S.D. Jha Member (J)

1. Appellants have filed this appeal against order dated 24-4-84 passed by the Collector of Central Excise, Madras. By the said order the Collector demanded differential duty from the appellants in respect of Bastalloys B C Rs. 3,25,464.52 for the period six months prior to 3-8-1979 to 31-10-1982 and for contravention of various provisions of the Central Excises and Salt Act, 1944, and rules made thereunder imposed penalty of Rs. 250.

2. The proceedings against the appellants are outcome of search dated 22-10-82 by Excise preventive unit, Madras, in the administrative offices of the appellants. The appellants in the factory had been manufacturing stainless steel alloy castings from 1-10-74 and were licensed under Tariff Hem 22AA. During search the preventive officers of Excise on examining the appellants' invoices found that between September 1977 and October 1982 the appellants had manufactured and cleared Hastelloys B C 14586.045 Kgs valued at Rs, 44,98,144.04. On these goods the appellants had paid duty at the rates applicable to Steel castings under Tariff Item 26-AA(v) when they ought to have paid duty on the aforesaid quantity of Hastelloys B C under Tariff Item 68. After usual investigation by notice dated 7-7-83 the Collector of Central Excise called upon the appellants to show cause why differential duty of Rs. 3,43,929.10 on goods aforementioned by not demanded from them applying the extended time limit under Rule 10 of the Central Excise Rules, 1944 in respect of clearances made up to 17-11-80 and under Section 11A of the Central Excises and Salt Act, 1944 for clearances after this date and, further, why penalty be not imposed under Rule 173-Q for contravention of various provisions of the Act and the rules. The appellants filed reply dated October 18, 1983 which is described as a preliminary reply (pp. 10-17 of the Paper Book). Apart from this reply there is no other reply on record. In this reply the appellants submitted that they had been paying central excise duty for all castings on the basis of classification filed by them and approved by the Central excise authorities and earlier no discrepancy was pointed out or the classification questioned or disputed at any stage. Among the many alloy castings manufactured by the appellants two items were Hastelloys B C with castings. The classification with respect to these two was filed in accordance with advice and guidance of Central Excise authorities. Central Excise authorities had been inspecting the appellants factory and the process of manufacture since the date of licensing was well known to them. All their records of production, stock and clearances and documents of trading clearly displayed the fact of manufacture of Hastelloys B C and these records were scrutinised, examined and checked on several occasions by Central Excise Audit Inspecting officers and the classification of the goods under Tariff Item 26AA was not questioned earlier. They protested against the seizures of their documents which they called unwarranted and unauthorised. They also referred to their letters dated 22-10-1982, 21-12-1982, 10-2-1983 and 21-3-1983 wherein they had furnished the statement of composition of their manufacture which included Hastelloys B C. They challenged the show cause notice as not maintainable. About reference to Trade Notice No. 170/79, dated 3-8-79 of Madras Collectorate referred to in paragraph 3 of the show cause notice the appellants submitted that they had not been informed of this Trade notice nor was the Trade notice brought to their notice. They denied other material allegations in the show cause notice. The appellants further submitted that on the facts and circumstances of the case, as the goods had been cleared after the approval of the classification lists and RT 12 returns, and other records had been inspected from time to time by Excise authorities, the time limit applicable to the demand could be the shorter time l