as a pigment. He has stated going by the trade parlance criteria as held by various pronouncements of Hon’ble Supreme Court followed in the latest decision of the Hon’ble Court in case of Auto Glassworks v. Union of India, the Supreme Court wherein it has been held that mirror was not an item of glassware and as it was not known so in the trade but is known as a commodity different from glass and glassware on account of its nature and use as known in the trade. It was, therefore, not held to be assessable under the tariff entry item covering glass and glassware. In regard to the . plea of the appellants that the second show cause notice issued on 29.9.80 alone should be taken as the relevant show cause notice for the purpose of these proceedings, he pleaded, that the second show cause notice was in the nature of an amendment and an amendment could be carried out even after the limitation period was over. He referred to in this regard the judgment of CEGAT in the case Premier Tyres Limited v. Collector of Customs, Madras : 1984(16) ELT 419 (Tri) wherein in the case of a refund claim, the Tribunal has held as under:
“… an amendment in claim could be made even after expiry of limitation, if it is necessary for the purpose of determining the question in controversy and if it does not work injustice to the other side, and in such a case an amendment would take effect from the date of original claim and not from the subsequent date when it is allowed.”
9. In reply Shri Kapur stated that items covered under entry 15 A (1) should be given highly technical meaning and as held in case of decision of the CEGAT in the case of Chemical & Fibre India Limited v. Union of India : 1982 ELT 917. He drew our attention to Hon’ble Bombay High COurt decision (para 24 and 25) of the order in the case cited earlier and reproduced below for reference:
“24. Reliance has been placed by the learned Counsel for the petitioners on certain decisions of the Supreme Court as well as the decision of Tulzapurkar J. as he then was, for the proposition that when an Article is referred to in a taxing statute, its popular and not technical or scientific meaning should be accepted and since, according to the learned Counsel, the evidence in the form of affidavits filed by the respondents does not establish that the polyester chips in question are recognised as artificial or synthetic resins by persons in the trade but that as indicated by the affidavits filed on behalf of the petitioners, the product produced by the petitioners is known in the trade only as polymer or polyester chips, the levy of excise duty on the footing that the product is covered by item 15A is illegal.
25. As pointed out by the Supreme Court in “Dunlop India Ltd v. Union of India A.I.R. 1977 S.C. 597, it is well established that in interpreting the meaning of words in a taxing statute, the acceptation of a particular word by the trade and its popular meaning should commend itself to the authority. In Ramavatar v. Assistant Sales Tax Officer, A.I.R. 1961 S.C.1325 the question was whether for the purposes of sales tax under the C.P. and Berar Sales Tax Act, “betel leaves” which was specified as a separate item was covered by ‘vegetables’ which was also a separate item by itself and the Supreme Court held that the word ‘vegetable’ in taxing statutes is to be understood as in common parlance, that is, denoting class of vegetables which are grown in a kitchen garden or in a farm and are used for the table. Vegetable was one of the items exempt from taxation and the Supreme Court held that the. bete! leaves are not exempt from taxation.”
He pleaded that rationale of the decision in the case of Atul Glass would not apply to the facts of the case before us as in that case, the character of the glass had completely changed and a different product with a different character and use had emerged namely, mirror from a glass sheet. In the instant case, he pleaded, masterbatches continued to have the properties of the PVC and were therefore required to be assessed under item 15A (1)(ii) CET with the benefit of the relevant notification under the said item.
10. There are two appeals before us and two orders of the lower authorities – one relating to the demand and the other relating to classification. In the case relating to the demand raised the classification issue is also involved. In the other case, issue has arisen out of the approval of the classification list.
11. We observe that the Department issued clarifications and advices in regard to the classification of the goods from time to time. The position in regard to the same is briefly set out as under: The earliest communication issued to the All India Plastics Manufacturers Association on 9.3.65 under which they were informed that the PVC paste and PVC compound manufactured out pf duty paid PVC resin will not attract any further Central Excise duty. The next communication was from Central Board of Central Excise & Customs letter F.No.25/27/69-CUS(TU) dated 13.3.72 and the Tariff Advice No.17/22 in pursuance thereof (Public Notice No. 116/72). The subject heading of this communication was : PVC and Polyethylene masterbatches – whether liable to additional (countervailing) duty should be equal to that specified under item 15A(1) (ii) CET. The position clarified in these is as under:
“It is clarified that ‘polyvinyl chloride’ falling under item 15A(i)(ii) CET should be deemed to refer only to PVC resins in their pure and straight form and that modified forms of PVC resins are not covered by that sub-items. Accordingly, the Central Board of Excise & Customs, New Delhi are of the view that the modified forms of PVC resins not being covered by item 15A(1)(ii) on import will not be liable to pay additional (cv) duty equal to that specified under that item.
The Board’s instructions on polyethylene masterbatches (No. 9 countervailing duty p65 conveyed in its letter No. 15/8/65 Cus I dated 24.6.1965) (Incorporated in this office Public Notice 138/65 are hereby cancelled) (Letter F.No. 25/27/69 Cus (T.U.)dated 13.3.1972 from Board)”
It is seen from the record that until April 1979 the concerned authorities had been classifying goods in pursuance to these instructions and the appellants were availing of the benefit of the Notification 167/79. The action taken by the authorities against the appellants for demand of duty is obviously on the basis of the advice of the Board which resulted in the issue of the Trade Notice on 20.43.1979.
12. The Central Excise Tariff entry 15A-I as it stood at the relevant time is as under:
“15A. – Artification or synthetic resin and plastic materials and cellulose esters and others, and articles there –
(1) The following artification or synthetic resins and plastic materials, and cellulose esters and ethers, in any form, whether solid, liquid or pasty, or as powder, granules or flakes or in the form of moulding powders, namely :-
(i) …
(ii) Polymerisation and copolymerisation products such as polyethylene, Polytetrahaloethlene, Polyisobutylene, Polystyrene, Polyvinyl Chloride, Polyvinyl acetate, polyvinyl chlorocatate and other polyvinyl derivatives, polyacriylic and polymetha-crylic derivatives and coumarone-Indene Resins.
We observe; that under item 15A(1)(ii) polyvinyl chloride and polyvinyl derivative are covered. The appellants themselves have stated and as seen from the record the product under reference cannot be treated as a straight polyvinyl chloride resin. The only possible item under which the appellants can claim classification is that of polyvyinyl derivatives. From what has been pleaded before us, we find that the masterbatches are produced in a single stream operation in which the PVC is in admixture with the desired quantity of pigments, forming a physical mixture of the two. The pigment does not, in any way, bind itself with the PVC molecules chemically. For an item to be considered as derivatives of the poly-vinyl, it is necessary that there should be a change in the chemical character of polyvyniyl product of which the item is considered as a derivative and this, we find, is not the case here. The addition of the pigment does not change the chemical character of the PVC. The appellant themselves have pleaded that the entry under 15A(1) should be very strictly interpretted based on the technical meaning of the items set out under this heading. In this view of the matter and in view of decision of Bombay High Court in the case of Chemicals and Fibres India Limited v. Union of India, cited by the appellants, masterbatches cannot be treated as derivatives of polyvinyl. The appellants plea that inasmuch as the PVC compounds are assessed under 15A(1)(ii) as polyvinyl derivatives and is so accepted by the Department, does not advance their case as they have not shown how that PVC compound and the PVC masterbatchess cannot be considered technically or otherwise products of the same genera. We observe from the reference cited by the appellants that as per page 848 of the Encyclo-paedia of PVC Vol 2 edited by Leonard Mass Ed., 1977, PVC compound is formed by adding to the paste PVC resin, additive that will allow it to be processed into a finished product with desired properties. This involves the addition of various chemicals including some colorants, in desired proportion and these include plasticizers, stabilizers, lubricants, fillers, impact modifiers. The product taken chemically as whole is of quite a different composition from that of the PVC resin. It is to be noted that these PVC compounds are such as can be processed straightaway into a finished product. In the case of the appellant it has been conceded that the PVC masterbatches cannot be and are not used for the manufacture of any product directly therefrom. These are used only as additives for imparting necessary colour effects to the PVC compounds. Thus, there is a basic difference between the PVC compounds and PVC masterbatches in their character and composition and use.
13. The appellants plea that the product should be assessed based on the predominance of PVC resin in the masterbatches in the light of Tribunal decision in the case of Bhor Industries Limited, Bombay v. Collector of Central Excise, Bombay : 1983 : ELT : 179 (CEGAT). We observe that the issue in that case related to the classification of articles of plastics entry 15A II and the ratio of that decision cannot be applied to the instant case as it is not the case of appellants that PVC compound is an Article of plastics. It is only in the context of Article of plastics that question as to what gives the product its character and how it is known in the trade can be considered for the purposes of classfication as pointed out by the appellants. So far as entry 15A (1) is concerned, this has to be strictly interpretted based on the technical nomenclature as in this item, framers of the Tariff have chosen to use highly technical terminology for describing the items covered therein. This has been held so even by the Courts and also by the Tribunal. The Tribunal in the case of Bakelite Hylam Limited v. Collector of Central Excise, Hyderabad reported 1986(24) ELT 643(Tri) has observed as under:
“It is seen that the context of this item requires interpretation of the items covered therein based on the technical nomenclature adopted in the description of the tariff item. It is a well-settled principle of law that unless a context requires interpretation of a tariff entry based on technical meaning, the entry should be interpreted as the layman would understand or those who are dealing with the items covered under a particular tariff entry in the trade would understand. The wording of tariff Item 15A clearly calls for an interpretation based on the chemical composition of the products covered therein and how the terms used therein are described in the technical books of polymer sciences. It is in this context that the Hon’ble Bombay High Court has interpreted the scope of term Resin vis-a-vis Plastics in the case of Chemicals & Fibres India Limited.”
The appellants plea that merely addition of the pigment by the physical process should not be taken the product out of purview of the product. The plea is that since the mixing of the pigment with the PVC was a physical process, the product continues to be PVC for the purpose of assessment under 15A(1)(ii). It is seen that the masterbatches; are produced in a single stream operation as a product having its own character and distinct use and it is not as if the two products have been physically mixed. This plea is, therefore, not acceptable.
14. In view of the above, we hold that the goods fall out of the purview of item 15A(1)(ii). Having held that the goods do not fall under 15A(1)(ii), the next question for consideration is whether these fall under 14.l(ii) as contended by the revenue and whether masterbatches can be considered as pigments.
15. We observe that it has been conceded by both the parties that the masterbatches are used for imparting colour to PVC compounds for the production of articles of PVC of the desired colour shades. The master-batches is a specialised product used in the PVC industry and is intended for proper dispersal of the colour in the PVC compound. The masterbatches have a high concentration of the pigment dispersed uniformally in the PVC by using specialised machines for the purpose. The masterbatches for admixture with the PVC compounds have the properties of miscibility and uniform dispersion in the PVC compound resulting in a proper dispersion of the colour creating a desired effect for the purpose of manufacture of specified products. The use of masterbatches; is only in the PVC industry. While masterbatcheses impart colour to the PVC compound, these are not bought and sold as pigment or colour nor it has been shown by Revenue. These are also not known in the trade as pigments or colours. Anything which process colouration need not be considered as pigment and colour as set out in the Central Excise Tariff unless it satisfies the trade parlance criterion.
15a.The Revenue have cited the Supreme Court judgment in the case of Atul Glass Works : 1986 ELT in support of the plea that the PVC masterbatches are not known as PVC compounds and that character of the product has changed by addition of the pigment for showing that the product does not fall under 15A(1)(ii). It is seen the product has masterbatches formed with the dispersion of pigment in PVC has neither remained as pigment as know in the trade nor PVC. The definition of the pigment as stated by the Revenue also does not help them. In the masterbatches the PVC cannot be considered merely on a vehicle for the pigment. After mixing with PVC compound, PVC in the masterbatch becomes a part of the ultimate product manufactured out of the compound. It is not like pigments ordinarily sold in suspension form where on application the carrier evaporates and has no other role to play. In the instant case, the PVC in the masterbatches is not only acts as a carrier, as pointed, but it becomes part and parcel of the product which is manufactured out of PVC compounds. Therefore the analogy with the pigment in the the suspension form given by Revenue will not apply. In this view of the matter the PVC masterbatch cannot be held to fall under item 14(1)(ii) as pleaded by the Revenue. The item, therefore, for the reasons as above will fall under item 68 CET.
16. We now proceed to deal with the question of time bar as agitated by the appellants. We find that a show cause notice was issued on 7.5.1979 by the jurisdiction Superintendent Central Excise, raising a demand. It is essential for proper appreciation of the case that it should be reproduced in entirety and is appended as Annexure ‘A’ to this Order. The appellants sent their reply to this demand notice vide therir letter dated 12.6.1979. The limited issue raised in this demand notice was the appellants had contravened Rule 173B for having declared PVC masterbatches as PVC compounds and having claimed the benefit of Notification No.206/77 and a demand of Rs.12,43,429.95 (Basic Rs.12,05,151.00 + Rs.38,278.95 B.E.D.) was made. The appellants contested the demand giving various reasons. Later, we find, another show cause notice was issued on 29.9.1980 again by the Jurisdictional Superintendent’ of Central Excise. In this show cause notice, a demand for the amount as indicated in the show cause notice of May 1979 was raised and it was indicated that the goods were classifiable under 14(1)(ii) as against 15A(1)(ii) as per classification list earlier approved. The appellant was also charged with having wrongly claimed the benefit of notification No.206/77. This show cause notice is also annexed as Anne-xure ‘B’. In this show cause notice in para 5, it has been stated that this was issued in supersession of the earlier show cause-cum-demand notice dated 7.5.1979. Further an amendment to the show cause notice of 29.9.1980 was issued by a letter dated 18.4.1984 by the Superintendent and the amount demanded was Rs. 1,50,643.89 Basic + Rs. 4,784.87 Special Excise duty.
17. The question to be considered is which show cause notice is to be taken as the relevant one for the purpose of issue of demand in the proceedings before us.
18. We observe that the first show cause notice of May 1979 raised the demand on the premise that the appellants had wrongly availed of the benefit of Notification No. 206/77.The appellants replied in the context of this show cause notice. This show cause notice was however not pursued further by the Department and therefore in supersession of the same, issued another show cause notice wherein while demand amount was the same, the basis was totally changed and the goods were sought to be assessed under 14(1)(ii) CET. The amount indicated however was not correct and later amended to a much lesser amount as indicated above. The question that arises in this background is as to whether the first show cause notice can be taken to have subsisted for the purpose of action or was it the second show cause notice which alone was relevant for the purpose of proceeding before the Assistant Collector. It is seen that it is in respect of this show cause notice that the Assistant Collector passed the order. We observe that the grounds on which the demand was raised earlier and also the amount shown therein were totally changed. It is seen that taking the lead from the reply given by the appellant and finding that no case could be made out on the basis of the grounds given, the Department changed the premises on which the show cause notice was issued. The appellants plea is that the first show cause notice cannot be taken to have survived in the facts and circumstances of the case and cited the observation of the Bench of the CEGAT in the case of Crystic Resin (India) Pvt.Ltd., Faridabad v. Collector of Central Excise, New Delhi: 1985(19) ELT 285(Tri). The Bench have observed as under in this regard:
“Unless there has been a short recovery and that short recovery can be shown in the notice, even if only indirectly, as might perhaps be the case when a notice says that duty should have been recovered at one rate whereas in reality, it had been recovered at a lower rate, the assessee would not know the additional liability to which he is going to be subjected. He must know the manner, the time, as well as the reasons why the notice issuer says that the money was recoverable as duty. While it may not always, perhaps, be possible to calculate the exact money proposed to be recovered as duty, the notice given should notify the notice receiver how and by what method he arrived at and deduced the short recovery which he proposes to recover under the notice. The utmost accuracy and certainty must be the aim of a notice of this kind, and not a shot in the dark like the notice before us is.”
19. We observe that the first show cause notice is defective both in respect of the ground on which the demand was raised and also amount for which it was raised. This was superseded by a specific mention in the second show cause notice. In this view of the matter and in the light of the observation of the CEGAT Bench in the decision cited above, we hold that the first show cause notice issued does not survive being not a proper show cause notice for the purpose of these proceedings. It is only the second show cause notice which is valid show cause notice for these proceedings. We find from the Assistant Collector’s order that no suppression of facts has been alleged for invoking the extended period for the demand. In fact, the Assistant Collector has given the appellants clean chit so far as this aspect was concerned. Reckoned from the date of issue of second show cause notice the demand is already time barred. The appeal is allowed on the above terms.
S.D. Jha, Vice-President
The manufacturing process of Master Batches appears-to be concentration of colour which could be presumed to have discharged duty liability as colour under T.I.14 is mixed in single stream operation with PVC. This mixture of PVC with concentration of colour is called Master Batches. The product so obtained not having been specifically mentioned in T.I.15A would not be covered therein. It is PVC with concentration of colour, ingredient colour already having discharged duty liability as such. I would therefore agree with Brother Gulati that its proper classification would be under residuary item 68.
As for time bar, it is observed that the subsequent show cause notice dated 29.9.1980 superseded the earlier notice dated 7.5.1979. The use of the word ‘superseding’ clearly shows that the earlier show cause notice was given up. Therefore, I would agree with Brother Gulati that the claim on the strength of the subsequent show cause notice dated 29.9.1980 subsequently amended by another letter dated 18.4.1981 would be barred by limitation.
ANNEXURE ‘A’
NOTICE TO SHOW CAUSE
(Appendix-1 of the Adjudicating Manual)
Office of the Superintendent of Central Excise: Range Thane – II Division, Pradhan Bldg. Near Thane Rly. Station, Thane.
Phone No. 595534 No. SC/NOCIL/PVCMB/79/258
Thane, the 7th May, 1979
Whereas it appears that M/s National Organic Chemical Industries Limited, Thane, have contravened Rule 173B in as much as PVC Master Batches falling under PVC Resin (T.I. No. 15A l(ii) have been declared as PVC Compounds and have claimed exemption from whole of the C. Ex. duty leviable thereon under Notification No.206/77.C.E. dated 29.6.1977.
The said M/s NOCIL are hereby required to show cause to the A.C. C. Ex., Thane, Div. II why C. Ex. duty of Rs. Twelve lakhs forty three thou-sand four hundred twenty-nine paise ninety-five only (Basic Rs. 12,05,151.00 12,05,151.00 + S.E.D. Rs. 38,278.95) for the quantity cleared during the period from November 1978 to April 1979 should not be recovered under Rule 10 of C. Ex. Rules 1944.
2. M/s NOCIL Thane are further directed to produce at the time of showing cause all the evidence upon which they intend to rely in support of their defence.
3. M/s NOCIL Thane should also indicate in the written explanation whether they wish to be heard in-person before the case is adjudicated.
4. If no cause is shown against the action proposed to be taken within thirty days of the receipt of this Notice or they do not appear before the adjudicating officer when the case is posted for hearing the case will be decided exparte.
Sd/-
Place : Thane Superintendent
Range X Thane-II Div. Central Excise
Date : the 7th Thane.
To:
M/s. NOCIL
Thane.
CC: WMA WOP WOP/FD WAC SEC MKD.
ANNEXURE 'B'
NOTICE TO SHOW CAUSE
Office of the Supdt. of Central Excise, Range X Thane Div. II, Pradhan Bldg. Thane.
Phone No. 595584 NOSC/NOCIL/PVCMB/319/665
Thane dt. 29.9.1980
Whereas it appears that M/s National Organic Chemical Industries Ltd., Thane, have contravened Rule 173B of Central Excise Rules 1944, in as much as PVC Master Batches, manufactured by them and falling under T.I. No. 14 I(ii) (Paints & Varnishes of Central Excise Tariff) have been wrongly described and declared as PVC compounds and cleared under T.I. 15A I(ii) without payment of whole of Central Excise duty leviable thereon under the aforesaid T.I. by wrongly claiming exemption under Not. No. 206/77 CE dated 29.6.1977.By virtue of the above-stated misdecla-ration of the PVC Master Batch being PVC compounds & as such are not eligible for such exemption.
The said M/s NOCIL are hereby required to show cause to the A.C. C. Ex., Thane, Div. II why C. Ex. duty of Rs. Twelve lakhs forty three thousand four hundred twenty-nine paise ninety-five only (Basic Rs. 12,05,151.00 + S.E.D. Rs. 38,278.95) for the quantity cleared during the period from November 1978 to April 1979 should not be recovered under Rule 10 of C. Ex. Rules 1944.
2. M/s NOCIL, Thane, are further directed to produce at the time of showing cause all the evidence upon which they intend to rely in support of their defence.
3. M/s NOCIL, Thane should also indicate in the writting whether they wish to be heard in-person before the case is adjudicated.
4. If no cause is shown against the action proposed to be taken within thirty days of the receipt of this Notice or they do not appear before the Adjudicating Officer, when the case is posted for hearing the case will be decided exparte.
5. This show cause-cum-demand notice is issued in supersession of the earlier show cause-cum-demand notice issued to NOCIL, Thane under this office letter No. SC/NOCIL/PVCMB/79 dated 7th May 1979 which should be treated as revised to the above extent.
Sd/-
Superintendent
Received Central Excise
30th Sept., '84 Place : Thane Range X Thane-II Div.
Nocil - Site Date : 29th Sept. 1980 Thane.
To
M/s. National Organic Chemicals Industries Ltd.
Thane.
Copy submitted to A.C.C. Ex. Thane II Div. w.r.t. his No. V(ISR)3-6/79 dt. 11.9.1980, for favour of information.