2006 (3) TMI 413 - AT - Central Excise

Summary

Issues:
1. Duty demand and penalty imposition on clearance of ink for marker pens without payment of duty under notification 83/90.
2. Applicability of notification 67/95 for captive consumption.
3. Classification of ink for marker pens under CET sub-heading 3215.90 and duty chargeable @ 18%.
4. Proper course of action when classification of disputed ink is uncertain in the show cause notice.

Analysis:
1. The adjudicating authority confirmed a duty demand and penalty on the respondents for clearing ink for marker pens without paying duty under notification 83/90. The manufacturer claimed benefit under notification 67/95 for captive consumption, but it was held not applicable as the final product, marker pen, was cleared without duty exemption. The Assistant Commissioner rejected the claim that the ink was not marketable, classifying it under CET sub-heading 3215.90 and imposing duty at 18%.

2. The Commissioner (Appeals) noted that the show cause notice did not propose a classification other than writing ink under CET sub-heading 3215.90. The department had not issued any notice suggesting a different classification, which was deemed necessary before confirming the demand. The Revenue appealed against the decision to set aside the demand.

3. The Appellate Tribunal agreed with the Commissioner (Appeals) that proper classification of the disputed ink was crucial when raising the demand. However, instead of setting aside the demand, the Tribunal held that the case should have been remanded to the original authority for testing the product to determine if it was writing ink or another type. The Tribunal ordered the adjudicating authority to draw samples, test them, communicate the results to the assessee, and allow them to present their case before passing fresh orders.

In conclusion, the Tribunal set aside the impugned order and remanded the case for proper classification of the ink for marker pens, emphasizing the importance of determining the nature of the product before imposing duty. The decision highlighted the procedural requirement of notifying the assessee of any proposed classification changes before confirming a duty demand.