In a classification dispute, the extended period of limitation cannot be invoked and the process of distillation does not amount to manufacture.

JUDGMENT

1. This intra-Court appeal filed by writ petitioner is directed against the order dated 9th March, 2017 in WP No. 5757 (W) of 2017. The said writ petition was filed challenging an order-in-original dated 29.11.2016 passed by the Commissioner, Central Excise and Service Tax, Siliguri Commissionerate, the second respondent in this appeal. The facts leading to the filing of the writ petition could be summarized as follows.

2. The second respondent issued show cause-cum-demand notice dated 11th March, 2016 alleging that the appellant has contravened the provisions of Sections 2(f) and 3 of the Central Excise Act, 1944 (the Act) read with Rules 4, 6, 8, 10 and 12 of the Central Excise Rules, 2002 (the Rules) inasmuch as they have clandestinely manufactured and cleared 'Special Boiling Point Spirit' classifiable under Central Excise Tariff Sub-heading 2710.1213 commercially known as 'EPC solvent' during the period from 2011-12 to 2015-16 (up to October, 2015) without payment of Central Excise Duty as leviable thereon amounting to Rs. 24,87,18,605.00/- including cess. Further, it was stated that the aforementioned goods have been cleared without payment of Central Excise Duty hence liable for confiscation under the provisions of Rule 25 of the Rules. It was further stated that the appellants have suppressed the fact of clandestine manufacture and clearance by way of suppression and willful mis-statement in their ER Returns submitted by them to the Central Excise Department every month and by way of manipulation in the sale invoices, the amount of Central Excise Duty so evaded is recoverable in terms of Section 11A(4) of the Act by invoking the extended period of 5 years. Therefore, the appellants are liable to pay interest in terms of Section 11AA read with Section 11AC of the Act. It was alleged in the notice that intelligence was received with the effect that the appellants were procuring 'condensate' and were manufacturing 'industrial solvent' from such product but they failed to pay Excise Duty against clearances of such manufactured 'Industrial Solvent'. Acting on such intelligence, the officers of Head Quarter Anti-Evasion Unit, Siliguri Central Excise Commissionerate visited the factory premises on 12th June, 2015. After briefly stating about the manufacturing process as culled out during the inspection, during which the officers appear to have examined the documents available in the factory premises and stated that the appellants were submitting their returns showing no production and clearance of finished goods therein. After mentioning about the various registrations, permissions and licenses obtained by the appellants it was stated that the appellants themselves declared their premises as a factory and the activities therein was a manufacturing process but they failed to pay Central Excise Duty by suppressing the fact of production in their monthly returns and thereby, violated Rule 4 of the Rules and also violated Rule 6 as they had mis-classified their finished goods and had not assessed liability of duty on the finished goods correctly, violated Rule 8 as they had not paid duty, violated Rule 10 as they had not shown it in their daily stock account the amount payable and particulars regarding the amount of duty actually paid in respect of the goods cleared from the factory premises and violated Rule 12 inasmuch as they had not disclosed removal of those goods in their monthly returns. Statement of the authorized signatory of the appellants and their managers and employees were recorded. There was a reference to a chemical test report dated 13th January, 2016 stating that though in the reports no classification of the product has been made but there were certain observations made in the report which ultimately led to a prima facie conclusion that the appellant had violated the various provisions of the Act of the Rules and were called upon to show cause (a) as to why the goods which were manufactured and cleared c