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2005 (4) TMI 455 - AT - Central Excise
Issues:
Demand of duty on the appellants for manufacturing and removing a product without payment, invoking a larger period of limitation. Penalty imposed on the appellants. Waiver of predeposit and stay of recovery sought by the appellants. Classification of the product as an Ayurvedic medicament under CETA Schedule. Interpretation of ingredients in the product based on Ayurvedic texts and procedures. Financial hardships faced by the appellants. Analysis: The judgment deals with the demand of duty amounting to Rs. 84,44,286 on the appellants for manufacturing and removing a product without payment during a specific period. The Department raised the demand through a show-cause notice alleging suppression of the correct composition of the product. A penalty of Rs. 30 lakhs was also imposed. The appellants sought waiver of predeposit and stay of recovery for the duty and penalty amounts. The primary contention revolved around the classification of the product as an Ayurvedic medicament under the CETA Schedule. The appellants argued that the ingredients in the product, although alleged to be synthetic chemicals, had Ayurvedic equivalents. They relied on the Supreme Court decision in Amrutanjan Ltd. case to support their claim. The appellants contended that the product should be considered an Ayurvedic medicament eligible for exemption under specific notifications. On the other hand, the Revenue argued that the ingredients were not used in accordance with Ayurvedic procedures, citing the Supreme Court's judgment in Naturalle Health Products case. The Director of Drugs Control also stated that certain ingredients were not recommended for "Sastric preparation." The Tribunal acknowledged the contentious nature of the issue. While the appellants referenced the Amrutanjan case, the Revenue cited the Naturalle Health Products case. The Tribunal decided to refer to the ratio of the Amrutanjan case, emphasizing that the presence of synthetic chemicals would not disqualify a product as an Ayurvedic medicament if they were known to the Ayurvedic system of medicine. The Tribunal noted that the ingredients in question had Ayurvedic equivalents but reserved judgment on whether they were added following the Ayurvedic procedure. Considering the financial hardships faced by the appellants and the contentious nature of the issue, the Tribunal directed the appellants to pre-deposit a reduced amount within a specified period, pending further hearings.
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