JUDGMENT :

Sanjeev Kumar, J.

1. This appeal by the Revenue filed under Section 35 G of the Central Excise Act, 1944 [‘the Act’] is directed against a final order No.A/62272/2018-EX (DB) dated 19.03.2018 passed by the Customs, Excise & Service Tax Appellate Tribunal, Chandigarh [‘CESTAT’] whereby the appeal preferred by the respondent has been accepted and the impugned order dated 17.02.2011 passed by the Commissioner, Central Excise, J&K, Jammu has been set aside.

2. Briefly stated the facts leading to filing of this appeal are that the respondent is engaged in manufacturing of various products like Pesticides, Insecticides, Herbicides and Plant Growth Regulators and has established its unit at SIDCO Industries Complex, Samba. The respondent is registered for the manufacture of aforesaid products under Tariff Heading Nos. 38089330, 38089990, 38089090 & 38089340 respectively of the 1st Schedule to the Central Excise Tariff Act, 1985 [‘the Act of 1985’]. The respondent being eligible had been availing exemption/refund of excise duty under Notification No. 56/2002-CE dated 14.11.2002 as amended [‘the exemption notification’]. The respondent filed monthly claims of exemption for the period from 2005-06 to 2008-09 which was duly sanctioned by the appellant in favour of the respondent by passing separate orders for each month. The orders passed by the appellant for exemption/refund under the exemption notification were not assailed by the appellant-revenue and instead, the sanctioned amount was released in favour of the respondent. It seems that, during some investigation, the appellant noticed that, during the relevant period, the respondent had cleared the products Paushak/Joy and Kri-kelp on payment of duty by classifying the same under sub-heading 3808 9340 and claimed the benefit of exemption notification. It was found by the appellant that the Chemist and the Director of the respondent in their statements had clearly admitted that Paushak/Joy, used to increase the size and yield of fruits and vegetables, was manufactured by mixing various solvents, dye, caustic soda and stabilizers with Gibberillic acid. The appellant, therefore, found that the only active ingredient in the product aforementioned manufactured by the respondent was Gibberillic acid and the rest being only solvents, dyes and stabilizers, as such, the product was required to be classified under sub-heading 3808 93330 as Gibberillic acid and exempted from payment of duty as mentioned at S.No.285 of Notification No. 06/2002-CE prior to 01.03.2006 and S.No.53 of Notification No. 04/2006-CE thereafter. Kri-kelp was also found manufactured from the extract of sea weeds and was a biological plant growth enhancer as per the product label and was, thus, classifiable under sub-heading 3101 0099.

The appellant was of the opinion that the respondent had willfully suppressed/misstated the facts to the appellant-revenue with an intent to pay duty on goods which was otherwise exempted and consequently, take erroneous refund under the exemption notification. The appellant-revenue, thus, concluded that, in the instant case, the extended period of limitation as provided under the proviso to Section 11 A(1) of the Act was invocable for recovery of excess amount of refund claimed and granted to the respondent. Resultantly, a show cause notice was issued to the respondent for recovery of erroneous refund sanctioned in its favour on the ground that the goods in question were not dutiable and, therefore, the respondent was neither liable to pay the duty, nor was entitled to refund of the same. The said show cause notice culminated into order in original passed by the appellant and demand was confirmed along with interest and penalty.

3. Feeling aggrieved against the aforesaid order in original passed by the Commissioner, Central Excise, Jammu, an appeal was filed by the respondent before CESTAT. The appeal of the respondent was allowed vide order impugned primarily on the following two gro