2010 (6) TMI 700 - AT - Central Excise

Summary

Issues Involved:
1. Classification of SIOOXY capsules under the Central Excise Tariff.
2. Allegation of willful suppression of information and mis-declaration.
3. Applicability of the extended limitation period under Section 11A(1) of the Central Excise Act.
4. Requirement of pre-deposit for hearing the appeal.

Issue-wise Detailed Analysis:

1. Classification of SIOOXY Capsules:
The primary issue revolves around whether SIOOXY capsules, containing Omega-3 fatty acids, vitamins, and minerals, should be classified under sub-heading 15042090 (nil duty) as "other Fats and Oils and their fractions, of fish, other than liver oil" or under sub-heading 30045090 (16% duty) as "other medicaments containing vitamins or other products of heading 2936." The appellant argued that the product is a dietary supplement and not a medicament, thus falling under Chapter 15. The department contended that the product is a medicament due to its therapeutic and prophylactic uses, fitting under Chapter 30.

2. Allegation of Willful Suppression of Information and Mis-declaration:
The department alleged that the appellant deliberately mis-declared the product name in the ER-1 returns as "SOOXY" instead of "SIOOXY" and did not mention the tariff heading, suggesting willful suppression of information to evade duty. The appellant countered that the mis-spelling was a bona fide mistake and not a deliberate mis-declaration. They highlighted their consistent communication with the department since October 2003 regarding the product's classification and duty rate, arguing against any intent to suppress information.

3. Applicability of the Extended Limitation Period:
The show cause notices dated 22nd June 2007 and 11th September 2007 were issued by invoking the extended limitation period under the proviso to Section 11A(1) of the Central Excise Act. The appellant argued that the longer limitation period should not apply as there was ongoing correspondence with the department about the product's classification since October 2003. The tribunal found that the department was aware of the product and its classification issues, indicating that the extended limitation period might not be justified. Consequently, a significant portion of the duty demand could be time-barred.

4. Requirement of Pre-deposit:
The appellant requested a waiver of the pre-deposit requirement, arguing a strong prima facie case and undue hardship if required to deposit the entire amount. The tribunal considered both the merits of the case and the financial hardship. It directed the appellant to deposit an additional Rs. 18,00,000/- within six weeks, on top of the Rs. 22,00,000/- already deposited, to waive the requirement for the remaining duty, interest, and penalty until the appeal's disposal.

Conclusion:
The tribunal acknowledged the complexity of the classification issue and the appellant's substantial communication with the department, which could negate the allegation of willful suppression. While the department had a strong prima facie case on the merits, the tribunal balanced the interests of revenue and the appellant's hardship by requiring a partial pre-deposit. The final resolution of the classification and duty demand issues would hinge on further proceedings.