V.P. Gulati, Member (T) - (1.)THIS is an appeal against the order of the Collector of Central Excise (Appeals), Bombay.
(2.)BRIEF facts of the case are that the appellants manufactured . products falling under Tariff Item 15AA and availed of benefit of exemption Notification No. 101/66 -C.E., dated 17 -6 -1966 under Serial No. 4 of the said notification. These products were manufactured out of the ingredients some of which were exempted under the said notification while in respect of, they had paid duty under T.I. No. 1.5 A A. The products manufactured by the appellants hereinafter described as said goods are the following :
i) Perminal KBI ii) Dispersol 'K' Paste iii) Lissapol 'PS Cone' iv) Lubrol 'VA' v) Cirrasol CS Conc The various ingredients used as raw material and the duty paid/discharge status of the raw material as set out by the appellants are : - _______________________________________________________________ Product OSAAs used as Remarks raw materials in manufacture _______________________________________________________________ (1) (2) (3) _______________________________________________________________ 1.Cirrasol i) Cationic softener i) Cationic softener C.S. Cone ii) Dispersol VLX and Dis - persol VLX (softener)iii) Dispersol 'A' are manufac - tured by the appellants at its factory; Appellant pays duty thereon. ii) Dispersol 'A' is manufactured at the Appellant's factory but no duty is paid thereon as the appellant claims exemption under Se - rial No. U of the Notifica - tion 101/66. 2.Perminal i) TRO 'B' i) TRO 'B' is manufactured KBI ii) Calsolene Oil 'GS' by the Appellant at its (wetting factory but no duty is paid out agent) thereon as the appellant claims exemption thereon under Sr. No. 1 of Notification No. 101/66. ii) Calsolene is manufactured by the appellant at its fac - tory. The appellant pays duty thereon. 3.Lissapol PS i) Gilapol'P' i) Gilapol 'P' is manufactured Cone (wett - ii) TRO'B' by the appellant at its ing out iii) Lissapol'CW factory. The appellant pays agent) duty thereon. ii) TRO 'B' and Lissapol 'CW' are manufactured at its factory but no duty is paid thereon as the appellant claims exemption under Sr. No. 1 of Notification 101/66 4.Lubrol i) Lissapol 'NW i) Lissapol 'NX' is manufac - 'VA' ii) Dispersol 'A' tured by the appellant at (Emulsifier) its factory. The appellant pays duty thereon. ii) Dispersol 'A' is manufac - tured at the Appellant's factory but no duty is paid thereon as. the Appellant claims exemption under Sr. No. 4 of Notification No. 101/66. 5. Dispersol i) Dispersol 'VLX' i) Dispersol 'VLX' is manu - 'K' ii) Icipol Brillian factured by the appellant Oil at its factory. The appellant Paste (wetting pays duty thereon. out agent) ii) Icipol Brilliant Oil is manufactured at the Appe - llant's factory but no duty is paid thereon as the App - ellant claims exemption thereon under Serial No. 1 of Notification No. 101/66. _______________________________________________________________ For proper appreciation of the issues, the said notification is reproduced below : "Exemption to sulphonated caster oil, fish oil, sperm oil and Turkey red oil. In exercise of the powers conferred by Sub -rule (1) of Rule 8 of the Central Excise, Rules, 1944, the Central Government hereby exempts the excisable goods specified in column (2) of the Table hereto annexed and falling under Item No. 15AA of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944) from the whole of the duty of excise leviable thereon subject to the conditions laid down in the corresponding entries in column (3) of the said Table. TABLE _____________________________________________________________________ SI. Description Conditions No. _____________________________________________________________________ (1) (2) (3) _____________________________________________________________________ 1. (a) Sulphonated castor oil, commonly known as Turkey red oil (b) Sulphonated fish oil (c) Sulphonated sperm oil 2. Organic surface -active agents If in or in relation to (other than soap; surface -active the manu - facture and packing preparations, and washing pre - of such surface/active agents, parations, whether or not con - surface - active preparations taining soal. and washing preparations no process is ordinarily carried on with the aid of power of steam for heating. 3. Surface -active preparations and If in respect of surface -active washing preparations containing agents or surface -active prepa - less than five per cent by weight rations used in the manufacture of the principal active ingre - of such surface -active prepara - dients. tions and washing preparations the appropriate amount of excise or the additional duty under Section 2A of the Indian Tariff Act, 1934 (32 of 1934) has al - ready been paid or where such surface -active agents or surface active preparations are purcha - sed from the open market on or after the 20th day of January, 1968. 4. Emulsifiers, wetting out agents, If in respect of surface active softeners and other like prepa - agents used in the manufacture rations intended for use in any of such emulsifiers, wetting out industrial process. agents, softeners and other like preparations the appropriate amount of duty of excise or the additional duty under Section 2A of the Indian Tariff Act, 1934 (32 of 1934), has already been paid or where such surface - active agents are purchased from the open market on or after the 20th day of January, 1968.
2. This notification shall, in relation to sulphonated caster oil, commonly known as Turkey red oil (specified as serial No.1 in the Table above) be deemed to have taken effect from the 1st day of March, 1966.
(3.)PARA 2 added Notification No.l72/66 -CE shall be deemed always to have been added.
(Notification No. 101/66 -CE dated 17 -6 -1966 as amended by Notifications No. 137/66 -CE dated 10 -9 -66; No. 172/66 -CE dated 5 -11 -1966 No. 4/68 -CE dated 20 -1 -1968 and No. 182/75 -CE dated 30 -8 -1975). The appellants had been manufacturing these goods in their factory for a number of years and the manufacture of these different products for the first time took place at different points of time and they had been filing their classification lists from time to time furnishing the date regarding the raw materials used in the manufacture of products and were clearing the same without payment of duty availing of the exemption under Notification 101/66, till 5th October,1982 when the show cause notice was issued to them demanding the duty in respect of past clearances of the said goods. The reasons given in the show cause notice for demand are that the appellants had been using exempted inputs falling under T.I.I5AA for the manufacture of the said goods and therefore the said goods in terms of the conditions set out at serial No.4 of the notification were not eligible for the benefit of duty free clearances. The Department's case in the proceedings is that the exemption to the said goods is available only if these are manufactured out of the surface -active agents on which appropriate excise duty has been paid. In as much as some of the ingredients used as inputs were found to have been cleared on nil duty being exempted in terms of the notification No.101/66, these apparently have been held to have not discharged the appropriate duty liability.

3. The learned advocate for the appellants, Shri R.K. Habbu, pleaded that the appellants had been filing classification lists in respect of the said goods from time to time and they furnished all the information about the ingredients utilised for the manufacture of the goods. He pleaded that alongwith some items falling under 15AA exempted under notification 101/66 they had utilised duty paid surface active agents also for the manufacture of the goods in question. His plea is that since some of the inputs falling under T.I.15AA had suffered duty, the goods manufactured by them should be taken to have manufactured out of duty paid inputs. He pleaded in view of the information furnished by the appellants in the classification lists, the original adjudicating authority has clearly held in his order that there had been no suppression of any facts on their part and in his order made the demand of duty on the ground that approval accorded to the classification lists filed was provisional in nature. He ointed out that in the show cause notice the duty had been demanded in terms of Section 11A and there was no mention in the show cause notice that the duty had been demanded for the reason of provisional approval of classification lists. He pleaded that the findings of the lower authority holding that the assessments were provisional is contrary to the facts in as much as the provisional duty procedure set out in Rule 9(2) had not been followed and unless this was done, the assessment could not considered provisional. He stated that the Assistant Collector's findings holding the assessment as provisional were also in violation of the principle of natural justice as the appellants had not been asked to explain their position in regard to the provisional nature of the assessments as held by the lower authority. He pleaded that the classification lists were approved by the Assistant Collector subject to the outcome of the test. He pleaded that if, at all, the approval of the classification lists could be considered as provisional it is only for the purpose of the test for classification of goods under T.I. 15AA and it could not the considered as provisional for all purposes. He stated as early as on [17.6.71, final approval had been granted to three out of the five products now under issue and drew our attention to the classification lists filed by him in the paper book at page 23. He stated that when one of the items before us 'Lubrol 'VA' for the first time manufactured by them, they had submitted the classification list alongwith the covering letter dated 4.8.77. He pleaded that provisional nature of the assessment could be considered only with reference to the outcome of the test results and to which they had acquiesced. He cited in this regard the case of 1985 (20) ELT 102(Tribunal). However, on further scrutiny of the documents filed it was seen that in respect of the classification list filed on 5.3.8J,, the appellants gave the following undertaking in their covering letter:

"Should, however, it is decided at a later date that the products attract Central Excise duty we shall pay the same with retrospective effect. Please therefore let us have your approval of the classification list" It is further seen that in respect of classification list filed effective from 16.3.82, provisional approval has been granted under Rule 9B as under: Subject to Dy. CC's chemical report. Approved provisionally under Rule 9B subject to execution of Bond and therefore of satisfaction of all the conditions laid down under Notification No.101/66 by the R/s."
The learned advocate, however, pointed out that in respect of clearances made in pursuance of this classification list, they have not made any plea regarding the limitation. He further pointed out that RT -12 had been finalised except in the case of a few Gate Passes. His plea, in short, is two -fold : Firstly, that the demand is time -barred except in the case where he has given up the plea regarding the limitation as above; and secondly since the ground regarding the assessment being provisional was not set out in the show cause notice issued, the demand could not be raised on this ground without giving them an opportunity to put forth their defence. He cited in this regard the judgment of the Hon'ble Gujarat High Court : AIR 1972 (Guj.) 115. He further pleaded that in as much as there was no charge regarding the suppression of any facts also that the lower authority had accepted that all the facts were on record, demand for extended period beyond six months could not be raised. He pleaded that all the ingredients manufactured by them and which were either exempted in terms of notification No.101/66 or on which duty had been paid were declared in the classification list. On merits, he pleaded, even the exempted organic surface agents utilised in the manufacture of the goods in question should be deemed to have discharged the appropriate duty for the purpose of the notification.
The learned JDR for the Department, Smt. Chander, drew our attention to some of the classification lists where she pointed out that these lists had been approved provisionally except one which had been approved finally. She pointed out that the endorsement on the price list dated 1.12.79 was subject to the eligibility of the notification. She pleaded that the appellants themselves in their letter dated 5.3.1981 stated that "should however it is decided at a later date that the products attract Central Excise duty we shall pay the same with retrospective effect". She pleaded that this undertaking by the appellants was a blanket undertaking not with reference to the approval granted subject to the testing of the goods alone. She pleaded, no doubt, the lower authority in the show cause notice issued, has invoked Rule 11A but the invoking of a wrong rule by itself does not vitiate the demand as the said demand was due in view of the fact that the classification lists had been approved provisionally and the appellants themselves had acceded to pay the duty in case the benefit of the notification was not available to them. Referring to the plea of the appellants that there was some overlapping in the demand raised in the two show cause notices issued to the appellants, she pleaded that the demand had been raised for two different periods in the two show cause notices and there was no overlapping of the demand raised in this regard. She further pleaded that in terms of notification No.101/66 the benefit under Serial No.4 of of the same was available only if duty paid inputs were used. She stated these conditions in the notification had been inserted with a view to ensure that once the inputs had got benefit of exemption notification No.101/66, the products made out of thej same should not get the benefit for the second time. She pleaded that the notification should be strictly interpreted inasmuch as some of the inputs falling under 15AA had not suffered any duty, the appellants goods were not entitled to the benefit of the notification as claimed -