2004 (10) TMI 403 - AT - Central Excise

Summary

Issues: Classification of "Wipro Shikakai Soap" under Central Excise Tariff, duty demand, penalty imposition, time limitation for the period October 1995 to March 1997.

In the judgment by the Appellate Tribunal CESTAT, Mumbai, the issue revolved around the classification of "Wipro Shikakai Soap" under the Central Excise Tariff. The Commissioner of Central Excise, Aurangabad had classified the product under sub-heading 3305.99 as a "preparation for use on the hair" instead of under sub-heading 3401.19 as a soap. This classification led to a demand for duty amounting to Rs. 68,24,701, interest, and penalties under various provisions of the Central Excise Act, 1944. The period in question was from October 1995 to March 1997.

The Tribunal noted that the show cause notice alleged that the appellants had misdeclared the product with the intention to evade proper duty payment. However, it was found that the essential characteristic of the product, Shikakai extract, was not suppressed as it was clearly declared as "Wipro Shikakai Soap" in all relevant documents. The product was marketed and labeled as soap, with no Vitamin-E or Milk Powder used during the disputed period. The department had previously accepted the classification under chapter Heading 34.01 for nearly a decade without any challenge. The Tribunal emphasized that a claim for a different classification, not finally adopted by the department, did not constitute suppression or wilful misstatement to evade duty payment.

Based on these findings, the Tribunal concluded that the demand for the period from October 1995 to March 1997 was time-barred due to the absence of suppression or wilful misstatement. Consequently, the duty demand and penalties imposed were set aside, and the appeal was allowed on the grounds of the time limitation, without delving into the merits of the correct classification of the product under the Central Excise Tariff.