JAGATJIT INDUSTRIES LTD Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE facts of this case are briefly stated below.

(2.) THE appellants were manufacturing, inter -alia, Indian Made Foreign Liquor (IMFL), Denatured Spirit, Country Liquor etc. during the relevant period (August 1990 to June 1995). These products were not liable to Central Excise duty. The chief process involved in the manufacture of these liquors was fermentation of molasses. It was carried out thus - -molasses was initially mixed with water to achieve the required dilution. It was then mixed with 'compressed yeast' purchased from the market, whereupon fermentation would start (fermentation is the chemical process of breaking down of cane sugar molecules into ethyl alcohol and carbondioxide molecules under the catalytic action of enzymes present in yeast). The liquid mixture containing alcohol in dilute solution, which resulted from complete fermentation of the molasses, was called 'wash'. The 'wash' so obtained was then subjected to distillation to get concentrated alcohol, which was subsequently processed suitably to get the spirit of desired flavour and degree. After inspecting the processes carried out in the distillery of the appellants and after taking expert opinion on the nature of use of yeast in distilleries, the department issued show -cause notice to the appellants alleging that they were engaged in the manufacture/propagation of yeast, falling under sub -heading No. 2102.90 of the Schedule to the Central Excise Tariff Act, for captive consumption thereof in the manufacture of potable and non -potable ethyl alcohol and that, during the period from 1.8.90 to 30.6.95, they had so manufactured 3,06,909 Kgs. of such yeast valued at Rs. 1,99,49,085 involving Central Excise duty amounting to Rs. 29,61,035 and had removed the same for captive consumption without complying with any of the requirements under the Central Excise Act and the Central Excise Rules. The department asked the party to show cause why the aforesaid amount of Central Excise duty should not be recovered from them by invoking the extended period of limitation on the ground of suppression of facts under the proviso to Section 11A(1) of the Central Excise Act and also why penal action should not be taken against them under various provisions of Central Excise Rules. The appellants contested the proposed action of the department by way of their detailed reply to the show -cause notice. The dispute was adjudicated by the jurisdictional Commissioner of Central Excise, who confirmed the above demand of duty and imposed personal penalty of Rs. 15 lakhs on the appellants. Hence, the present appeal before the Tribunal.

(3.) WE have carefully considered the impugned order and connected records. We have also gone through the relevant entries of the Central Excise Tariff as well as the relevant HSN Notes. Further, we have heard the learned Consultant Shri R. Swaminathan for the appellants and the learned JDR Shri V.M. Udhoji for the respondent -Revenue.