2001 (10) TMI 1075 - AT - Central Excise

Issues Involved:
1. Classification of maltodextrin and maltodex.
2. Allegations of suppression and misclassification.
3. Limitation and computation of differential duty.
4. Availability of Modvat credit.
5. Marketability and excisability of maltodex.
6. Valuation under Rule 6(b) of the Central Excise Valuation Rules.

Issue-wise Detailed Analysis:

1. Classification of maltodextrin and maltodex:
The core dispute in this appeal revolves around the classification of two products, maltodextrin and maltodex. Both products are derived from the hydrolysis of starch, with maltodex containing Vitamin D-3. The initial classification by the department placed maltodextrin under tariff item 15-C, later changed to item 68, benefiting from Notification No. 118/75. Upon the introduction of the new tariff, the classification shifted to Chapter 19, then to Chapter 29, and finally to heading 29.13. The Commissioner, however, classified maltodextrin under sub-heading 1702.29, rejecting the claim under Chapter 29, as maltodextrin was not a separate chemically defined organic compound. For maltodex, the Commissioner also classified it under sub-heading 1702.29 based on a test report indicating it as "other sugar."

2. Allegations of suppression and misclassification:
The show cause notice alleged that both products were commercial glucose, classifiable under sub-heading 1705.19, and that the assessee suppressed this fact, wrongly availing benefits under Notifications 118/75 and 234/86. The Commissioner held that describing maltodextrin as "Maltodextrin-BPC" amounted to suppression, confirming differential duty from March 1986 onwards. However, the Tribunal found that the phrase "BPC" did appear in the certificate and subsequent classification lists, invalidating the suppression allegation and the demand for differential duty.

3. Limitation and computation of differential duty:
The Commissioner observed that the description "Maltodextrin-BPC" amounted to suppression, confirming differential duty post-March 1986. However, the Tribunal found that the certificate indeed included "BPC," thus the demand for differential duty from March 1986 to March 1988 does not survive on both limitation and merits.

4. Availability of Modvat credit:
The Commissioner denied the claim for Modvat credit on the confirmed duty, stating that the duty was not paid. The Tribunal directed that this issue, along with the classification of maltodex, be reconsidered afresh by the jurisdictional Commissioner.

5. Marketability and excisability of maltodex:
The appellant argued that maltodex was not a stable product, hence not marketable or excisable. The Tribunal acknowledged the legality of this argument, allowing it to be taken up during the appeal. This issue, along with the classification and excisability of maltodex, is to be reconsidered by the Commissioner.

6. Valuation under Rule 6(b) of the Central Excise Valuation Rules:
The appellant contended that similar products were available, and valuation should be under Rule 6(b)(i) rather than 6(b)(ii). The Commissioner did not address this point, and the Tribunal directed that this issue be reconsidered afresh by the jurisdictional Commissioner.

Conclusion:
The Tribunal set aside the demand of duty on maltodextrin and directed a de novo examination of the classification of maltodex, including the confirmation of short levy, by the jurisdictional Commissioner. The Commissioner is to provide the appellant an opportunity to contest the findings, including the excisability and marketability of maltodex, and the availability of Modvat credit. The appeal thus succeeds in part.

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