2006 (10) TMI 283 - AT - Central Excise

Summary

Issues involved:
1. Classification of the product under CETA sub-headings 3003.10 and 3003.20.
2. Application for waiver of pre-deposit of duty and penalty.
3. Interpretation of the department's clarification regarding the product.
4. Consideration of limitation in the demand for duty.

Classification of the product under CETA sub-headings 3003.10 and 3003.20:
The case involved a dispute over the correct classification of a product, initially described as 'Oxy 500' under CETA sub-heading 3003.20, later identified as Oxytetracycline Hydrochloride Capsules - 500 mg. The department clarified in May 1998 that the product should be classified under CETA sub-heading 3003.20 as a generic medicine. The Tribunal's remand order sought to determine the actual product manufactured by the assessee, confirming it as Oxytetracycline Hydrochloride Capsules - 500 mg. However, the classification under CETA sub-heading 3003.20 was rejected due to the previous classification under CETA sub-heading 3003.10 by the assessee.

Application for waiver of pre-deposit of duty and penalty:
The appellants applied for the waiver of pre-deposit of duty amounting to Rs. 13,48,625/- and penalty of Rs. 1,00,000/-. The Tribunal considered the merits of the case, noting that the appellants had filed classification declarations under CETA sub-heading 3003.20 after the department's clarification in May 1998. The Tribunal found that the appellants had made a prima facie case for waiver on merits, especially considering the absence of a demand for duty in the earlier adjudication order of March 1999.

Interpretation of the department's clarification regarding the product:
After the department's clarification in May 1998 that the product should be classified under CETA sub-heading 3003.20, the appellants subsequently filed classification declarations claiming the same. This action was considered as a prima facie case for waiver on merits by the Tribunal. The Tribunal also noted that the failure to challenge the earlier adjudication order of March 1999 did not operate against the applicants as there was no duty demand in that order necessitating an appeal.

Consideration of limitation in the demand for duty:
Regarding the limitation in the demand for duty, the Tribunal found that the show cause notice of January 2001 covered the period from December 1999 to February 2000. Since there were no allegations of suppression or misdeclaration in the notice, a prima facie case on the limitation was established. Consequently, the Tribunal waived the requirement of pre-deposit of duty and penalty, staying the recovery pending the appeal.

This detailed analysis of the judgment highlights the key issues involved and the Tribunal's findings on each aspect of the case.