2003 (7) TMI 545 - AT - Central Excise

Summary

Issues:
Classification of the product "Odonil" under Heading 33.07 or 38.08 of the Tariff, imposition of penalties on the assessee and its employees, applicability of the extended period of limitation.

Classification Issue:
The appeals challenged the Commissioner's order confirming the duty demand on "Odonil" as a room deodorant under Heading 33.07 instead of as a moth repellent under Heading 38.08. The appellant cited a previous Tribunal decision for similar composition products classified under Heading 33.07. The Commissioner invoked the extended period of limitation due to alleged non-disclosure by the appellant. However, the Tribunal found the extended period inapplicable as the department had previously considered the classification issue multiple times. The Tribunal noted the product's packaging and labeling, emphasizing its use as a room deodorant and air freshener, not a moth repellent. Ultimately, the Tribunal held that the classification change from Heading 3307.49 to 3808.10 was approved after due examination, rejecting the penalties and duty demand for the extended period.

Penalties Imposition Issue:
The Commissioner imposed penalties on the assessee and its employees based on the duty demand under Heading 33.07. The Tribunal, however, found the penalties unjustified as the classification change was previously approved by the department after thorough examination. The Tribunal highlighted the product's labeling indicating its use as a room deodorant and odor eliminator, not a moth repellent. Therefore, the penalties on the assessee and its employees were set aside.

Extended Period of Limitation Issue:
The Commissioner confirmed the extended period of limitation, alleging non-disclosure by the appellant regarding the product's use as a room deodorant. The Tribunal disagreed, stating that the department had already considered the classification issue multiple times before approving the classification change. The Tribunal emphasized the product's packaging and labeling, which clearly indicated its use as a room deodorant and odor eliminator. Consequently, the extended period of limitation was deemed inapplicable, leading to the rejection of duty demand and penalties for the extended period.

Judgment Outcome:
The Tribunal partially allowed Appeal 67/03 and fully allowed Appeals 75 and 76/03. The miscellaneous application filed by the department was deemed irrelevant. The Tribunal's decision centered on the correct classification of "Odonil," the unjustified penalties imposed, and the inapplicability of the extended period of limitation based on thorough examination and product labeling.