KALYANI PACKAGING INDUSTRY Vs. UNION OF INDIA

JUDGEMENT

(1.) THE grievance of the petitioners relates to refusal on the part of the respondents to permit the petitioners to avail exemption from payment of duty under Notification No. 193/86, hereinafter called as the said notification, in relation to the product manufactured by the petitioners even though the exemption under the said notification in similar circumstances was allowed to be availed by one of the competitors of the petitioners, besides there being a circular issued by the board on 1 5/05/1995 clarifying availability of exemption from payment of duty under similar notification to the products manufactured by utilising the raw materials which had availed the benefit of exemption from payment of duty under an exemption notification like the one bearing No. 193/86.

(2.) FEW facts relevant for the decision are that: the petitioners are engaged in the business of packing tea on job work basis for M/s. Sapat Packaging Industry (P) Ltd. , M/s. Sapat Agro Pack Industry (P) Limited purchases tea classified under sub-heading 0902. 19 of central Excise Tariff Act, 1985 from the garden on payment of duty. Thereafter, Sapat Agro Pack Industry (P) Limited blends the tea and sell the same to m/s. Sapat Packaging Industry (P) Limited without any payment of duty claiming benefit of Notification No. 425/86. M/s. Sapat Packaging Industry (P) Limited sends the tea so purchased to the petitioner along with packing material. The petitioners pack the tea in packets of different sizes and in terms of the Central Excise Tariff Act, a packet of less than 25 gms. is classifiable under sub-heading 0902. 11 whereas the packet of more than 25 gms. but less than 20 kgs. is classifiable under subheading 0902. 12. The duty payable on these two different classes of product also differs. Under Exemption Notification No. 193/86 dated 11/03/1986 duty payable on goods falling under heading 0902. 11 is exempted in excess of 44 paise per kg. If the duty payable on tea falling under sub-heading 0902. 19 and used in the manufacture of the said goods, has already been paid and no credit of such duty paid is availed of under Rule 576 of the Central Excise Rules, 1944. The said Notification further provides for exemption in respect of tea falling under subheading 0902. 12 in excess of Rs. 1. 10/- per kg. , if the duty paid on ten falling under subheading No. 0902. 19 and used in the manufacture of the said goods has already been paid and no credit of such duty is availed of under Rule 57-A of the Central Excise Rules, 1944. The said Notification further provides that the exemption contained under the said notification shall not apply if in respect of such tea, falling under subheading No. 0902. 19 of the said schedule, the exemption contained in the Notification No. 217/86 ce dated 2/04/1986 has been availed of. The petitioners had cleared their products claiming exemption under the said notification. On or about 28/02/1991 a show cause notice came to be issued to the petitioners as to why the benefit under the said notification should not be withdrawn as the petitioners product is not entitled to claim exemption under the said notification. Consequently excise duty to the extent of Rs. 10,24. 099/ was sought to be demanded for the period from August 1990 to January 1991 in exercise of powers under section 11-A of the Central Excise Act, 1944, as also the penalty for non payment of the said excise duty.

(3.) THE ground for taking action under section 11-A of the said Act as disclosed from the show cause notice was that the product manufactured by the petitioners did not constitute the goods which had manufactured by utilising the raw materials which had already paid the excise duty thereon. Consequent to the filing of the reply and hearing of the petitioners, the concerned authority by its order dated 26/04/1991 while rejecting all the contention of the petitioners, held that the petitioners were not entitled for exemption under the said notification and they were liable to pay the duty in entirety and therefore, confirmed the demand for the payment of duty to the extent of Rs. 10,24,009/- as was demanded under the show cause notice dated 4/03/1991. Hence, this petition.