Per Shri S.L. Peeran :

This appeal arises from Order-in-Original dated 05.06.90 by which a demand of Rs. 53,349/- has been confirmed under Rule 9 (2) read with proviso to Section 11A (1) of the Central Excises and Salt Act, 1944. There is a penalty of Rs. 15,000/- on M/s. Duraiappa Lime Products and further penalty of Rs. 5,000/- on M/s. Thangam Industries under Rule 173 and Rule 209A respectively.

2. There are two appeals filed one by M/s. Duraiappa Lime Products against confirmation of duty and penalty and the other by M/s. Thangam Industries against penalty only.

3. The proceedings against the appellants were commenced by issue of show cause notice dated 11.01.90 for invoking of larger period on the ground that the appellants are engaged in the manufacture of lime powder falling under Heading 2505.00 of Central Excise Tariff Act, 1985. The departmental officers visited the factory and recorded statements and after detailed investigation, show cause notice was issued directing the appellants to show cause as to why duty amount as confirmed should not be recovered for the said period.

4. The appellants before us today are not contesting the merits of the matter as it is covered by large number of judgements against them. More particularly, with the judgement of the Madhya Pradesh High Court rendered in the case of S.N. Sunderson (Minerals) Ltd. Vs. Superintendent (Preventive), Central Excise, Indore reported in 1995 (75) ELT 273. However, it is the contention of the appellants that the appeals are barred by time and penalty is not leviable in view of the fact that there was controversy with regard to the excisability of the product itself and there were contradictory judgements in this regard.

5. Learned Advocate submits that the aspect pertaining to invokation of larger period itself was considered in large number of judgements and in the Madhya Pradesh High Court judgement in the case of S.N. Sunderson (Minerals) Ltd. supra, held that penalty is not imposable where acts of omission and commission on assessee's part were due to bona fide belief borne out of conflicting Court and Tribunal decisions on excisability of the product. He also relied on the judgement in the case of Hindustan Construction Co. Ltd. Vs. CCE reported in 1997 (89) ELT 123 (Tri.) where the 3 Member Bench held that extended time limit is not applicable when classification of the goods was itself in doubt. It has been held that issue as regards classification of stones after crushing was not being free from doubt, benefit of doubt is to be given to the appellants and larger period of limitation is not invokable.

6. The Tribunal again examined the issue pertaining to extension of larger period in identical case as in the case of M/s. Bhawanthadi Minerals Vs. CCE reported in 1997 (23) RLT 260, wherein the Tribunal after noting all the judgements on the issue held that the appellants held bonafide belief with regard to the non-excisability of the item and hence larger period cannot be invoked in the present case.

7. Learned S.D.R. reiterates the department's contention. He submits that there is clear suppression in the matter. The party had not raised the issue pertaining to the bonafide belief held by them and hence the judgements cited are distinguishable.

8. Learned Advocate in counter pointed out to para 4 of the order, wherein, during the personal hearing the Consultant had informed the Commissioner that the parties did not have intention to evade payment of duty.

9. On a careful consideration of the submissions, we notice that the issue both on merits as well as larger period is no longer res integra. The aspect pertaining to the excisability of lime stones has been examined in several judgements and it is now well settled that the crushing of lime stone amounts to manufacture and dutiable and excisable in terms of the Madhya Pradesh Division Bench judgement in the case of S.N. Sunderson (Minerals) Ltd. In the same judgement the Madhya Pradesh High Court ha