2015 (2) TMI 1170 - AT - Central Excise

Classiffication - Maize Starch Powder - Whether to be classifiable under heading 11.03 as Maize Starch Powder as per assessee or under heading 35.05 as other modified starches as per Revenue - Period of dispute is from 1.1.2003 to 30.09.2003 and from 1.10.2003 to 31.03.2004 - Held that - there is no chemical test report on record on the basis of which it can be said that the goods in question are Modified Starch. Moreover as observed by the Tribunal in appellant s own case reported in 2011 (4) TMI 970 - CESTAT BANGALORE the appellant have produced the test reports in respect of the samples of Starch Powder tested by South India Textile Research Association and on the basis of the characteristics like moisture content ash content pH free acidity cold water solubility viscosity and starch content the goods in question have to be treated as Native Starch and not the Modified Starch. In view of this the classification of the Maize Starch Powder is upheld under Chapter 11 of the Central Excise Tariff Act as contended by the appellant. - Decided in favour of appellant with consequential relief

Summary

Issues Involved:
1. Classification of Maize Starch Powder under the Central Excise Tariff Act.
2. Applicability of extended period for limitation.
3. Imposition of penalty under Section 11 AC of the Central Excise Act, 1944.

Issue-wise Detailed Analysis:

1. Classification of Maize Starch Powder:
The primary issue in this appeal is whether Maize Starch Powder should be classified under heading 11.03 as "Maize Starch Powder" or under heading 35.05 as "Modified Starch." The Commissioner in his previous order classified the product under heading 35.05. However, the Tribunal in 2011 (270) E.L.T. 291 (Tri.) ruled that the product was properly classifiable under chapter 11. The present period of dispute falls within the same timeframe as the earlier decision, and thus, the Tribunal's previous ruling is applicable.

The Department's Representative agreed that the issue has been decided by the Tribunal, although the decision is under appeal without a stay. Consequently, the Tribunal set aside the impugned order and allowed the appeal, following the previous decision.

2. Applicability of Extended Period for Limitation:
The Tribunal examined whether the extended period of limitation under Section 11A(1) of the Central Excise Act could be invoked. The Commissioner argued that the appellant suppressed material facts about the different grades of Maize Starch Powder and their manufacturing processes. The Tribunal found that the appellant had not disclosed the full details of the manufacturing process and the various grades of Maize Starch Powder, which constituted suppression of facts. However, the Tribunal's previous decision, which was based on the lack of chemical testing, was considered applicable. Therefore, the extended period of limitation was not invoked.

3. Imposition of Penalty under Section 11 AC of the Central Excise Act, 1944:
The Commissioner had imposed a penalty of Rs. 15 lakh on the appellant under Section 11 AC, based on the classification under heading 35.05. The Tribunal found that the classification issue had already been settled in favor of the appellant in the previous case. Since the classification under chapter 11 was upheld, the penalty imposed under Section 11 AC was set aside.

Separate Judgments Delivered by the Judges:
The Member (Judicial) followed the Tribunal's previous decision and classified the product under chapter 11, setting aside the impugned order. The Member (Technical), however, distinguished the facts and upheld the classification under heading 35.05, supporting the Commissioner's findings and the imposition of penalty.

Final Order:
The matter was referred to a third member due to a difference of opinion. The third member agreed with the Member (Judicial), concluding that the Maize Starch Powder should be classified under chapter 11. Consequently, the majority order upheld the classification under chapter 11, allowing the appeal with consequential relief to the appellant.