2006 (4) TMI 270 - AT - Central Excise

Summary

Issues: Classification of product under tariff headings 33.04 and 3303.09, Time-barring of demand, Medicament vs. cosmetic classification

Classification Issue:
The case involved appeals regarding the classification of the product "Stretch Nil" as either a skin care product under Heading 33.04 or as an Ayurvedic Medicine under sub-heading 3303.09. The appellants argued that the product was a medicament for preventing/reducing stretch marks during pregnancy, while the respondent contended it was a cosmetic product. The duty rate differed between the two classifications, with the appellants claiming that the product should be classified under the lower duty rate of sub-heading 3303.09.

Medicament vs. Cosmetic Classification Issue:
The appellants relied on the Board's Circular and criteria to argue that the product should be treated as a medicament. They highlighted that the product was marketed for a specific condition, prescribed for a limited period with a daily dose, and had substantial therapeutic properties. The appellants also cited a Tribunal decision upheld by the Supreme Court to support their classification argument.

Time-barring of Demand Issue:
The appellants contended that the demand for the period in question was time-barred as the show cause notice was issued after a significant delay from the relevant period. They argued that they had fully disclosed the product description in the declaration submitted earlier, making the demand time-barred.

Judgment:
After considering the arguments and case records, the Tribunal found that the appellants had described the product as a medicament in their declaration under Rule 173B. The Tribunal held that the product was marketed for a specific skin condition during pregnancy, with prescribed usage and therapeutic properties, thus classifying it as an ayurvedic medicament under sub-heading 3303.09. The Tribunal also ruled that the extended period of limitation was not applicable as there was no misstatement or suppression of facts by the appellants. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellants.