Customs, Excise and Gold Tribunal - Delhi
Fertilizer Corporation Of India Ltd. vs Collector Of Central Excise on 27 May, 1987
Equivalent citations: 1987(13)ECC327, 1987(12)ECR1005(TRI.-DELHI), 1987(31)ELT411(TRI-DEL)
ORDER D.C. Mandal, Member (T)
1. The facts of the case, in brief, are that the appellants brought low sulphur heavy stock (LSHS) without payment of duty claiming exemption of duty under Notification No. 147/7 4-CE and following the Procedure laid down in Chapter X of the Central Excise Rules, 1944. This LSHS was to be used in the manufacture of fertilizers as feed stock. They used 3382.87 M/Tons of LSHS in the manufacture of Ammonia and subsequently used that Ammonia in the manufacture of Ammonium Nitrate (Prilled) during the period from 1-1-1980 to 31-12-1981. A show cause notice was issued to the appellants on 3-5-1982 alleging contravention of Rules 173-G(2) read with Ruk: 52-A, 173-F read with Rule 9(1), 192, 196 and 226 of the Central Excise Rules, 1944, on the ground that the LSHS was not used in the manufacture of fertilizers and they had not maintained the Central Excise records in spite of being specifically told to do so by the Inspector in-Charge of the factor. It was also alleged that they had wilfully suppressed the quantity of Ammonia used in the manufacture of Ammonium Nitrate (Prilled) by not showing it properly in the records, which led to the evasion of duty. By the impugned order, the Collector held the charges as established and asked the appellants to pay Central Excise duty amounting to Rs. 37,12,565.41 under Rule 196 read with Rule 9(2) of the Central Excise Rules, 1944 and Section 11A of the Central Excises and Salt Act, 1944, and also imposed on them a penalty of Rs. 5,00,000/- under Rule 173Q of the Central Excise Rules, 1944 for deliberate evasion of duty and for making deliberate misleading statements with intent to evade duty.
2. In upholding the charges, the Collector observed that :
(i) The claim of the assessee (the appellants herein) that the Ammonium Nitrate (melt) manufactured by them out of Ammonia produced from LSHS was a fertilizer, was based on a very long-winding argument that once upon a time, at Serial No. 1 of the Table attached to Notification No. 164/69, dated 11-6-1969 Ammonium Nitrate was shown as a fertilizer. This Notification was subsequently amended by Notification No. 225/70, dated 21-7-1979, omitting the above Serial No. 1-Ammonium Nitrate from the table of the Notification No. 164/69 because it was not a fertilizer and it did not appear as fertilizer in the Fertilizer (Control) Order, 1957 issued by the Central Government in exercise of the power derived under Section 3 of the Essential Commodities, Act, 1955. The Department also issued a Trade Notice No. 53/1-Fertilizer/79, dated 5-6-1979, informing all concerned that Ammonium Nitrate (melt) would be dutiable under Item 68 of the Central Excise Tariff and that Ammonia gas falling under Tariff Item 14H used in the manufacture of such Ammonium Nitrate (melt) would also be dutiable. Subsequently, the Notification No. 164/69, was rescinded by Notification No. 67/80, dated 7-6-1980. In view of the above, the argument that Ammonium Nitrate (melt) was a fertilizer was not acceptable.
(ii) The Ammonium Nitrate (melt) was never sold by the assessee (the appellants) as fertilizer. It was seen from the manufacturing process submitted by them that Ammonia gas was first vapourised into Vapour Ammonia, then reacted with Nitric Acid which resulted in Ammonium Nitrate (melt), which subsequently moved into a concentrator where steam of high pressure was applied and then the material moved to a prilling tower from which ultimately Ammonium Nitrate (Prilled) was obtained. The whole operation was a continuous, uninterrupted, integrated process and Ammonium Nitrate (melt) was never taken out of the stream- It came into existence only as an intermediary product in a continuous, uninterrupted, integrated process adopted for the manufacture of Ammonium Nitrate (Prilled) out of Ammonia gas. It is absolutely clear that neither at any stage they had any intention to manufacture Ammonium Nitrate (melt) as a product for sale, nor it was at all a fertilizer; it just came into existence incidentally in the manufacture of Ammonium Nitrate (Prilled) from Ammonia. Inspite of knowing all these facts, they deliberately attempted to evade Central Excise duty by making misleading statements before the Department and even before the adjudicating authority that they manufactured fertilizer out of the Ammonia. Further, the Department, through the Inspector in-charge of the factory, had insisted upon the assessee to maintain records in a way so that the Department would get a correct idea of the going on in the assessee's factory, but they deliberately ignored the Department's instruction with intent to evade duty. Under Rule 173-F of the Central Excise Rules, 1944, the assessee was required to determine his liability for duty and not to remove excisable goods from the factory without payment of duty so determined. In the light of this express legal obligation and the deliberate evasion of duty, the longer time limit of 5 years would apply in this case.
3. During the hearing before us, learned representative of the appellants has stated that Ammonium Nitrate (melt) manufactured by them from duty-free Low Sulphur Heavy Petroleum Stock (LSHS) and ammonia is a fertilizer falling under Tariff Item 14HH of the Central Excise Tariff. In Government of India, Ministry of Finance (Department of Revenue and Insurance) Notification No. 164/69-CE, dated 11-6-1969, ammonium nitrate was mentioned as a fertilizer vide Serial No. 1 of the table appended to the Notification. The department classified Ammonium Nitrate (melt) in 1972 as fertilizer and L.6 licence was issued. Notification No. 164/69-CE was subsequently amended by Notification No. 225/79-CE, dated 21-7-1979 deleting the aforesaid Serial No. 1-Ammonium Nitrate from table of the Notification No. 164/69-CE. Deletion of the said serial number from the Notification or the Trade Notice No. 53/l-Fertilizer/79, dated 5-6-1979 could not change the classification of Ammonium Nitrate. Chapter 31 of the Customs Tariff also shows Ammonium Nitrate as fertilizer. He has further stated that if the Ammonium Nitrate (melt) is decided to be fertilizer, then the appellants will get benefit of Notification No. IVJl 74-CE and 145/71-CE. He has also argued that longer period of time-limit of five years is not applicable in the present case as the Department knew that the appellants were producing Ammonium Nitrate (melt) for the manufacture of. Ammonium Nitrate (Prilled). As the demand show cause notice was issued after the period of six months, the demand was barred by limitation. In support of his arguments, the learned representative has relied on the decisions reported in (i) 1983 ELT 17 (Patna), GO 1983 ELT 1566 (SO and (iii) 1985 (22) ELT 513 (Tribunal). He has stated that in the case of Tata Yodogwa Limited v. Asstt. Collector of Central Excise, Jamshedpur and Ors., reported in 1983 ELT 17 (Patna), the High Court of Patna held that words 'intent to evade' in Rule 10(1) indicated that the limitation of five years would apply in the case of "intentional evasion' and not 'mere evasion'. Therefore, if an assessee bona fide disputed the classification of goods for the purposes of payment of duty, it could not be said that there was intentional evasion of payment of duty. Hence, the period for recovery of short-levy would be six months (and not 5 years), as laid down in Rule 10(1) ibid. The learned representative has argued that in the present case the dispute related to classification of Ammonium Nitrate (melt) and there was no intention to evade duty by the appellants and therefore, the time-limit of six months should apply in issuing the demand for duty. The longer period of five years applied by the department is not permissible in terms of ratio of this judgment. The learned representative has further argued that appellants were under bona fide belief that duty was not payable as the Ammonium Nitrate (melt) was fertilizer and as such, no duty was payable on LSHS and Ammonia used by them in the manufacture of the said product. He has, therefore, contended that according to the ratio of the aforesaid judgment of Patna High Court, imposition of penalty on the appellants was not justified. Drawing our attention to the judgment of the Supreme Court in the case of Dunlop India Ltd. & Madras Rubber Factory Ltd. v. Union of India and Ors., reported in AIR 1977 S.C. 597, learned representative has stated that Ammonium Nitrate (melt) was once classified by the Government in Notification No. 164/69-CE as fertilizer. This is a specified item in the Tariff Schedule. It will be against the very principle of classification to deny classification under Tariff Item 14HH and consign it to the Residuary Item 68 of the Central Excise Tariff. He has also stated that in the aforesaid judgment the Hon'ble Supreme Court held that when there was no reference to the use or adaptation of the article, the basis of the end use for classification under a Tariff entry is absolutely irrelevant. According to him, after having classified the product as fertilizer by the Notification No. 164/69, the question of end use of the product as fertilizer becomes irrelevant in terms of the ratio laid down by the Supreme Court in the said judgment. Relying on the decision of this Tribunal in the case of Punjab Breweries Ltd. and Mohan Meakins Ltd., Solan (H.P.) v. Collector of Central Excise, Chandigarh, reported in 1985 (22) ELT 513 (Tribunal), the learned representative has stated that Ammonium Nitrate (melt) was utilised by the appellants for the manufacture of Ammonium Nitrate (Prilled) and; condition of the article at the time of its removal for captive consumption would be a material factor for deciding the tariff entry under which it should be classified. The product Ammonium Nitrate (melt) was already classified as fertilizer. The classification of this product cannot be governed by the ultimate finished product, namely, Ammonium Nitrate (Prilled) which is used as explosive.
4. Arguing for the respondent, learned SDR has stated that Ammonium Nitrate (melt) was never used by the appellants as fertilizer. Appellants used this product for the manufacture of Ammonium Nitrate (Prilled), which is an explosive. Ammonium Nitrate (Prilled) was never cleared by the appellants as fertilizer. According to the ratio laid down by the Supreme Court in the State of Punjab v. Hindsons (P) Ltd. reported in 1985 (19) ELT 19(SC), predominant use of a product is relevant for the purpose of classification. In the aforesaid case, a question arose whether a belt pulley attachment was an agricultural implement as it was used as part of the tractor. Belt pulley was also used for various other purposes, as for example, in motor, cars, water pumps, threshers and other machines. The Hon'ble Supreme Court held that belt pulley could not be classified as agricultural implement. The arguments of the learned S.D.R. are that Ammonium Nitrate has various grades and uses and the fertilizer grade of Ammonium Nitrate is not explosive. Ammonium Nitrate (melt) was exclusively used by the appellants for the manufacture of explosive and it was never used by them captively as fertilizer nor the product was emoved from the factory as fertilizer. This shows that the Ammonium Nitrate (melt) produced by them for captive consumption was not of fertilizer grade. The exclusive use for explosive will determine the classification of their Ammonium Nitrate (melt). The learned SDR has further argued that Tariff Item 14-HH mentions fertilizers, all sorts. This Tariff Heading implies functional use. In the case of Hico Products Ltd., Bombay v. Collector of Central Excise, Bombay reported in 1983 ELT 2483 (Cegat), this Tribunal has held that end-use of certain goods cannot determine their classification in general, but predominant use is relevant and significant where classification is related to function of the goods as in Tariff Item 65. Tariff Item "14-HH-Fertilizers, all sorts" is a functional Tariff Item. End use is relevant for classification under this Tariff Item. Learned SDR, in support of his arguments for classification of Ammonium Nitrate (melt) under Item 68, has relied on the grades and uses of Ammonium Nitrate as per the Condensed Chemical Dictionary (Tenth Edition) by Gessner G. Haw ley.
5. Regarding the question of limitation under Rule 10 of the Central Excises Rules and Section 11-A of the Central Excises and Salt Act, 1944, learned SDR has stated that in the present case the Department asked the appellants to maintain records of the Ammonia, but they deliverately omitted to maintain the requisite records. Trade Notice was also issued asking the Trade to pay duty on Ammonia and Ammonium Nitrate (melt), but still the appellants did not pay duty on the products under Self-Removal Procedure. The longer period of limitation of 5 years will, therefore, apply. In support of this argument, he has relied on the decision of Hon'ble Allahabad High Court in the case of Jay Prestressed Products Ltd. and Anr. v. Union of India and Ors., reported in 1986 (26) ELT 913 (All.). In this case, Hon'ble High Court held that if the petitioner did not supply the value of inserts, despite persistent demands, the Department could rightly take the view that there has been a wilful suppression of facts for the purpose of evading payment of excise duty and accordingly, the extended period of five years for issue of show cause notice will apply. The learned SDR has further argued that non-duty paid Low Sulphur Heavy Petroleum Stock and Ammonia was to be used by the appellants in the manufacture of fertilizer following the Procedure laid down in Chapter X of the Central Excise Rules, 1944. Since this was not done, duty on the said goods was to be paid in terms of Rule 196 of Central Excise Rules. No time-limit is prescribed by this Rule for demanding Central Excise duty on the goods which were not used for the purpose for which those were obtained under Rule 192 of the Central Excise Rules. In support of his argument that no time limit will apply for demanding duty in terms of Rule 196 of the Central Excise Rules, learned SDR has relied on paragraph-9 of the decision of this Tribunal in the case of Bajaj Tempo Ltd. v. Collector of Central Excise,; Pune, reported in 1984 (17) ELT 2C5 (Tribunal). In the said paragraph, this Tribunal Interalia held: "Why the Departmental authorities took so long to wake up remains a mystery. The question of time-bar is, however, unaffected by this since the Collector relied-on Rule 196 and a demand can be made without any period of limitation. Since, therefore, the concession was wrongly used, the demand for duty was in order." Relying on the above decision, learned SDR has contended that- longer period of time-limit of five years was applicable in this case as the appellants wrongly used concession under Notification No. 145/71-CE, dated 21-6-1971 and 147/74-CE, dated 30-10-1974.
6. As regards the quantum of penalty, the learned SDR has argued that the amount of duty deliberately evaded is more than Rs. 37 lakhs and when compared with this amount, the penalty of Rs. 5 lakhs is fully justified and it is not excessive. He has, therefore, prayed that the appeal filed by the appellants may be dismissed in its entirety.
7. From the foregoing facts and arguments of the learned representative of the appellants, and the learned SDR, the questions which emerge for our consideration and decision are :-
(i) Whether Ammonium Nitrate (melt) produced by the appellants for captive consumption was a fertilizer;
(ii) If the reply to Question No. (i) is in the affirmative, whether LSHS and Ammonia used in the production of the said Ammonium Nitrate (melt) which was subsequently used in the manufacture of Ammonium Nitrate (Prilled), was entitled to the benefit of Notification No. 145/71-CE, dated 26-6-1971 and 147/74-CE, dated 30-10-1974; and
(iii) Whether in the facts and circumstances of the case, the demand for duty was barred by limitation under Rule 10(1) of the Central Excise Rules and Section 11-A of the Central Excises and Salt Act, 1944.
8. Under Notification No. 145/71-CE, dated 26-6-1971, ammonia used in the manufacture of fertilizer falling under Tariff Item 14-HH of the Central Excise Tariff was exempted from the payment of Central Excise duty. -Under Notification No. 147/74-CE, dated 30-10-1974, Low Sulphur Heavy Petroleum Stock used in the manufacture of Fertilizer as feed stock was exempted from whole of the Central Excise duty. Appellants obtained Low Sulphur Heavy Petroleum Stock following the procedure laid down in Chapter-X of the Central Excise Rules, 1944 for use in the manufacture of fertilizer as feed stock without payment of duty. Low Sulphur Heavy Petroleum Stock was used in the manufacture of ammonia which was used* in the manufacture of Ammonium Nitrate (melt) and the Ammonium Nitrate (melt) was ultimately used for Ammonium Nitrate (melt). In support of his argument that Ammonium Nitrate (melt) produced for captive consumption by the appellants was not fertilizer classifiable under Item 14-HH of the Central Excise Tariff, but the product was assessable under Item- 6S of the Central Excise Tariff, the learned Departmental Representative relied, inter alia, on the grades and uses of Ammonium Nitrate mentioned in the Condensed Chemical Dictionary (Tenth Edition) by Gessner G. Hawley. We find from page 61 of the said Dictionary that Ammonium Nitrate has several grades, one of which is fertilizer grade. It has also been stated therein that "Fertilizer Institute states that the fertilizer grade of Ammonium Nitrate is not explosive". The uses of the Ammonium Nitrate have been stated in the said Dictionary as "Fertilizer; explosive, especially as prills/oil mixture; pyrotechnics; herbicides and insecticides; manufacture of nitrous oxide; absorbent for nitrogen oxides; ingredient of freezing mixtures, oxidizer in solid rocket propeilahts; nutrient for antibiotics and yeast; catalyst." It, therefore, follows from the above that Ammonium Nitrate which is used as explosive is not of fertilizer grade. Admittedly, in this case, Ammonium Nitrate (melt) produced by the appellants was not used as fertilizer, nor was it cleared from the factory of use as fertilizer. The entire production was consumed internally in the manufacture of Ammonium Nitrate (Prilled), which is explosive. There, is, therefore, no scope for any doubt that Ammonium Nitrate (melt) produced by them was of explosive grade and not of fertilizer grade. It has been argued on behalf of the Revenue that Ammonium Nitrate is not included as an- item of fertilizers in the Fertilizer (Control) Order, 1957. This fact is not disputed by the appellants. Their contention, however, is that under Notification No. 164/69-CE, dated 11-6-1969 Ammonium Nitrate was shown as fertilizer. Clause 2(d) of the Fertilizer (Control) Order, 1957 defines fertilizer as meaning any substance used or intended to be used as a fertilizer of the soil and specified in Column-1 of the Schedule-1". In paragraph-23 of Order No. 112/83-C, dated 21-5-1983 in Appeal No. ED(SBXT) A. No. 59/76-C (M/s. Gujarat State Fertilizers Co. Ltd., Baroda v. Collector of Central Excise, Baroda) this Tribunal held that even if any material is specified in the Schedule to the Fertilizer (Control) Order, it would not be fertilizer if it was not used or intended to be used as such. In the said case, the interpretation of Notification No. 187/61-CE, dated 23-12-1961 was involved. Notification provided as follows :-
"(1) Raw Naphtha is exempt from so much of duty of excise leviable thereon as is in excess of four rupees and forty paise per kilolitre at 15° centigrade provided that -
(i) it is proved to the satisfaction of an officer not below the rank of an Assistant Collector of Central Excise that such Raw Naphtha is intended for use in the manufacture of fertilizers; and
(ii) the procedure set out in Chapter X of the Central Excise Rules, 1944, is followed.
(2) The exemption contained in this Notification shall also apply in respect of such Raw Naphtha as is used in the manufacture of Ammonia, provided such Ammonia is used elsewhere in the manufacture of fertilizers and the procedure set out in Chapter X of the Central Excise Rules, 1944, is followed."
In the above case, it was held by this Tribunal that according to the definition in Clause 2(d) of Fertilizer (Control) Order, 1957, the goods listed in Schedule-I to the Order, which were used or intended to be used as fertilizer of the soil, were fertilizer and since in that case Ammonia was not so used or intended to be used, the Fertilizer (Control) Order, 1957 could not be invoked to support the appellants' case. It was also held by this Tribunal that use of Ammonia as fertilizer at the material time had not been established on the basis of a technical literature and therefore, the appellants' case that Ammonia was a fertilizer was without substance. This ratio is applicable in the present case before us. In this case, Ammonium Nitrate (melt) was never used as Fertilizer, but was used exclusively for the manufacture of explosive. This product, manufactured by the appellants, is not a fertilizer and it cannot be classified as such under Item 14-HH of the Central Excise Tariff.
9. The appellants have argued that Chapter 31 of Customs Tariff shows Ammonium Nitrate as fertilizer and hence, for the purpose of Central Excise duty, Ammonium Nitrate (melt) should be classified as fertilizer. This argument is not acceptable to us as Central Excise duty and Customs duty are levied under two separate enactments and in the case of Super Traders and Anr. v. Union of India and Ors., 1983 ELT 258 (Del.), the Hon'ble Delhi High Court has held that the description of an article under the Excise Act cannot be taken as covering and determining the meaning of the said item under the Customs Act.
10. Learned representative for the appellants has argued that end use is not relevant for the purpose of determination of classification of a product. He has relied on the judgment of the Supreme Court in the case of Dunlop India Limited. In that case, the Hon'ble Supreme Court held that end use was irrelevant in the context of an entry where there is no reference to the use or adaptation of the article. There cannot be any dispute about the ratio laid down by the Hon'ble Supreme Court in the case of Dunlop India Limited [AIR 1977 SC 597 (SOI It was held by this Tribunal in its Order No. C-154/85-C in Appeal No. ED(SB) A. No. 113/84-C (Citric India Limited, Nasik v. The Collector of Central Excise, Pune) that the above ratio is applicable in situations where the goods are described by name. In the said case before the Tribunal, no description was given of the goods, but a general categorisation by use and function was given. Tribunal observed that there was no such thing as a drug or pharmaceutical and it was only a chemical and other substance which was put to such use. The term "drug/drug-intermediate and Pharmaceutical" was not description of a product identifiable as such, but only a class or category within which many chemicals and substances can be grouped. At the same time, those same chemicals are not always used as drugs or Pharmaceuticals. Therefore, the Tribunal could not say that Citric Acid which was not used as a pharmaceutical or a medicine could be described as medicine or pharmaceutical. The Tribunal, therefore, ordered in that case that exemption could be extended to Citric Acid cleared by M/s. Citric India Limited and used for the manufacture of drugs/medicines/pharmaceuticals. The Tribunal directed that the Central Excise authority should make enquiries and satisfy itself about its use and if the Citric Acid was not used for the manufacture of drugs/medicines/ Pharmaceuticals, it must be denied the exemption. A similar view is to be taken by us in the present case also. The name Fertilizer represents group of substances which are used or intended to be used as fertilizer. If a substance is not at all used as a fertilizer, it cannot be brought within the purview of the Tariff Item "14-HH Fertilizers, all sorts". From this point of view, the end use becomes relevant and important. Learned SDR as relied upon the judgment of Supreme Court in the case of Hindsons VP) Ltd., reported in 1985 (19) ELT 19 (SC), according to which predominant use of a product is relevant for the purpose of classification. He has also relied on this Tribunal's decision reported in 1983 ELT 2483 (Hico Products Ltd., Bombay v. Collector of Central Excise, Bombay) in which it was held by this Tribunal that end use of certain goods cannot determine their classification in general, but predominant use is relevant and significant where classification is related to function of the goods. In the case of Fertilizer, description is related to the function of the goods, i.e., its use or intended use as fertilizer. These two decisions also support the Department's case that the product Ammonium Nitrate (melt) is not a fertilizer.
11. The main contention of the appellants is that Ammonium Nitrate was mentioned as fertilizer in Notification No. 164/69-CE, dated 11-6-196$ and it should continue to be a fertilizer. According to them, deletion of Serial No. 1-Ammonium Nitrate from the table of Notification No. 164/69-CE by Notification No. 225/79-CE, dated 21-7-1979 or issue of Trade Notice No. 53/l-Fertilizer/79, dated 5-6-1979 could not change the aforesaid classification of Ammonium Nitrate. In the impugned order, the Collector has observed that Ammonium Nitrate was omitted from the table of the Notification No. 164/69-CE because it was not a fertilizer and it did not appear as fertilizer in the Fertilizer (Control) Order, 1957. We are unable to accept the contention of the appellants that Government cannot change the classification. If the Ammonium Nitrate was not used as fertilizer and it did not appear as fertilizer in the Fertilizer (Control) Order, 1957 it was within the competence of the Government to delete the item from the Exemption Notification No. 164/69-CE, dated 11-6-1969 and the Government did so by another Notification No. 225/79-CE, dated 21-5M979. Not only that, the Department informed the Trade about the change in the Notification by issue of Trade Notice No, 53/1-Fertilizer/79, dated 5-6-1979. The Trade Notice made it very clear that Ammonium Nitrate (melt) was dutiable under Item 68 of the Central Excise Tariff and Ammonia Gas falling under Tariff Item 14-H used in the manufacture of Ammonium Nitrate (melt) was not dutiable. Nothing further remained to be done by the Department to guide the Trade properly.
12. In view of the foregoing discussions, we hold that Ammonium Nitrate (melt) produced by the appellants was-not fertilizer and hence, it did not fall within the purview of Tariff Item 14-HH of the Central Excise Tariff. The Authorities below correctly held that the product was classifiable under Item 68 of the Central Excise Tariff. As the Low Sulphur Heavy Petroleum Stock obtained by the appellants without payment of duty under Chapter X of the Central Excise Rules and the Ammonia produced by them were not used in the manufacture of fertilizer, the benefit of Notification No. H5/71-CE, dated 26-6-1971 and Me. 147/74-CE, dated 30-10-1974 was not admissible in respect of the said LSHS and ammonia used by them in producing Ammonium Nitrate (melt) for the manufacture of Ammonium Nitrate (Prilled).
13. In view of the above findings, our replies to Questions No. (i) and (ii) of paragraph 7 are in the negative.
14. Regarding time-limit for issuing demand for duty in the present case, we find that the appellants deliberately ignored the Trade Notice No. 53/l-Fertilizer/79, dated 5-6-1979 and Notification No. 225/79-CE, dated 21-7-1979 which amended Notification No. 164/69-CE. The learned SDR has argued that the appellants did not maintain proper records in respect of Ammonia in spite of the fact that Inspector Incharge of the factory insisted upon the appellants for maintaining necessary records. The Department's case is that in spite of knowing the fact that duty was payable on LSHS and Ammonia, the appellants deliberately attempted to evade Central Excise duty and hence, time-limit of five years is applicable. The learned SDR has relied upon the judgment of Allahabad High-Court in support of his argument and we find that to their decision reported in 1986 (26) ELT 913 (Allahabad), Hon'ble Allahabad High Court held that if the petitioner did hot supply value of inserts, despite persistent demands, the Department could rightly take the view that there had been a wilful suppression of facts for the purpose of evading payment of excise duty and accordingly, extended period of five years for issue of show cause notice would apply. The present case is squarely covered by this judgment of Allahabad High Court. In the case before us, it has not been denied by the appellants that Central Excise Officer, incharge of the factory asked them repeatedly to maintain necessary records in respect of Ammonia. Despite insistence from the Central Excise Officer, they appear to have not maintained the record deliberately on the plea that Ammonium Nitrate was a fertilizer. Their plea does not stand in view of: the discussions already made by us earlier in this order. The appellants were working under Self-Removal Procedure. Under this procedure, they were supposed to make correct assessment of the goods and pay duty. By issue of a Trade Notice as early as on 5-6-1979, the Department informed the Trade that Ammonium Nitrate (melt) would be dutiable under Item 68 of the Central Excise Tariff and ammonia used in the manufacture of Ammonium Nitrate (melt) was also dutiable. We find no justification on the part of the appellants Ho act in the manner they have done in this case. Learned SDR has also relied on the decision of this Tribunal, reported in 198* (17) ELT 204, in the case of Bajaj Tempo Limited v. Collector ;of Central Excise, Pune, in which the Tribunal held that demand under Rule 196 of the Central Excise Rules, 1944 could be made without any period of limitation and since the concession was wrongly used, the demand for duty was in order in that case. The present case is fully covered by the aforesaid decision of this Tribunal. In the present case, Rule 196 of the Central Excise Rules was invoked by the Collector in upholding the demand for duty. The decision of Patna High Court, reported in 1983 ELT 17 (Patna) which has been relied upon by the learned representative of the appellants will not hold good in the present case as the appellants' deliberate omission to maintain necessary records of Ammonia, despite persistent demands, has amounted to wilful suppression of facts for the purpose of evading Central Excise duty. This position is not affected by the fact that the Department knew that the appellants had been producing Ammonium Nitrate (melt).
15. In view of the above discussions, we hold that Collector has rightly invoked longer period of time limit of five years in demanding- duty evaded by the appellants. The classification of Ammonium Nitrate (melt) under Item 68 of the Central Excise Tariff and the duty demanded in respect of Low Sulphur Heavy Petroleum Stock and Ammonia used in manufacturing Ammonium Nitrate (melt) are, thus, upheld. Considering the amount of duty involved and the manner in which the appellants deliberately evaded the payments of duty, we do not consider the amount of penalty of Rs. 5 lakhs to be unjustified. Hence, the penalty, is also confirmed by us.
16. In the result, the impugned order is upheld and the appeal filed before us, is dismissed.