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1.The appellants, M/s. Mermaid Marine Products (P) Ltd. admittedly manufacture fish meal and fish oil in their factory. Under Notice dated 11-5-1083 they were called Upon to show cause why action should not be taken against them for carrying on the said activity of manufacture of fish oil without taking out a Central Excise licence therefor and without observing due formalities in connection therewith. They replied contending that fish meal as well as fish oil were exempted and that though they had applied for licence the same had been returned with audit and that they had not, therefore, committed any contravention. They further claimed that the demand was time-barred.

7. But it appears to us that the argument of Shri Chidambaram in this regard is not acceptable in the circumstances of, the present case. The plant run by the appellants is a 'fish meal plant' as is referred to by the appellants themselves in their letter dated 29-11-1978. It may be noted that the appellants themselves do not refer to the same as a 'fish oil plant' or a 'fish oil milP. The words used by them are as follows :

"Our manufacturing process is carried out by an Imported Compact fish meal plant and operation is carried out in an automatic manner."

Further, in their letter dated 13-10-1980 they had stated as follows :

"For this we had imported a complete Fishmeal Plant from Norway in 1976 and for which we have undertaken to the Government to export at least 75% of our production of Fishmeal annually. Fish oil our by-product has so far been for inland consumption only."

8. From the above statements of the appellants themselves it is fully clear that the factory of the appellants was a fish meal plant, the production of the fish-oil by them being only by way of a by-product in the manufacture of fish meal.

9. We may also see that in their letter dated 29-11-1978 they have given the following further details also :

"The envisaged annual production of fish meal is to the tune of 1000 tonnes and fish oil around 150 tonnes. The value of the fish meal varies and however, we hope 1000 tonnes of fish meal will be able to fetch Rs. 28,00,000/-. Please also note that the entire quantum of ths fish meal will be exported. 150 tonnes of fish oil is likely to fetch around Rs. 7,50,000/-".

10. These details make it clear that the factory of the appellants was intended for production of fish meal and that the production of fish oil was as a by-product only, the value as well as the quantity being a small proportion of the value as well as the quantity of the fish meal manufactured by the appellants.