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PETITIONER: PADMINI PRODUCTS

       Vs.

RESPONDENT: COLLECTOR OF CENTRAL EXCISE, BANGALORE

DATE OF JUDGMENT18/08/1989

BENCH: MUKHARJI, SABYASACHI (J) BENCH: MUKHARJI, SABYASACHI (J) RAY, B.C. (J)

CITATION:  1989 AIR 2278            1989 SCR  (3) 873  1989 SCC  (4) 275        JT 1989 (3)   404  1989 SCALE  (2)329

ACT:     Central Excises and Salt Act 1944/Central Excise  Rules, 1944:  Section 11A Rules 8, 9 and 174--Persons  required  to take   out  licence-Recoveries  of  duty  not   levied   not barred--Failure  to  pay  duty or take out  licence  is  not necessarily due to fraud, collusion or wilful misstatement.

HEADNOTE:     The  appellant  was a manufacturer of  agarbatis,  dhoop sticks,  dhoop  coil and dhoop powder failing  under  Tariff Item No. 68 of the Central Excise Tariff. It claimed  exemp- tion  from  duty of excise on the ground  that  these  items being handicrafts were fully exempt from such payment  under notification  No.  55/75. The appellant’s further  case  was that  under  Notification No. 111/78 all  goods  which  were exempt  from  the whole of duty of excise  leviable  thereon unconditionally were exempted from the operation of Rule 174 of  the Central Excise Rules, which required a  manufacturer to take out a licence.     The  Collector rejected the claim of the  appellant  and held that these items were not handicrafts.     It was contended before the Tribunal that dhoop  sticks, coil and power were agarbaties and agarbaties were  accepted as handicrafts by various authorities including the  Central Government;  mere use of power in the manufacture  of  these items  did not bar them from being called handicrafts;  and, in  any event, there was no warrant in invoking longer  time limit for five years for raising the demand.     The Tribunal rejected the contentions of the  appellant. It  was  found  by the Tribunal that the main  part  of  the manufacture  of  agarbaties, etc. was done with the  aid  of power; only a very small part of the required work was  done by hand; and that it was difficult to accept that these were handicrafts  merely because some authorities had  chosen  to treat agarbaties as handicrafts. The Tribunal held that  the Revenue was entitled to levy tax for a period of five  years prior  to the issue of show-cause notice and not six  months pursuant to rule 9(2) of the Central Excise Rules. 874     Before  this  court, it was contended on behalf  of  the appellant that in order to sustain the order of the Tribunal

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beyond  a period of six months and upto a period of 5  years under section 11-A it had to be established that the duty of excise had not been levied or paid by reason of either fraud or collusion or wilful mis-statement or suppression of facts or  contravention of any provision of the Act or Rules  made thereunder, with intent to evade payment, as provided in the proviso to sub-section (1) of section 11-A. In this context, it  was urged that there was scope for believing that  agar- baties  were entitled to exemption and if that was so,  then there was enough scope for believing that there was not need of taking out a licence under rule 174 of the Central Excise Rules,  1944. On the other hand, the Revenue contended  that the  failure to take out the licence and thereafter to  take the  goods out of the factory gate without payment  of  duty was  itself  sufficient  to infer that  the  appellant  came within the mischief of section 11-A of the Act.     While partly allowing the appeal, and remanding the case to the Tribunal to modify the demand, this Court,     HELD: (1) In view of the evidence examined by the Tribu- nal  and in the light of the well settled principle and  the background  of the definition of handicrafts,  the  Tribunal was  right in holding that agarbaties were not  handicrafts. [881D-E]     M.S.  Company Private Limited v. Union of India,  [1985] ECR 110 SC, referred to.     (2)  Failure  to pay duty or take out a licence  is  not necessarily  due to fraud or collusion or wilful  mis-state- ment or suppression of facts or contravention of any  provi- sion  of  the Act. Suppression of facts is  not  failure  to disclose  the  legal consequences of  a  certain  provision. [884B]     Collector of Central Excise, Hyderabad v. M/s.  Chemphar Drugs  and Liniments, Hyderabad, [1989] 2 SCC 127,  referred to.     (3)  Mere failure or negligence on the part of the  pro- ducer  or manufacturer either not to take out a  licence  in case  where  there was scope for doubt  whether  goods  were dutiable or not, would not attract section 11-A of the  Act. [884D]     (4)  In the facts and circumstances of the  case,  there were materials to suggest that there was scope for confusion and the 875 appellants believing that the goods came within the  purview of  the concept of handicrafts and as such were  exempt.  If there  was scope for such a belief or opinion, then  failure either to take out a licence or to pay duty on that  belief, when there was no contrary evidence that the producer or the manufacturer  knew that these were excisable or required  to be  licenced,  would  not attract the  penal  provisions  of section  11-A of the Act. If the facts were otherwise,  then the position would be different. [884E-F]

JUDGMENT:     CIVIL  APPELLATE JURISDICTION: Civil Appeal No. 4080  of 1988.     From the Judgment and Order dated 18.3.88 of the Customs Excise  and Gold (Control) Appellate Tribunal, New Delhi  in Appeal No. ED/SB/1201/84-C.     V.  Lakshmikumaran, N.M. Popli and V.J. Francis for  the Appellant.     A.K. Ganguli, K. Swamy, T.V.S.N. Chari and P.  Parmeswa- ran for the Respondent.

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The Judgment of the Court was delivered by     SABYASACHI MUKHARJI, J- This is an appeal by the revenue under  section 35L of the Central Excises & Salt  Act,  1944 (hereinafter referred to as ’the Act’) against the order No. 195  of 1988-C dated 8th March, 1988 passed by the  Customs, Excise  and Gold (Control) Appellate  Tribunal  (hereinafter referred to as ’the Tribunal’).     The appellants at all relevant times were  manufacturing agarbaties,  dhoop sticks, dhoop coil, dhoop powder  falling under  Tariff  Item No. 68 of the erstwhile  Central  Excise Tariff.  The relevant period involved in the  present  Civil Appeal  is  from the year 1979 to  1983-84.  The  appellants claimed  exemption  under notification No. 55/75  dated  1st March,  1975. By the said notification, the Central  Govern- ment  had exempted goods of the description in the  Schedule annexed to the notification and falling under Tariff Item 68 of  the First Schedule to the Act from the whole of duty  of excise leviable thereon. In the serial No. 8 of the Schedule to the said notification, ’Handicrafts’ were listed. It  is, therefore,  clear that ’handicrafts’ were fully exempt  from payment  of  duty of excise, according  to  the  appellants. Under  the notification No. 111/78 dated 9th May, 1978,  the appellants were exempted from 876 licensing  control. That is the case of the appellants.  The provision requiring a manufacturer to take out a licence  is controlled  by Rule 174 of the Central Excise  Rules,  1944. The  relevant  provision of Rule 174 at  the  relevant  time provided, inter alia, as follows:               "Rule 174. Persons requiring a licence:                        Every manufacturer, trader or  person               hereinafter  mentioned, shall be  required  to               take  out a licence and shall not conduct  his               business  in  regard to such  goods  otherwise               than  by  the authority, and  subject  to  the               terms and conditions of a licence granted by a               duly authorised officer in the proper Form"     It is the case of the appellants that by this  notifica- tion, all goods which were exempt from the whole of duty  of excise  leviable thereon unconditionally were exempted  from the operation of Rule 174. The appellants were manufacturing dhoop sticks, coil and powder which the appellants contended before the Tribunal, were handicrafts under notification No. 55/75  and as such were exempt from licensing control  under notification No. 111/78. It is, therefore, necessary at this stage, in view of the contentions raised in this appeal,  to refer  to  the notifications. By first  notification,  i.e., notification No. 55/75, in exercise of the powers  conferred by sub-rule (1) of rule 8 of the Central Excise Rules, 1944, the Central Government had exempted goods of the description specified in the Schedule annexed thereto and falling  under Item No. 68 of the First Schedule to the Act from the  whole of  the  duty of excise leviable thereon and,  as  mentioned hereinbefore,  Item  No. 8 of the Schedule  annexed  to  the notification  included  among  the  exempted  goods  ’Handi- crafts’.  The  second notification, i.e.,  notification  No. 111/78-CE  dated 9th May, 1978, the Central  Government  ex- empted  from  the operation of rule 174 of the  said  Rules, inter alia, all goods that are exempt from the whole of  the duty of excise leviable thereon. unconditionally. The effect of  this  notification, was that manufacture of  such  goods were  exempt  from  the operation of rule 174  of  the  said Rules.  As  a  result, it was not necessary to  take  out  a licence as enjoined by rule 174. The appellants had indicat- ed  the  process of manufacture of dhoop  sticks,  coil  and

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powder before the Tribunal and the process was as follows:               "1. The various ingredients/raw materials like               perfumes,  essential  oils, natural  oils  and               other raw materials are first mixed in specif-               ic proportions, by manual labour.               877               2.  These raw materials along with jigget  and               saw dust after serving by hand are mixed in  a               barrel with a stirrer with hand and made  into               a paste.               3.  This  paste  is kneaded  in  the  kneading               machine operated by power.               4. This paste is put by hand in the extruder.               5. The extruder extrudes the paste in the form               of needles with the aid of power.               6. As the paste is extruded from the  extruder               it is collected on a wooden tray which is of a               particular  size.  As it is collected  on  the               tray  it is cut on both sides to the  accurate               size by hand.               7.  The thin long incense is then  transferred               by hand from the individual trays of long  big               tray by hand.               8. After transferring it is properly  arranged               by  hand in a consolidated manner on the  long               big tray.               9.  Another tray which has four  slits  called               the cutting tray is placed on top of the  long               tray with the incense.               10.  After  placing the cutting  tray  a  hand               roller cutter is rolled along the slits of the               cutting  trays to cut the incense to  the  re-               quired sizes.               11.  The extra length or width of the  incense               on the tray is then removed by hand.               12.  The cut incense is then transferred to  a               drying tray by hand.               13. The incense is dried by stocking the trays               in the drying yard.               14.  The  dried incense is broken at  the  cut               ends.               15.  The ten incense sticks are inserted  into               the packet.               878               16. The incense packets are first punched with               an eyelet.               17.  Then  twelve  packets are  wrapped  in  a               cellophone wrapper."     The  revenue  had issued trade notices  indicating  that agarbaties were handicrafts and were eligible to the  exemp- tion  contained  in  the notification No.  55/75  dated  1st March,  1975.  Our attention was drawn by  Shri  V.  Lakshmi Kumaran  appearing  for the appellant to  the  trade  notice issued on 10th October, 1977, which read as follows:               "PUNE  TRADE NOTICE NO. 258/1977, (NO.  3/T.I.               68/ 1977) DT. 18.10.77               Agarbaties are exempt under Notfn. 55/75                         Attention of the trade is invited to               this  Collectorate Trade Notice  No.  179/1975               (No.  4/T.I.  68/1975) dated  4.10.75  on  the               above subject.                         2.  The issue has been  reconsidered               and  it has been advised that  Agarbaties  are               handicrafts  and  would  be  eligible  to  the               exemption  contained in the  notification  No.

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             55/ 75-CE dated the 1st March, 1975 (as amend-               ed)."     He also drew our attention to the certificate  furnished by  the Basic Chemicals, Pharmaceuticals & Cosmetics  Export Promotion Council, which stated as follows:               "This is to certify that Dhoop Sticks, Incense               Cubes and Cone, Coils, Joss Sticks, are  agar-               baties in different physical forms. The ingre-               dients  as  well as end  use  for  Agarbaties,               Dhoop  Sticks, Incense cubes and Cone,  coils,               joss sticks are one and the same.               Government of India has therefore  categorised               Dhoop Sticks, Incense cubes and cone,  .coils,               joss  sticks as agarbaties and  thus  eligible               for the same rate of export incentives."     It  was contended before the Tribunal on behalf  of  the appellants  that  dhoop sticks had been  recognised  by  the Indian Handicrafts Board as handicrafts and that these  were nothing else but agarbaties. 879 As indicated hereinbefore, Basic Chemicals,  Pharmaceuticals and  Cosmetics Export Promotion Council had  also  indicated that dhoop sticks, incense cubes and cone, coils joss sticks are  agarbaties  in different physical forms  and  that  the end-use  of these and the ingredients used therein were  one and the same and for that reason these had been made  eligi- ble  for  the benefit of export  incentives  as  agarbaties. Learned  counsel  for the appellants submitted that  in  the report  on  the  Marketing of Handicrafts  under  the  title "Survey  of Indian Handicrafts" sponsored by  the  All-India Handicrafts Board, which was brought out by Indian  Coopera- tive  Union, agarbaties were mentioned, which  according  to counsel,  indicated  that these were  recognized  as  handi- crafts.  A letter was placed before the Tribunal  which  was issued  by the Deputy Director, All India Handicrafts  Board functioning  under the Ministry of Commerce,  Department  of Export  Production which had certified that  the  agarbaties were the products of the Indian Handicrafts Board,  Ministry of Commerce. Certain notifications were also drawn attention to  of  the Tribunal which indicated  that  agarbaties  were handicrafts  eligible for exemption under  notification  No. 55/75. It was, therefore, contended that dhoop sticks,  coil and  powder were agarbaties and agarbaties were accepted  as handicrafts  by  various authorities including  the  Central Government and mere use of power in the manufacture of these did  not bar them from being called as handicrafts.  It  was further contended that in any event, there was no warrant in invoking  longer  time limit of five years for  raising  the demand  and if at all demand should be raised it  should  be for  a  period of six months reckoned from the date  of  six months prior to the issue of the show cause notice. In those circumstances,  it was submitted that the appellants  should not be made liable beyond the period of six months from  the date of issue of the show cause notice. The Tribunal, howev- er,  referred  to the definition of the  term  ’handicrafts’ given  in the Concise Oxford Dictionary; 7th Edition,  which stated as follows:               "Manual skill; manual art or trade or  occupa-               tion; man skilled in a handicraft."     Therefore,  in  order to be  handicrafts,  the  Tribunal proceeded,  on  the basis that it should be  the  result  of manual skill. But the respondent before the Tribunal pleaded that  the raw materials for the dhoop are kneaded  with  the aid  of power and after kneading the same, are extruded  and the  manual  work that was done in the process was  only  in

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feeding  of the raw materials by hand and later in the  cut- ting  of the sticks to the desired length.  The  distinction between handicrafts and 880 those which are machine-made, would be clear from the  defi- nition adopted by UNCTAD. The same reads as follows:               "Some good may. be produced partly by  machine               and  partly by hand: (i.e. a dress made up  by               hand  from  machine made cloth,  perhaps  with               additional  hand embroidery or  other  decora-               tions) . .. in such cases a product should  be               regarded  as hand-made or handicrafts  if  the               essential  character  of the  product  in  its               finished form is derived from the ’hand  made’               aspect of its production."     In  the Import Policy of 1984-85, handicrafts and  agar- baties  and dhoop figured under a Heading apart from  handi- crafts and stated that dhoop and agarbaties had been  listed under traditional item in Appendix 17 at Serial No. V  under Group Heading "Toiletry and Perfumery" while the handicrafts had been given separately in that Policy and this  envisaged the  handicraft to be manufactured by hand. General  Note  I against the entry ’Handicrafts’ in the Policy Book stated as follows:               "Articles which are classifiable elsewhere  in               this policy will be deemed to be ’Handicrafts’               falling  in this group only if such  articles,               besides being made by hand, have some artistic               or  decorative  value;  they may  or  may  not               possess functional utility value in  addition.               Artistic  or decorative value of  the  article               exported need not necessarily come out of  any               art work, engraving or decoration done on  the               article but the very form, shape or design  of               the article could also be artistic and sugges-               tive of the fact that the article is primarily               meant  for  decorative  and  not  for  utility               purposes."     After  analysing the findings and the trade notices  and relying  on  the  decision oil this Court  in  M.S.  Company Private  Limited v. Union of India, [1985] ECR 110  SC,  the Tribunal in the light of the definition of "handicrafts"  in the Encyclopaedia Britannica, came to the conclusion that in the manufacture of a product skill of the worker and the use of hand are two pre-requisites for a product to qualify as a handicraft. In the Encyclopaedia Britannica, handicraft  has been defined as follows:               "Occupation of making by hand usable  products               graced with visual appeal. Handicrafts  encom-               pass activities that               881               require a broad range of skills and equipment,               including  needle work,  lace-making,  weaving               printed  textile, decoration,  basketry,  pot-               tery,  ornamental  metal  working,  jewelling,               leather  working, wood working,  glassblowing,               and the making of stained glass."     It  was  found by the Tribunal that raw  materials  were mixed  by  hand  and the first essential  procedure  in  the manufacture of dhoop etc., is kneading of the raw  materials and  the next essential stage is the formation of the  dhoop into sticks or coils. Both these processes were carried  out by  the  aid  of power. Only cutting of the  sticks  to  the desired length was stated to be by hand. It was not the case of  the appellant that the formation of the dhoop sticks  or

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coils,  etc., there had been use of the skill of  the  human hand  to  give the dhoop its essential  character.  But  the Tribunal  found that it was difficult to accept  that  these were handicrafts merely because some authorities have chosen to treat agarbaties as handicrafts. Therefore, the  Tribunal agreed  with the Collector that these were not  handicrafts. In that view of the matter, the Tribunal upheld the order of the Collector on this point and held that these were  dutia- ble. In view of the evidence examined by the Tribunal and in the  light of the well settled principle and the  background of the definition of handicrafts, it appears to us that  the Tribunal  was right in coming to the conclusion that only  a very  small portion of required work was done by  hand.  The main  part of the manufacture of agarbaties, etc.  was  done with  the  aid of power. It was the  machine  that  produced predominantly  the end product. In that view of the  matter, we are of the opinion that the Tribunal was right in holding that  agarbaties  were  not handicrafts. In  coming  to  the aforesaid  conclusion the tribunal had considered all  rele- vant  materials and records and applied the correct  princi- ples  of law. These findings of the tribunal on this  aspect are unassailable. In the premises, when the appeal was filed and  came  up before this Court for hearing  on  2nd  March, 1989,  on  examination of these materials,  this  Court  was satisfied  that this contention of the appellant  cannot  be accepted and agarbaties were not handicrafts. It was, howev- er, further held by the Tribunal that the revenue was  enti- tled  to  levy tax for a period of five years prior  to  the issue  of show-cause notice and not six months  pursuant  to rule 9(2) of the Central Excise Rules. The relevant  portion of rule 9(2) provides as follows:               "(2) If any excisable goods are, in contraven-               tion  of subrule (1) deposited in, or  removed               from, any place specified therein, the produc-               er or manufacturer, thereof shall pay               882               the  duty leviable on such goods upon  written               demand  made  within the period  specified  in               section 11A of the Act by the proper  officer,               whether such demand is delivered personally to               him,  or  is left at his dwelling  house,  and               shall  also be liable to a penalty  which  may               extend to two thousand rupees, and such  goods               shall be liable to confiscation."     It  may  be mentioned that rule 9(1) of the  said  Rules stipulated that no excisable goods shall be removed from any place where they are produced, except in the manner provided in  the rules. Therefore, the question that arises  in  this appeal  is whether section 11-A of the Act applies  or  not. The relevant provisions of section 11-A are as follows:               "11-A.  Recovery of duties not levied  or  not               paid  or shortlevied or short-paid or  errone-               ously  refunded. (1) When any duty  of  excise               has  not  been  levied or  paid  or  has  been               short-levied  or  short-paid  or   erroneously               refunded, a Central Excise Officer may, within               six  months  from  the  relevant  date,  serve               notice on the person chargeable with the  duty               which has not been levied or paid or which has               been short-levied or short-paid or to whom the               refund  has erroneously been  made,  requiring               him  to show cause why he should not  pay  the               amount specified in the notice:               Provided that where any duty of excise has not               been  levied or paid or has been  short-levied

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             or  short-paid  or  erroneously  refunded   by               reason  of  fraud,  collusion  or  any  wilful               misstatement  or  suppression  of  facts;   or               contravention of any of the provisions of this               Act  or  of  the rules  made  thereunder  with               intent  to  evade  payment of  duty,  by  such               person  or his agent, the provisions  of  this               sub-section shall have effect, as if the words               "Central Excise Officer" the words  "Collector               of  Central  Excise", and for the  words  "six               months",  the words "five years" were  substi-               tuted.                         Explanation.--Where  the service  of               the  notice is stayed by an order of a  Court,               the  period of such stay shall be excluded  in               computing  the aforesaid period of six  months               or five years, as the case may be."     Shri V. Lakshmi Kumaran, learned counsel for the  appel- lant drew our attention to the observations of this Court in Collector of 883 Central  Excise, Hyderabad v. M/s Chemphar Drugs  and  Lini- ments, Hyderabad, [1989] 2 SCC 127 where at page 131 of  the report,  this  Court observed that in order  to  sustain  an order  of the Tribunal beyond a period of six months and  up to a period of 5 years in view of the proviso to sub-section (1)  of  section 11-A of the Act, it had to  be  established that  the  duty  of excise had not been levied  or  paid  or short-levied  or  short-paid,  or  erroneously  refunded  by reasons of either fraud or collusion or wilful  misstatement or suppression of facts or contravention of any provision of the  Act  or  Rules made thereunder, with  intent  to  evade payment  of duty. It was observed by this Court  that  some- thing  positive other than mere inaction or failure  on  the part of the manufacturer or producer or conscious or  delib- erate withholding of information when the manufacturer  knew otherwise, is required before it is saddled with any liabil- ity  beyond the period of six months had to be  established. Whether in a particular set of facts and circumstances there was  any fraud or collusion or wilful misstatement  or  sup- pression or contravention of any provision of any Act, is  a question of fact depending upon the facts and  circumstances of  a particular case. The Tribunal, however, had held  con- trary  to  the contention of the  appellants.  The  Tribunal noted  that dhoop sticks are different products  from  agar- baties  even though they belonged to the same  category  and the  Tribunal was of the view that these were to be  treated differently.  Therefore,  the  clarification  given  in  the context  of the agarbaties could not be applicable to  dhoop sticks  etc., and the Tribunal came to the  conclusion  that inasmuch as the appellant had manufactured the goods without informing the Central Excise authorities and had been remov- ing  these without payment of duty, these would have  to  be taken to attract the mischief of the provision of rule  9(2) and  the longer period of limitation was available. But  the Tribunal  reduced  the penalty. Counsel for  the  appellants contended before us that in view of the trade notices  which were referred to by the Tribunal, there is scope for believ- ing  that agarbaties were entitled to exemption and if  that is  so, then there is enough scope for believing that  there was  no need of taking out a licence under rule 174  of  the said Rules and also that there was no need of paying duty at the  time of removal of dhoop sticks, etc.  Counsel  further submitted  that  in any event apart from the  fact  that  no licence had been taken and for which no licence was required

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because  the whole duty was exempt in view  of  notification No.  111/78,  referred to hereinbefore, and in view  of  the fact  that there was scope for believing that it was  exempt under  Schedule  annexed to the  first  notification,  i.e., 55/75,  being handicrafts, the appellants could not be  held to be guilty of the fact that excise duty had not been  paid or short-levied or short-paid or erron- 884 eously refunded because of either any fraud or collusion  or wilful misstatement or suppression of facts or contravention of any provision of the Act or Rules made thereunder.  These ingredients postulate a positive act. Failure to pay duty or take out a licence is not necessarily due to fraud or collu- sion  or  wilful  misstatement or suppression  of  facts  or contravention  of any provision of the Act.  Suppression  of facts is not failure to disclose the legal consequences of a certain provision. Shri Ganguly, appearing for the  revenue, contended  before us that the appellants should  have  taken out  a licence under rule 174 of the said Rules because  all the goods were not handicrafts and as such were not exempted under  notification No. 55/75 and therefore, the  appellants were obliged to take out a licence. The failure to take  out the  licence  and thereafter to take the goods  out  of  the factory gate without payment of duty was itself  sufficient, according to Shri Ganguly, to infer that the appellants came within  the  mischief  of section 11-A of the  Act.  We  are unable  to accept this position canvassed on behalf  of  the revenue.  As mentioned hereinbefore, mere failure or  negli- gence on the part of the producer or manufacturer either not to  take  out a licence in case where there  was  scope  for doubt as to whether licence was required to be taken out  or where there was scope for doubt whether goods were  dutiable or  not, would not attract section 11-A of the Act.  In  the facts and circumstances of this case, there were  materials, as  indicated to suggest that there was scope for  confusion and the appellants believing that the goods came within  the purview  of  the  concept of handicrafts and  as  such  were exempt.  If  there was scope for such a belief  or  opinion, then failure either to take out a licence or to pay duty  on that  belief, when there was no contrary evidence  that  the producer or the manufacturer knew that these were  excisable or  required  to be licenced, would not  attract  the  penal provisions  of  section 11-A of the Act. If  the  facts  are otherwise, then the position would be different. It is  true that  the Tribunal has come to a conclusion that  there  was failure in terms of section 11-A of the Act. Section 35-L of the  Act, inter alia, provides that an appeal shall  lie  to this  Court from any order passed by the Appellate  Tribunal relating,  among other things, to the determination  of  any question having a relation to the rate of duty of excise  or to the value of goods for purposes of assessment. Therefore, in  this appeal, we have to examine the correctness  of  the decision  of the Tribunal. For the reasons indicated  above, the  tribunal  was in error in applying  the  provisions  of section 11-A of the Act. There were no materials from  which it could be inferred or established that the duty of  excise had not been levied or paid or short-levied or short-paid or erroneously  refunded by reason of fraud, collusion  or  any wilful misstatement or suppression of facts, or 885 contravention of any of the provisions of the Act or of  the rules  made thereunder. The Tribunal in the appellate  order has,  however, reduced the penalty to Rs.5,000 and had  also upheld  the order of the confiscation of the goods. In  view of the fact that the claim of the revenue is not sustainable

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beyond a period of six months on the ground that these dhoop sticks, etc. were not handicrafts entitled to exemption,  we set aside the order of the tribunal and remand the matter to the  tribunal  to modify the demand by confining it  to  the period of six months prior to issue of show-cause notice and pass  consequential orders in the appeal on the question  of penalty  and  confiscation.  The appeal is  allowed  to  the extent indicated above and the matter is, therefore, remand- ed  to  the  tribunal with the  aforesaid  directions.  This appeal is disposed of accordingly. R.S.S.                                  Appeal allowed. 886