By TIOL News Service

CHENNAI, OCT 05, 2018: ASSESSEE is a manufacturer of food colour preparations.

They were under the bonafide belief that due to dispute of M/s. Roha Dyechem before various forums, food colour preparation shall fall under Chapter 21 while Revenue was claiming classification under Chapter 32. But M/s. Roha Dyechem was successful before Apex Court holding that goods in question shall be classifiable under Chapter 21 of CETA, 1985.

To resolve this controversy, legislature inserted a Chapter Note 7 in Chapter 21 of CETA, 1985 with effect from 16th March, 1995 mandating that labeling and relabelling and any other process amounts to manufacture.

Appellant sought registration in June 1997 and thereafter started paying duty on the clearance of the said products manufactured by them.

The period involved in this appeal is December 1995 to June 1997 and the show-cause notice was issued on 3.1.2001 .

The demand was confirmed by the adjudicating authority.

CESTAT allowed the appeals of the assessee by observing thus -

"…is an established fact on record that there is nothing malafide on the part of the appellant either to suppress the fact before the authority or to make any statement to lead to the Department to hold that appellant has intention to cause evasion of duty. When the bonafide of appellant is patent from records, in view of the confusion persisting in the industry it would not be proper to hold the adjudication made is within the limitation period. …In absence of malafide expressly stated in the show-cause notice, it cannot be presumed that appellant had acted malafide… there was no malafide in the show-cause notice and confusion of classification persisted in the industry having led the appellant to be in confusion, the adjudication can be said to be time-barred."

We reported this order dated 18.01.2015 -   2015-TIOL-161-CESTAT-MAD.

Revenue is aggrieved and has filed appeal before the Madras High Court.

After noting the facts involved, the High Court observed -

"24. With regard to the question of limitation is concerned, it is clear from the plain reading of Section 11A, the Central Excise Officer shall, within 2 year from the relevant date, serve notice on the person chargeable with the duty which has not been so levied or paid or which has been so short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice. In fact, the said two years period of limitation was substituted with effect from 14.05.2016 and prior to that, it was only one year. Even on this account, the show case notice dated 03.01.2001 sent, is belated from the date of registration with the department, during the month of 1997 itself, and therefore, the action of the department is time barred. The authorities have neither pleaded malafide nor suppression in the show cause notice, and moreover acted belatedly, against the 1st respondent."

Finding no infirmity in the order passed by the Tribunal, the Civil Miscellaneous Appeal filed by the CCE was dismissed.

(See 2018-TIOL-2067-HC-MAD-CX)