Jyoti Balasundaram, Member (J)
1. The appellants herein are engaged in the manufacture of P.P. Ayurvedic medicament falling under Chapter sub-heading No. 3003.30 of Schedule to the Central Excise Tariff Act, 1985 and availing exemption from payment of Central Excise duty thereon in terms of Notification No. 32/89-CE dt. 1.3.89 as amended by Notification No. 9/93 dt. 28.2.93 during the period 1,10.92 to 28.2.1994. Inquiries revealed that during the course of manufacture of the above case, intermediate products either in liquid or dry forms arise and these are known as Kashay, Quatha, Ghan, which are Saps and Extracts of vegetable falling under Chapter sub-heading No. 1301.90. Since the final products i.e. P.P. medicaments were chargeable to nil rate of duty under Notification No. 32/89 as amended, the intermediate products were held to be liable to duty at the rate applicable to products of Chapter sub-heading 1301.90; demand was raised on 55297 kg. of Ghan valued at Rs. 2,08,82,647, by show cause notice dt. 29.9.97 for Rs. 32,30,623. Penal action was also proposed. The adjudicating authority confirmed the demand by application of the extended period of limitation; hence this appeal.
2. We have heard both sides. We find that during the period in dispute the appellants had filed declarations describing the process of manufacture of their final product viz. P.P. medicaments. The manufacturing process has not been found to be incorrect and has been accepted after verification by the Range Officer. The relevant parts of the process details are reproduced below:
We are manufacturing Ayurvedic medicines under the licence issued by the competent authorities i.e. Foods and Drugs Control Administration. Government of Gujarat. The medicines manufactured by us are classified based on the dosage forms, are as follows:
(1) Churna and Granules
(2) Vatika. Gutika (Tablets — pills)
(3) Asavas and Arishtas.
(5) Gritham and Thailam
(6) Liquid and orals.
These are the various dosage forms for the medicines in which we market our various products chiefly either one of the processes or more than one of them in the combination are used to prepare various products.
(1) Grinding: The materials are converted in the desired nature power it may be course of fine.
(b) Ghana/Quatha/Kasjaua : Herbal material are usually drugs with prescribed quantity of water. This boiled water is filtered and the volume of water is removed by various methods up to the desired level.
From the above, it is clear that it was disclosed to the department that Ghan is an intermediate product arising in the course of manufacture of P.P. Medicaments. Looking at from this angle, the appellants cannot be held guiity of wilful suppression of facts or deliberate misstatement so as to hold that the extended period of limitation is applicable. We hold that the entire demand is barred by limitation. In view of the above, and hence set aside the demand and penalty and allow the appeal without going into the merits of the case.