2002 (11) TMI 389 - AT - Central Excise

Issues:
1. Classification of purified potable water under Central Excise Tariff Act, 1985.
2. Excisability of the brand 'Bisleri' treated water.
3. Imposition of duty and penalty under Central Excise Rules, 1944.
4. Consideration of limitation period for duty payment.
5. Imposition of penalty on the appellants.

Detailed Analysis:
1. The issue of classification under the Central Excise Tariff Act, 1985 arose as the appellants claimed that their purified potable water preparation did not result in the manufacture of excisable 'Mineral water.' The Commissioner, however, concluded that the addition of mineral salts during the process made the final product excisable under Central Excise Tariff 2201.90, based on test reports certifying an increase in mineral salt concentration in the bottled water. The Tribunal found that there was indeed a manipulation of mineral contents to achieve specific end-product specifications, leading to an excisable manufacture, contrary to the appellant's claim.

2. The excisability of the 'Bisleri' brand treated water was disputed, with the Board initially deeming it non-excisable. However, subsequent clarifications stated that if mineral salts were added during the treatment process, the product would be considered 'mineral water' and subject to duty under sub-heading 2201.90. Test reports indicated an increase in mineral salt concentration in the final product, supporting excisability. The Tribunal upheld the excisability based on the Board's instructions and the evident manipulation of mineral contents, contrary to the appellant's argument.

3. The Commissioner had imposed duty demands and penalties under Section 173Q(1) of the Central Excise Rules, 1944. However, the Tribunal found that the longer period demand under the proviso to Section 11A and the penalty imposition were not justified. The demand for the period within six months from the date of issue was upheld, and the matter was remitted back to the original authority for quantification after considering the appellants' submissions.

4. Regarding the limitation period for duty payment, it was noted that the 'Bisleri' brand's excisability was in a state of flux, leading to a reasonable belief by both the appellants and the Department that the goods were not excisable. The Tribunal found that there was no deliberate attempt to evade duty, and certain demands falling within the longer period under the proviso clause of Section 11A(1) were not justified. The demand for the period within six months was to be quantified after granting the benefit of a specific decision.

5. The plea against the imposition of penalties on the appellants was upheld by the Tribunal. It was reasoned that since the Board and the Department were aware of the manufacturing process of the 'Bisleri' brand treated water, and the process remained consistent, the penalty imposition under Rule 173Q was not justified. The Tribunal set aside the penalty imposition in this case.

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