G. Sankaran, Senior Vice-President

1. The facts of the case, briefly stated, are that M/s. Tata Oil Mills Co. Ltd., Bombay (hereinafter referred to as the 'appellants') is a company engaged in the manufacture of soaps, detergents, cosmetics, oils etc. By a show cause notice dated 4-8-1982, the appellants were charged with contravention of several provisions of Central Excise Law inasmuch as they had manufactured and removed a quantity of 30,45,023 kgs. of Sulphur Trioxide ("SO3") during the period from April 1977 to March 1982 without payment of duty and observance of central excises formalities. It was further alleged that the appellants had suppressed material facts with intent to evade payment of duty totalling Rs. 4,54,433.44. They were called upon to show cause why the said amount of duty should not be recovered from them and why penalty should not be imposed on them. By their letter dated 17-9-82, the appellants denied the allegations. In the main, their submission was that what was formed at an intermediate stage in the continuous and integrated manufacture of organic surface active agents was not SO3 as is known in commercial or technical parlance but a mixture of air and SO3 in which the latter was present only to the extent of about 7%. Such an air-SO3 mixture was not known, or capable of being marketed, as SO3. Another submission was that in view of the judicial pronouncements in force at the material time, duty was not leviable on SO3 produced and captively consumed within the factory, assuming that what was produced was SO3 as known to the market. They sought to support their contentions by production of certain affidavits and technical authorities. In due course, the Assistant Collector of Central Excise, Bombay passed an order on 13-12-85 holding that the SO3 manufactured by the appellants was 'goods' within the meaning of Section 2(f) of the Central Excises and Salt Act, 1944 and that it attracted Central Excise duty under Item No. 14G of the First Schedule to the said Act (the Schedule is hereinafter referred to as the 'CET'). The appellants were directed to pay the aforesaid amount of duty but the Assistant Collector refrained from imposing any penalty on them.

9 other similar show cause notices were also issued to the appellants on similar grounds, the total amount of duty involved being Rs. 3,46,061.07 for the period April, 1982 to September, 1985. In due course, the Assistant Collector, by his order dated 13-1-86, confirmed these demands but refrained from imposing any penalty on the appellants.

The above matters were pursued in appeal by the appellants and, by order dated 14-9-87, the Collector (Appeals) dismissed the appeals. It is this order that is challenged in the present two appeals.

2. We have heard Shri V.J. Taraporevala, Advocate, with Shri H.N. Vakil, Advocate, for the appellants and Shri Sundar Rajan, Departmental Representative, for the respondent-Collector and have perused the record.

3. Shri V J. Taraporevala, learned Counsel for the appellants urged two out of the three following issues before us :-

(a) Whether the impure SO3 contained in the gas mixture which is obtained during the course of the continuous and integrated process of manufacture of organic surface active agents, is technically SO3?

(b) Even assuming that the aforesaid question is answered in the affirmative, whether the impure SO3 contained in the gas mixture which is obtained during the course of the continuous and integrated process of manufacture of organic surface active agents is commercially known as Sulphur Trioxide?

(c) Whether the extended period of limitation under Section 11A of the Act is applicable in the facts and circumstances of the present case?

4. Shri Taraporevala submitted that the first point was not being urged in view of the fact that technical literature has not specifically stated that such impure SO3 cannot be considered technically as SO3.

5. As regards the question at (b) above, the Counsel submitted t