Customs, Excise and Gold Tribunal - Mumbai
Ashwin Vanaspati Inds. (Pvt.) Ltd. vs Collr. Of C. Ex. And Cus. on 2 December, 1993
Equivalent citations: 1997ECR509(TRI.-MUMBAI), 1994(70)ELT754(TRI-MUMBAI)
ORDER P.K. Desai, Member (J)
1. The CEGAT, West Regional Bench, has, vide Order No. 730/92-WRB, dated 28-4-1992, referred this appeal to the Larger Bench, observing that there is a conflict in the views expressed by the South Regional Bench in Ponds (India) Ltd. v. Collector -1988 (38) E.L.T. 351 (Tribunal) and Collector of Central Excise v. Indo Swing Ltd. - 1992 (57) E.L.T. 606 (Tribunal), on one hand, and the views expressed by the East Regional Bench in Rasoi Ltd. v. Collector, 1990 (49) E.L.T. 522 (Tribunal) and the West Regional Bench in F.D.C. Ltd. v. Collector - 1991 (55) E.L.T. 601 (Tribunal) and Parle Products (P) Ltd. v. Collector - 1992 (57) E.L.T. 152, on the other, on the major issue as to what is the "packaging material" as contemplated in Rule 57A of the Central Excise Rules, 1944, and whether the benefit of MODVAT facility is available, only if the packaging material is used as such, or whether the benefit is available, also if the packaging material received has to undergo some conversion as also whether, the item that comes into existence on conversion of the packing material, is exempt from duty, if construed as a final product, would attract the provisions of Rule 57C of the Rules, or could that be construed as an intermediate product attracting the provisions of Rule 57D(2) of the Rules.
2. The undisputed factual position here, is, that the appellants are the manufacturers of Vanaspati (vegetable ghee or hydrogenated oil - as is commonly known), and market the same in Tin containers. They receive tin sheets as packaging material and in their own factory, convert them into container without the aid of power. The mental containers so made are used only for the purpose of packing their product, namely vanaspati and none else. The containers are classified under Tariff Heading 8312.19, but because they are manufactured without the aid of power, they are exempted from payment of excise duty. As the tin sheets are specified as the input and Vanaspati as the final product for availment of MODVAT Credit, the appellants, after filing declaration as required under Rule 57G of the Rules, availed of MODVAT Credit for the duty paid on the tin sheets claiming the same as permissible vide Rule 57A of the Rules, and utilised that against payment of excise duty on the vanaspati, which is their final product. The availment of credit is objected to, on the ground that the tin sheets are not vised as such, in packing the final product, but are utilised in manufacture of containers, which are a distinct final product, which is exempt from payment of duty, as manufactured without the aid of power, and as such, the credit was not available to the appellants for the duty paid on tin sheets, as the same was not permissible under Rule 57C of the Rules. A demand for Rs. 6,44,906/- was raised and after issue of Show Cause Notice, adjudication proceedings were conducted. The appellants contested the same on merits as also on the issue of the demand being barred by the limitation. The Collector of Central Excise, Baroda, however, confirmed the said demand, vide Rule 57-I of the Rules read with Section 11A(1) of the Act, and also imposed personal penalty of Rs. 50,000/- vide Order-in-Original No. 92/MP/91 dated 28-10-1991.
3. In the appeal filed vide Section 35B of the CESA, 1944, submission was made before the WRB of the Tribunal that though the entire demand was hit as time barred, the appellants would desire to get the issue adjudicated upon on merits. Arguing on merits, Mr. Willingdon Christian, the Ld Advocate for the appellants appears to have submitted that tin sheets are identifiable as packaging material, and sheets as such obviously cannot be used for packing and the same has to be converted in the form of containers, and though, thereby an item classifiable under T.I. 8312.19 would come into existence, the identity remains to be that of a 'packaging material' approved for MODVAT Credit under Rule 57A of the Rules, as the said Rule uses the word 'packaging material' and not 'ready to use packages/packaging material', and the criteria would be whether the material brought is known in the trade parlance as the packaging material. In his submission, though a tin container may not have come at an intermediate stage in manufacture of vanaspati, the word 'intermediate product' has to be construed in a broader sense, and that when the value of the packing material stands included in the assessable value of vanaspati, MODVAT Credit should not be denied. As is pleaded, the vanaspati being an edible product, the same is required to be marketed in containers alone. In his submission, like the plywood in tea chest, which is recognised as a packaging material but which by specific mention is excluded from availment of MODVAT Credit, the tin sheets are also recognisable as packaging material but do not fall within the excluded category. He has then relied upon the decisions of the East Regional Bench and West Regional Bench as indicated above.
4. It appears to have been argued on behalf of the Department that though tin sheets are recognisable as packaging material, when a distinct excisable item is brought in a different line of manufacture, the credit could be availed of only in relation to such excisable final product, and if that final product is exempt from payment of duty, by virtue of Rule 57C of the Rules, availment of credit is not permissible, and that provisions of Rule 57D would not stand attracted. It is also contended that the tin container is not coming into existence, in the stream of manufacture of vanaspati. Plea is also raised that the East Regional Bench has in Re: Rasoi Ltd. (supra) not considered the issue from the angle, where the packaging material is converted into a distinct excisable product, and that none of the Rules relating to the MODVAT benefit should be read in isolation and exclusion of other provisions. Reference is made to the South Regional Bench decisions in Ponds (India) Ltd. v. Collector (supra) and Collector v. Indo Swing Ltd. (also supra).
5. The West Regional Bench, has formulated three issues for the purpose of determination of the appeal:
1. Whether tin sheets are packaging material as per Rule 57A and if so, whether MODVAT benefit is eligible, only if they are used as such and not after conversion into tin container and whether Rule 57A bars such conversion?
2. Whether tin containers could be construed as intermediate product for purpose of Rule 57D(2) and hence, notwithstanding their exemption whether MODVAT Credit of duty paid on tin sheets is available to the final product namely vegetable ghee or whether tin container is a final product itself, being exempted and hence hit by the provisions of Rule 57C ?
3. If tin container is held as a final product, exempted, what is the significance of allowing MODVAT Credit to all packaging material whose cost is included in the assessable value of the packaged final product, under explanation to Rule 57A?
6. Formulating their own opinion on the issues, the said Bench have observed that Rule 57A of the Rules, recognises packaging material as an input, eligible for MODVAT Credit and have examined the dictionary meaning of the word "packaging" which is shown as "anything used to package the goods" and the word "material" which means "that, out of which anything is or may be made" and have concluded that what is meant to be taken as packaging material, is an item from which packages could be prepared, with an observation that it could not be the intention of the said provision to read the said as meaning "ready to use packaging material". As concluded by the said Bench, the only requirement is that such input should pass the test laid down in Rule 57A, and should not fall within the items specifically excluded. Referring to the meaning of the word "manufacture" as given in Section 2(f) of the CESA, 1944, it is opined that when the manufactured final product is required to be marketed in a container, packing becomes the integral part of the process of manufacture and processing on the packaging material has to be taken as a process incidental or ancillary to completion of the manufactured product. As opined by the said Bench, under the Excise Law, the term "manufacture" has a specific inclusive meaning to cover not only the process necessary for making of a product but also other processes incidental or ancillary to the completion of the product and as such, conversion of tin plates into tin containers in relation to the final product vanaspati, has to be construed only as a part of manufacture of the final product. Referring to the orders earlier passed by the same Bench as also by the East Regional Bench, the said Bench was inclined to allow the appeal against the orders of the authorities below which rejected the claim of the appellants to avail the MODVAT Credit, in relation to tin plates, holding that neither the provisions of Rule 57C, nor the provisions to Rule 57A, excluding some categories of inputs from availment of credit, could affect the claim of the appellants, but because of contrary view expressed by the South Regional Bench in two of their decisions referred to above, the matter is placed before the Larger Bench.
7. It may be observed that subsequent to the order of the West Regional Bench, to refer the issue to the Larger Bench, the decision of the South Regional Bench in Ponds (India) Ltd. v. Collector (supra) has stood reversed by the Madras High Court in Ponds India Ltd. v. Collector of Central Excise, 1993 (63) E.L.T. 3 (Mad.), when the High Court considered the Reference Application, moved vide Section 35G (1) of the CESA, 1944, against the aforementioned order of the South Regional Bench. The Madras High Court has accepted and approved the view held by the East Regional Bench in Rasoi Ltd. v. Collector (supra) and by the West Regional Bench in FDC Ltd. v. Collector and Park Products (P) Ltd. v. Collector (both supra). The view expressed by the South Regional Bench, in Collector v. Indo Swing Ltd. (supra) being the one principally based on the view expressed in Re: Ponds (India) Ltd., also virtually remains to be not a correct view, and can now not be considered as a conflicting with the view expressed by the West Regional Bench. The position that therefore, emerges out is that there are concurrent views expressed by the East Regional Bench and West Regional Bench, and the same have been endorsed as correct view by the Madras High Court, and the anomalous situation created because of conflicting views, has ceased to exist.
8. When, however, the issue is brought before the Larger Bench, it was felt desirable that the issue be independently examined and hence both the sides were heard.
9. Mr. Willingdon Christian, the Ld. Advocate for the appellants, has practically reiterated the submissions already made earlier, and has submitted that, besides the fact that the contrary view held by the South Regional Bench has been disapproved by the Madras High Court, now there is a decision from a High Court, which should operate as having a binding effect. The Ld. Advocate also cited some judicial pronouncements to substantiate his plea.
10. Mr. Ravinder Jain, the Ld. JDR, has however, submitted that, when the Larger Bench is constituted to examine the issue, it is necessary that the entire issue is examined without any pre-conceived notion based on any decision given by any of the Regional Benches, and has submitted that the issue here is whether the tin plates can be considered as an input in production of vanaspati, which is the final product. In his submission input is the one which is used in or in relation to "manufacture" of final product, and obviously tin plates have no role to play in that regards. He has submitted that by virtue of specific provisions in Rule 57A, "the packaging material" has been allowed for the purpose of availment of credit for duty paid thereon, and where the inclusion is specific, that has to be read and interpreted strictly and only such of the material which is used directly in packing could be given the benefit, and that no benefit could be given, if, by any process on the packaging material, an item distinctly known as an excisable item, comes into existence, then, the same is a final product by itself and MODVAT Credit in relation to the inputs used in the same, could be availed of only for that particular final product, and if that final product is exempted from payment of duty, the provisions of Rule 57C would come into play. The Ld. JDR has also referred to the Board's (CBEC) Tariff Advice to the effect that the raw materials by themselves are not recognisable as packaging material, and would cover only such material which are ready to use. In his submission, even otherwise, the vanaspati, is assessed to excise duty at a specific rate and there is no question of working out the assessable value vide Section 4 of the Central Excises and Salt Act, 1944, and hence the criteria of clause (iii) of Explanation to Rule 57A need not be overlooked.
11. Considering the submissions made, and going through the records, the main issue here is of availment of benefit under the MODVAT scheme, on the packaging material, in general, and tin plates used after conversion into tin containers, in particular. The Modified Value Added Tax system known as MODVAT, has been introduced with effect from 1-3-1986, with an obvious motive of evading cascading effect. The history thereof indicates that what was intended to be introduced was the VAT (Value Added Tax) system, but because of the constitutional impediments, and diversified tax collection system, and investiture of powers to collect taxes also in the respective State Governments, retaining some powers with the Union Government, introduction of VAT was considered not feasible, and hence, the scheme in the present form came to be introduced. All the same, it cannot be ignored that the scheme in the present form has its nexus in the VAT system of taxation, and the approach ought to be to see that cascading effect be avoided at its optimum level; and interpretation of various provisions has to be done, keeping this cardinal principle in view.
12. Rule 57A of the Central Excise Rules, 1944, introduced in the said Rules, under Section AA in Chapter V of the Rules, provides that any duty paid on the inputs used in or in relation to the final product, can be taken credit of, by the manufacturer of such final product, and be utilised towards payment of duty in the final product, subject to the condition that the item so used is specified as input for availment of credit and the final product is specified as eligible for that purpose. The said Rule also enlarges the definition of the word "input", by providing, in the Explanation, that amongst others, paints and packaging materials be deemed to be the inputs for the purpose of Rule 57A. The said Rule has also an exclusion clause, which, besides machines, machinery, plants etc., also excludes certain packaging material, by including clauses (ii) and (iii) in the exclusion provisions, which read thus:
"(ii) packaging material in respect of which any exemption to the extent of the duty of excise payable on the value of the packaging materials is being availed of for packaging of any final product.
(iii) packaging materials, the cost of which is not included or had not been included during the preceding financial year in the assessable value of the final product under Section 4 of the Act."
It may also be observed, that, even if packaging material is taken as an input, the credit of duty paid thereon is not available if the final product is exempt from duty (Rule 57C) or if the input is removed as such, for home consumption, in which case, the same has to be removed on payment of duty, chargeable as if the input is manufactured in the factory, and such amount should not be less than the credit availed of thereon [Rules 57F(1) proviso]. At the same time, provision also exists that credit should not be denied or varied, on the ground, amongst others, if during the course of manufacture, some intermediate product which is exempt from excise duty comes into existence, (Rule 57D).
13. As already indicated hereinabove, the undisputed factual position is that duty paid tin plates duly specified as input vide the Notification issued under Rule 57A, have been brought, by the manufacturers of vanaspati, and have been converted into form of containers for the purpose of packing vanaspati, which also is specified as a final product under the same Rule. The appellants have filed declaration to that effect as required vide Rule 57G. There is also no dispute over the fact that tin containers are made out of tin plates without the aid of power, and containers so manufactured, if taken as final product, are exempt from payment of excise duty. It therefore requires to be considered whether, under such circumstances, credit for the duty paid on tin plates can be availed of, and can be utilised in payment of duty on the final product, namely vanaspati.
14. It may be noted that vanaspati is an edible item and as per the relevant statute, the same has to be marketed in sealed containers. It is also not in dispute that the rate of duty chargeable on vanaspati is the specified rate of duty and working out of an assessable value vide Section 4 of the Act, does not arise.
14A. An objection is raised by the Ld. JDR, that because, there is no evidence that the value of the tin plates and/or container is included in the assessable value, vide exclusion clause (iii) of the Explanation to Rule 57A(i) of the Rules, notwithstanding any other ground, no credit be allowed. The objection raised has to be rejected firstly on the ground that such a ground is never raised in the Show Cause Notice or even by the adjudicating authority for denial of credit, nor does it appear to have been raised before the West Regional Bench, before which the matter was elaborately argued. The objection, if entertained, would bring out entirely a new ground requiring adducing of evidence, also on factual aspect, and hence, the same cannot be raised at this stage. Secondly, here, vanaspati is subjected to specific rate of duty as levied vide Section 3 of CESA, 1944, and the duty structure is not based on the value. Section 4 of the Act, is attracted only when the duty of excise is chargeable with reference to the value and clause (iii) in Explanation to Rule 57A, would stand attracted only when the assessable value has to be worked out vide Section 4 of the Act. The said clause, however, cannot be read to mean that the credit of duty on packaging material as an input cannot be availed of, when the duty chargeable on the final product is at "specific rate" vide Section 3 of the Act, as that would be even contrary to the provisions contained in the rule itself.
15. Turning to the main issue, Rule 57A provides for availment of credit of duty on inputs used "in or in relation" to manufacture of final product. By specific inclusion clause, "packaging material" is treated as an input, packaging material, obviously, cannot be used in the manufacturing process of the final product. It can also not be used "in relation" to the manufacture of the final product, as its use is only after the final product come into existence. However, as could be seen from the definition of the word "manufacture" as given in Section 2(f) of the Act, it includes "any process incidental or ancillary to the completion of a manufactured product". The Supreme Court, have, in Collector v. Eastend Paper Industries -1989 (43) E.L.T. 201 (SC) while dealing with wrapping paper as a packaging material for an excisable product, held :
"Anything required to make the goods marketable, must form part of manufacture and any raw material or any material used for the same, would be component part of the end-product."
The said Court have, for drawing the conclusion as aforesaid, relied upon their judgment in J.K. Cotton Spinning and Weaving Mills Co. Ltd. v. Sales Tax Officer 1965 (16) S.T.C 563 (SC) where it is held that manufacture of goods should normally encompass the entire process carried out and any particular process but for which manufacture or processing of goods would be commercially inexpedient, would fall within the expression "manufacture of goods". Thus, therefore, the process of manufacture of a product, as contemplated under the Central Excises and Salt Act, 1944 in general, and for the provisions of Rule 57A in particular, would also include the process of packing the articles manufactured, in the packages.
16. The issue here, however, is whether packaging material, for the purpose of availment of MODVAT Credit, could only be the one which is in "ready to use" condition or whether any further processing thereon is also included, and further, what could be the effect, if during such further processing, product distinctly known as an excisable product comes into existence, and which by itself may, by virtue of some notification/provision is exempt from duty.
17. The words used in the Rule, are "packaging material" and use of the words like, packets, boxes, containers, drums and alike, are avoided. The use of the words "packaging material" and not "packing material" also assumes importance. In the books "words and phrases - Legally defined" by Jotin B Saunders (Supplement-1988), the word "package" is mentioned to mean "a container containing prescribed goods". Thus, by the use of the words "packaging material" what is intended to be included as an input for the purpose of Rule 57A of the Rules, is the raw material from which a package for packing of the manufactured final product is to be made. This interpretation gets fortified by Exclusion Clause (v) in Rule 57A itself, where, what is excluded is "plywood for tea chest" and not "plywood tea chest". Tea chest is a package in which the tea is to be packed, and plywood is the material from which tea chest is to be manufactured. It is thus clear that the intention of the framers is explicit that they have not intended to restrict the benefit only to "ready to use" material, but to the raw material from which packages or containers have to be manufactured.
18. When the "packaging material" is specified as an input and when only the "packages" could be used in packing the final product, it could, without any fear of contradiction be deducted that the framers of the scheme did envisage some type of further process and/or conversion of the raw material into a container. However, with the word "manufacture" having a special and specific meaning, in the Central Excises and Salt Act, 1944, as found in Section 2(f) of the Act, and with the interpretation given thereto by the Supreme Court in Re: Eastend Paper Industries (supra), any process undertaken on the packaging material has to be taken as the one "incidental or ancillary to completion of the manufactured product" and is deemed to be an activity done "in relation to" the manufacture of final product, even though, conversion of the 'packaging material' in package or container, is by a process separately and independently undertaken. The final product for that purpose is the one which is commercially expedient or in other words, marketable or marketed.
19. Vanaspati, in the instant case, is the commodity which is statutorily required to be marketed in packed condition, be it a tin container or a polythene bag.
20. The issue that then remains to be examined is, what would be the effect, if the package article that comes into existence by processing the packaging material, is, by virtue of some notification/provision, exempt from duty, if the same by itself, is taken as a final product. Rule 57C of the Rules, provide that no MODVAT Credit is permissible, if the final product is exempt from duty, and if this criteria is made applicable to the case like the one here, presumably the entire benefit intended to be given would be rendered nugatory. Here also, with the specific meaning given to the word "manufacture" in Section 2(f) of the Act, and with the law as given by the Supreme Court in Re: Eastend Paper Industries Ltd. (supra), the process of manufacture is complete only when the product is put in the marketable condition or commercially expedient, and any process of manufacture, be it in the direct line of manufacture, or ancillary one, has to be taken as the process of manufacture of the main product, and any distinct excisable item that may come into existence, has to be taken as an intermediate product, and even if that excisable product is exempt from payment of duty, vide Rule 57D, the input used therefor, remains eligible to get MODVAT Credit.
21. Exclusion clauses (ii) and (iii) in Rule 57A, have been referred to by the Ld. JDR. So far as clause (iii) is concerned, the same has already been dealt with, while negativing the submission made by the JDR, in relation of duty chargeable on Vanaspati' being at the specific rate, and absence of any evidence as to whether the cost is included in the assessable value. However, to repeat, there is no contention raised to that effect in the Show Cause Notice, that credit is not available on that count, and even otherwise, that could not be the ground to refuse availment of credit. As regards clause (ii), the very wordings indicate that the same is applicable where the "packaging material" is exempt from duty, and the same does not cover the packages made therefrom.
22. Reference has been made by the Ld. JDR to the clarification issued by the Central Board of Excise and Customs to the effect (as reproduced in 1993 (32) E.C.R. Part II page 25C) that the MODVAT Credit would be admissible for duty paid on ready to use packaging material and not on the raw material. The clarification given by the Board is only in the nature of interpretation of the provisions of the Rule, and as is held by the Supreme Court, in Rajagopala Naidu v. State Transport Appellate Tribunal, AIR 1964 Supreme Court 1572, that any direction is issued which forges fetter on the exercise of powers by the quasijudicial tribunal, then the same has to be ignored, and the same court have further held in Orient Paper Mills Ltd. v. Union of India -1978 (2) E.L.T. J 345 (SC) that any direction issued by CBEC cannot bind the court or quasi-judicial authority. The rule position as already discussed herein above, goes contrary to the clarification given by the Board, which has, therefore, to be deemed to have no binding effect on the quasi-judicial authority.
23. The South Regional Bench, in Ponds (India) Ltd. v. Collector -1988 (38) E.L.T. 351 (Tribunal) and in Collector v. Indo Swing Ltd.-l992 (57) E.L.T. 606 (Tribunal), took the view contrary to the one expressed hereinabove. However, the Madras High Court, on reference made against the decision of South Regional Bench in Re: Ponds (India) Ltd. (supra), have, vide their judgment, in Ponds (India) Ltd. v. Collector - 1993 (63) E.L.T. 3 (Mad.), held the view of the South Regional Bench as not correct and as such, further deliberation thereon is not necessary. Even independently examining the issue as per the conclusion drawn hereinabove, it has also to be observed that the view of the said Regional Bench in Collector v. Indo Swing Ltd. also cannot be accepted as correct law.
24. The East Regional Bench has, in Rasoi Ltd. v. Collector (supra) as also the West Regional Bench has, in FDC Ltd. v. Collector (also supra) and in Parle Products (P) Ltd. v. Collector (also supra) as also in the instant matter, while referring the matter to the Larger Bench, come to a conclusion that when the packaging material is recognised as an input, and the same is not exempt from duty, the same gets eligible to availment of MODVAT Credit, notwithstanding the fact whether the container that is made out of such packaging material is recognised as an excisable product, and may even be exempt from duty as such excisable product, provided of course, the same is done in course of manufacture of final product. The West Regional Bench has also expressed the view that the facility under Rule 57F(2) of the Rules, would also be available. Considering what has been discussed above, and going through the reasonings adopted, the views expressed by both these Benches appear to be correct ones and are therefore endorsed as reflecting the correct position.
25. Mr. Willingdon Christian, the Ld Advocate for the appellants has, during the course of submissions, pleaded that with the judgment of Madras High Court in Re: Ponds (India) Ltd. (supra) the entire issue is set at rest, and the said decision having a binding effect ought to be followed. The point raised however has lost its force in view of the fact that an independent examination of the entire issue, the conclusion arrived at is in conformity with the view expressed by the said High Court, and the views expressed by the High Court are more in the nature of endorsing the views of the East Regional Bench and West Regional Bench. If however, the issue of precedents, was required to be examined, it would have required a lengthy discussion on various aspects of the point. Here however, such a discussion could only remain of an academic interest, and hence such an exercise is not undertaken. It would suffice here to mention, that though this Tribunal has taken a view, that the Tribunal working on All India basis has the freedom to choose judgment of any of the High Courts as a precedent [1989 (41) E.L.T. 266 (Tri.) and 1985 (21) E.L.T. 901 (Tri.) ], that might stand attracted when various High Courts have taken different views. The veracity of that view is also a matter of scrutiny in view of the Supreme Court judgment in East India Commercial Co. Ltd. v. Collector -1983 (13) E.L.T. 1342. When the issue is of a judgment from only one High Court, with no contrary view expressed by any other High Court, the Bombay High Court has in Commissioner of Income Tax v. Smt. Godavaridevi Saroj - 1978 (2) E.L.T. J 624 (Bom), held that High Court judgment of any other state has the binding effect on all authorities like Tribunal if no contrary view is taken by any other High Court. The Gujarat High Court has, in JD Patel v. Union of India -1978 (2) E.L.T. 540 (Guj), even gone to the extent of holding that when the issue of interpretation of statute is involved, the view of one High Court should be followed even by the other High Courts to ensure uniformity.
26. To conclude, the tin sheets, which are recognised as packaging material, are eligible for availment of MODVAT Credit for the duty paid thereon, even when they are converted into tin containers, without the aid of power, so far as those tin containers go in the packing of vanaspati, which is declared to be the final product and is also recognised as a final product for the purpose of availment of MODVAT Credit. It is also held that in the factual position as indicated, the tin containers, which are recognised as excisable product and are exempt from payment of duty because of their manufacture without the aid of power, would fall within the ambit of Rule 57D of the Rules, and the claim for availment of credit would not stand hit by the provisions of Rule 57C.
27. When the issue is being decided on merits in favour of the appellants, the issue of demand being barred by the limitation prescribed for raising the demand, need not be examined.
28. In the result, the appeal is allowed. The demand raised and penalty imposed are set aside. Consequential relief, if any, to follow.