1999 (8) TMI 892 - AT - Central Excise

Summary

Issues Involved:
1. Classification of the product 'Keshamrit Shampoo' under Central Excise Tariff Act, 1985.
2. Sustainability of duty demand for a specific period.
3. Imposition of penalties under Rule 173Q and Rule 209A.
4. Liability of seized goods to confiscation and imposition of fines.
5. Payment of interest on duty demand.

Analysis:

Issue 1 - Classification of the product:
The Tribunal examined whether 'Keshamrit Shampoo' should be classified as a shampoo under Chapter 33 or as an ayurvedic medicine under Chapter 30. Despite containing ayurvedic ingredients, the product was labeled and marketed as a hair wash, not a medicine. Based on Chapter Note 2 to Chapter 33 of CETA, 1985, the Tribunal held that the product must be treated as a shampoo due to its labeling. Consequently, duty was imposed on the product.

Issue 2 - Sustainability of duty demand:
Regarding the demand of duty for a specific period, the Tribunal noted that the appellants failed to inform the Department about the product's manufacture, leading to a lack of registration as required by Rule 174. However, since there was no evidence of willful misstatement or intent to evade duty, the larger period of limitation for duty demand was not applicable. The duty, if any, was deemed payable only for six months from the date of the show cause notice.

Issue 3 - Imposition of penalties:
The Tribunal found no mens rea (intent) to evade duty, leading to the setting aside of penalties imposed on the appellant unit and an individual under Rule 173Q and Rule 209A, respectively.

Issue 4 - Confiscation of goods and fines:
As there was no evidence of mens rea, the Tribunal deemed confiscation of goods unjustified. Consequently, no fine was imposed in lieu of confiscation, and the earlier fine of Rs. 30,000 was set aside.

Issue 5 - Payment of interest:
Since the larger period of limitation was not applicable, the question of interest payment did not arise as per Section 11AB. The appeal of the appellant unit was disposed of accordingly, with any consequential reliefs. The appeal of the individual was also allowed.

In conclusion, the Tribunal's judgment addressed the classification of the product, sustainability of duty demand, imposition of penalties, confiscation of goods, and payment of interest, providing detailed reasoning for each issue while considering relevant legal provisions and factual circumstances.