2003 (1) TMI 575 - AT - Central Excise

Summary

Issues: Classification of product, Valuation dispute, Prima facie case for waiver of duty amount

Classification of product:
The case involved a dispute regarding the classification of a product named Salinomycin 350 mycelia. The appellants classified the product under chapter heading 2302.00 as a "preparation of a kind used in animal feeding," attracting nil rate of duty. However, the department argued that the product should be classified under Heading 2941.90, attracting Central Excise duty. The department contended that Salinomycin is an organic chemical derived from fermented broth, not residue or waste from food industries or a preparation for animal feeding. The appellants relied on various case laws and decisions to support their classification, emphasizing that the product is a feed supplement for animals. The Tribunal found the issue to be arguable and dispensed with the pre-deposit of the duty demand pending further hearing.

Valuation dispute:
Another dispute revolved around the valuation of the product in question. The appellants had paid duty based on 50% of the assessable value declared in the cost data submitted to the department. They argued that since the potency level of the active mass of the product varied around 50%, the assessable value should be based on the active mass, not the total mass of the finished goods. The impugned adjudicating order covered multiple Show Cause Notices, with some specifically addressing the valuation of the product. Despite past remands and readjudications, the adjudicating authority confirmed a substantial demand against the appellants. The Tribunal acknowledged the complexity of the issue and decided to waive the pre-deposit of the duty demand pending further proceedings.

Prima facie case for waiver of duty amount:
The appellants sought a waiver of the entire duty and penalty, arguing that they had already paid more than 50% of the amount demanded. They presented detailed submissions, including chemical examination reports and production details, to support their case. On the other hand, the Revenue contended that the product in question was misclassified and should attract duty under a different heading. After considering the arguments from both sides and reviewing the case records and relevant case laws, the Tribunal found that the issue was arguable and ruled in favor of the appellants by dispensing with the pre-deposit of the duty demand during the appeal process. The case was scheduled for regular hearing on a specified date for further examination and resolution.