2004 (8) TMI 505 - AT - Central Excise

Summary

Issues:
Classification of items "Primosa" and "Simrose" under Chapter Sub-Heading 1503.00 vs. 2108.99 of Central Excise Tariff Act, 1985.

Analysis:
1. The appellants argued that the items were only repacked and encapsulated, not resulting in new products. They contended that Chapter 15 was appropriate for classifying plant-extracted oils marketed as dietary food supplements. The Commissioner (Appeals) agreed with this view, classifying the items under Chapter Heading 15.

2. The appellants disputed the reclassification under Chapter Sub-Heading 2108.99, stating the Commissioner lacked detailed reasoning. They highlighted that Chapter 21 required products for human consumption, containing vitamins and sometimes iron compounds. The appellants argued that the items did not meet these criteria and should not be classified under Chapter 21.

3. The JCDR supported the Commissioner's decision, emphasizing that as the items were marketed as "Dietary Food Supplements," they fell under Tariff Heading 2108.99. The JCDR justified the Commissioner's findings, stating that the classification was correct and all aspects had been examined thoroughly.

4. The Tribunal analyzed whether the items could be classified under Chapter 21, finding merit in the appellants' arguments. It was noted that the Commissioner did not provide sufficient reasoning for classifying the items under Chapter 21. The Tribunal observed that the items did not align with the descriptions under Chapter 21 or HSN Explanatory Notes, supporting the appellants' position. Consequently, the stay application was unconditionally allowed, and recovery was stayed pending appeal.

5. Concerning coercive measures by the Department for recovery under Chapter 21, the Tribunal directed that as the order was stayed, no coercive actions should be taken. The Department was prohibited from enforcing recovery or compelling the appellants to clear goods under Chapter 21 until the final hearing on 10th December 2004.