ORDER
V.K. Agrawal, Member (T)
1. M/s. Oudh Sugar Mills Ltd. have filed this appeal against the order dated 9-9-1994 passed by the Collector, Central Excise, Kanpur.
2. Shri R.N. Chopra, Ld. Advocate submitted that the appellants manufacture various grades of Ethyl Alcohol. A show cause notice dated 2-4-1991 was issued to them for demanding Central Excise Duty amounting to Rs. 1,51,88,616.62 in respect of spirit and Absolute Alcohol cleared during the period from 1-3-1986 to 28-2-1989. The Collector, Central Excise, under the impugned order confirmed the demand for Rs. 5,11,349.47 ps only on Absolute Alcohol, imposed a penalty of Rs. 1 lakh on the appellants and dropped the demand in respect of rectified spirit holding that Absolute Alcohol having strength 99.5% and above was considered suitable for being used as fuel for spark ignition engines and was chargeable to excise duty under Heading 22.04 of the Schedule to the Central Excise Tariff Act and that the extended period of limitation was applicable as they did not submit separate classification list for Absolute Alcohol and they mis-stated that Absolute Alcohol was non-excisable goods in column 7 of the classification list. The Ld. Advocate contended that the demand of duty was time barred as there was no fraud or any wilful mis-statement or suppression of facts by them because a complete record of all varieties of alcohol produced by them was maintained and full details were within the knowledge of the Excise officers. As the Appellants were under the bonafide belief that spirit in question was non-excisable, there was no question of including the same in the classification list. Even the notice dated 2-4-1991 shows that in the classification list effective from 18-5-1987, they had shown Absolute Alcohol in column 7 out of the classification list which clearly showed that they had not concealed anything and the Department was aware that the Appellants were producing Absolute Alcohol and were not paying the duty. Again in the classification list effective from 17-3-1988, they had shown Absolute Alcohol in column 7 of the list. He also submitted that the Central Excise Collectorate, Kanpur, under letter dated 13-8-1981 addressed to the Secretary, All India Distillers’ Association mentioned that no duty was chargeable on Absolute Alcohol, if it was not denatured. The Ld. Advocate contended that as Department was aware about their manufacturing Absolute Alcohol and the Department itself had clarified about non-excisability of the impugned product, the extended provision for issuing show cause notice for demanding duty cannot be invoked. He relied upon the decision in the case of Pushpam Pharmaceuticals Co. v. C.C.E. – 1995 (78) E.L.T. 401 (S.C.) in which the Supreme Court held that “where facts are known to both the parties, the omission by one to do what he might have done and not that he must have done, does not render the suppression”. Reliance was also placed upon the decision in the case of C.C.E. v. Chemphar Drugs & Liniments -1989 (49) E.L.T. 276 (S.C.) in which it was held that in order to make a demand for beyond a period of six months “something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required ….”
3. Countering the arguments, Shri Satnam Singh, Ld. SDR, submitted that the Appellants should have disclosed the manufacture of Absolute Alcohol to the Department; that the Appellants willingly and knowingly did not submit the classification list with intent to evade the payment of duty. He also referred to the charges contained in the Notice according to which the Appellants mis-stated the facts and did not mention correct and complete description of goods in their classification list inasmuch as they did not state that the spirit and Absolute Alcohol could be used either by itself or in admixture with any other substance as fuel for spark ignition engines. He, thus, contended that extended period of limitation as per Section 11A(1) of the Central Excise Act has been rightly invoked.
4. We have considered the submissions of both the sides. It has been interpreted by the Supreme Court in Pushpam Pharmaceuticals Company Ltd. v. C.C.E (supra) that for invoking the five years period for demanding duty the act must be deliberate and the correct information was not disclosed deliberately. We observe that it is not in dispute, as it is mentioned both in show cause notice and the impugned order, that the Appellants had mentioned “Absolute Alcohol” as not liable to Central Excise Duty as these could not be used in their naked form as fuel for spark ignition engine in column 7 of the classification lists effective from 18-5-1987 and effective from 17-3-1988. The Appellants had made a disclosure of their manufacturing the Absolute Alcohol which according to them was not excisable. There is no force in the case of the Department that the appellants ought to have given complete content of ethyl alcohol. Non furnishing of these details cannot be regarded to be suppression of facts so as to warrant invokation of the extended period for issuing the show cause notice. If the Department was not satisfied or desired to check up the impugned product, nothing prevented them to take a sample and get it tested. It has been held by the Appellate Tribunal in the case of ICPA Health Products P. Ltd. v. C.C.E. – 1998 (27) RLT 119 (Tribunal) that if the facts have been disclosed in the classification list, proviso to Section 11A(1) of the Act is not invokable. We also observe that the Kanpur Central Excise Collectorate in its letter dated 13-8-1981 had clarified that there was no Central Excise Duty on Absolute Alcohol, if it was not denatured. Having regard to all these facts and circumstances and following the ratio of the judgment of the Apex Court, relied upon by the Appellants, it cannot be said that the appellants have either suppressed the facts or made mis-statement and accordingly extended period of limitation as contained in proviso to Section 11A(1) of the Central Excise Act cannot be invoked in the present matter. Thus the demand is time barred and accordingly the same is set aside and the appeal is allowed.