1999 (3) TMI 565 - AT - Central Excise

Issues:
1. Duty demand on vegetable oils used for manufacturing bakery shortening.
2. Classification under Heading 15.08 versus Heading 15.04.
3. Barred by limitation - Suppression of facts.
4. Money Credit Scheme applicability.
5. Penalty imposition.

Analysis:

1. Duty Demand on Vegetable Oils:
The appellants contested the duty demand of Rs. 27,33,676 on vegetable oils used for producing "Roshni" brand bakery shortening. The Commissioner confirmed the demand by denying money credit, citing classification under Heading 15.08. However, the appellants argued that their products were classified under CET sub-heading 1504.00, which was regularly approved, and they had not suppressed any information regarding the classification.

2. Classification Dispute:
The dispute arose regarding the classification of the bakery shortening under Heading 15.08 or 15.04. The appellants consistently described their products using brand names like Rath, Sunbeam, and Roshni, claiming classification under CET sub-heading 1504.00. Both the appellants and the Department shared the view that bakery shortening fell under CET 1504.00, as evidenced by the approval of classification by the Assistant Collector and the regular permissions obtained from the Vegetable Oil Products Directorate for manufacturing.

3. Limitation and Suppression Allegation:
The show cause notice was issued beyond the normal six-month limitation period, covering the period from 1-5-1990 to 24-7-1991. The appellants argued that they had not suppressed any facts, as they consistently applied for permissions and declarations under Rule 57-O, believing their products were classifiable under CET sub-heading 1504.00. The Adjudicating authority acknowledged this belief and held that there was no intent to evade duty payment, leading to the conclusion that the demand was time-barred.

4. Money Credit Scheme Applicability:
The Money Credit Scheme under Notification No. 45/89-C.E. was a crucial aspect of the case. The appellants contended that the scheme applied to vegetable oils used for manufacturing products falling under Heading 15.04, supporting their claim for money credit. The consistent approval of classification under CET sub-heading 1504.00 further strengthened their argument regarding the applicability of the scheme to their products.

5. Penalty Imposition:
The penalty of Rs. 50,000 imposed on the appellants was set aside along with the duty demand, as the Tribunal found that the demand was time-barred and the Department had not sustained its claim for a longer period. The decision to set aside the penalty was in line with the conclusion that there was no suppression of facts or intent to evade duty payment, warranting the invoking of the extended period of limitation.

In conclusion, the Tribunal ruled in favor of the appellants, setting aside the duty demand and penalty on the grounds of being time-barred, without delving into the merits of the classification dispute.

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