1999(06)LCX0087
IN THE CEGAT, COURT NO. III, NEW DELHI
S/Shri A.C.C. Unni, Member (J) and V.K. Agrawal, Member (T)
COLLECTOR OF CENTRAL EXCISE, VADODARA
Final Order Nos. 503-505/99-C, dated 25-6-1999 in Appeal Nos. E/5531/91-C and E/773, 989/92-C
CASE CITED
Tetragon Chemie (Pvt.) Ltd. v. Commissioner — 1999 (030) RLT 366 — Referred................ [Para 1]
DEPARTMENTAL CLARIFICATION CITED
C.B.E.& C. Circular No. 1/90, dated 1-1-1990...................................................................... [Para 1]
Advocated By : Shri J.R. Cama, Advocate, for the Appellant.
Shri H.K. Jain, SDR, for the Respondent.
[Order per : A.C.C. Unni, Member (J)]. - These three appeals are taken up for hearing together as the main point at issue relates to classification of Animal Feed Ingredient (AFI) cake which is used in the manufacture of two final products manufactured by the appellants namely `Aurofad and Aureomycin’. The appellants contended that these are classifiable under Chapter Heading 23.02 (Preparation of a kind used in animal feeding including dog and cat food). The Department on the other hand, contends that it is classifiable under Chapter sub-heading 3823.00 (Prepared binders for foundary moulds or cores : chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included; residual products of the chemical or allied industries, not elsewhere specified or included.) Ld. Counsel for the appellants Shri J.R. Cama submitted in response to a query from the Bench that the Bank guarantees executed by the appellants pursuant to the stay order given by the Tribunal earlier have been updated and is now valid up to 31-12-1999 and he has also filed copies of letter from State Bank of India stating that Bank guarantees are kept alive till 31-12-1999. Ld. Counsel further submits that the department had approved the classification lists from time to time of the said products. Two show cause notices were issued to the appellants one dated 31-8-1987 covering the period of 22-2-1986 to 18-6-1987 and another show cause notice dated 5-10-1990 for the period 28-2-1986 to 15-6-1987 alleging among other things, suppression of facts, for invoking the extended period of demand of duty. In this connection, ld. Counsel drew attention to the letter sent by the appellants as early as August 8, 1985 in response to the Range Superintendent’s letter dated 16-7-1985 asking for data regarding their raw materials and process of manufacture of the goods manufactured by appellants. In the enclosure to their reply dated 8-8-1985 in page 3 under Column 6, appellants had clarified and explained the manufacturing process which clearly brought out that the animal food ingredients (AFI) mash is taken out and solid cake of AFI so obtained is partially dried in sun and air-dryer and is pulverised to make it in powder form. Ld. Counsel submits that in the face of the detailed description of the manufacturing process given to the Department as early as in 1985, the Department could not alleged any suppression of fact for invoking the extended period of limitation. He also refers to the Chemical Examiner’s report dated 25-10-1996 obtained by the Range Superintendent which fully supports the appellant’s claim that their product would fall under sub-heading 23.09. He also derives support from the HSN. Ld. Counsel then drew attention to the recent Larger Bench decision of the Tribunal in Tetragon Chemie (Pvt.) Ltd. v. CCE reported in 1999 (030) RLT 366 in which the description of preparations under Heading 23.09 of HSN and the clarification given by the Board by Circular No. 1/90 dated 1-1-1990 has been relied upon. Further, by Board Circular dated 26-3-1996, earlier Circular No. 1/90 had been further explained stating that Explanatory Notes under Heading 23.09 of HSN indicated that pre-mixes contained in addition to the active substance, vitamins, amino acides, anti-oxidants, solvents etc. would fall under Heading 23.02 of Central Excise Tariff Act, 1985 provided such a preparation is of a kind used in animal food. Ld. Counsel therefore submits that the extended period of limitation for demanding duty could not be sustained as there was no suppression of any relevant fact by the appellants. Further, on merits, they are covered by the decision in Tetragon Chemie (supra).
2. Ld. SDR submits that the letter dated August 8, 1985 and the enclosure referred to by the appellants counsel have not been discussed in the orders of the lower authorities. These were not produced before the authorities below and the same could not be relied upon at this stage to show that the appellants have not suppressed any information at the relevant time. He also draws attention to the fact that the Chemical Examiner’s report relied on by appellants is of October, 1996 and this cannot be said to be related to the items in dispute in the instant appeal. He also points out that the charge against the appellants is that the AFI which is mixed by the appellants for the manufacture of two final products namely Aurofad and Aureomycin were intermediate products which were dutiable and appellants had not disclosed manufacturing process of the said intermediate product in the classification lists. Therefore, the evidence presently brought to the notice of the Bench cannot be relied upon in support of the appellants’ contention.
3. We have considered the submissions mentioned above. We notice that two pieces of evidence presently brought to our notice by the appellant’s Counsel, namely, letter dated August 8, 1985 and the enclosure explaining the manufacturing process has not been discussed in the orders passed by the authorities below. It is not clear from the record, whether the said letter had been brought to the notice of the adjudicating authority. Further, the Chemical Examiner’s report dated 25-10-1996 also appears to be a report given by the Chemical Examiner after a visit to the factory sometime in 1996. It does not refer to any samples that were taken during the period under dispute. The Chemical Examiner’s report is based apparently on the examination of samples taken sometime later and not on the examination of samples stated to have been taken during the period under dispute i.e. August, 1987 or thereabout. We feel that these material which have been brought to our notice by the ld. Counsel now cannot be relied upon at this stage. Since the matter relates to the classification of a chemical product, technical examination of the product and expert opinion thereon has to be necessarily gone into before deciding the classification issue. We therefore, remand these appeals to the original adjudicating authority to examine the question whether the appellants had disclosed the manufacturing process to the excise authorities at the relevant time and also to see whether any report of Chemical Examiner of the samples taken at the relevant time in 1987 is available. The classification issue has to be decided on the basis of examination of the said material. In other words the limitation issue and the classification issue have to be gone into de novo. The adjudicating authority would therefore, readjudicate the matter after affording an opportunity to the appellants herein to make their submissions and produce all the relevant evidence at the de novo proceedings.
4. As a result, we remand these three appeals to the adjudicating authority to decide the classification as well as the limitation issue afresh on the basis of evidence that may be submitted.
5. We allow the Appeals by remand after setting aside the impugned order.
Equivalent 2000 (124) ELT 480 (Tribunal)