2016 (1) TMI 1153 - AT - Central Excise

Demand - Classification - Povidone Iodine IP/USP - Penalty - Period of limitation - Held that - Chemical Examiner report is stating that the product is chemically modified polymer; appellant did not challenge the Chemical Examiner s report - the product which is imported is classified under chapter no. 39, same product manufactured in India also merits to be classified under chapter 39 only and not under chapter 29 as claimed by appellant. when the appellant had field classification list seeking the classification of the products in a particular chapter i.e. chapter no. 29, on the basis of earlier approved classification list, revenue authorities cannot allege suppression or mis-statement with the intention to evade duty, in as much, when an assessee has followed the earlier classification lists as were approved by the department and discharged duty, in our view, show cause notice dated 12-01-1999 is time barred for demanding differential duty for the period May, 1995 to October 1997, as there is no dispute that the appellant had filed the classification lists to the authorities. Show cause notice dated 12.01.1999 is blatantly time barred, as during the relevant period show cause notice has to be issued within 6 month for demand of duty with the limitation period, for invoking the extended period, there has to be a positive evidence of misstatement and suppression of the facts - Appeal allowed.

Summary

Issues involved:
Classification of the product "Povidone Iodine IP/USP" under chapter heading no. 29.31 or 39.05 of the Central Excise Act, 1985. Time limitation for demanding differential duty for the period 01-05-1995 to 31-10-1997.

Classification of the product "Povidone Iodine IP/USP":
The appellant classified the product under chapter 29, while the revenue sought classification under chapter 39. The adjudicating authority confirmed the demand with interest and penalty. The first appellate authority rejected the appeal. The appellant argued that the product falls under chapter 29 as it is mentioned in IP or USP. They claimed the demand was time-barred as no objections were raised when the classification list was filed and approved. The appellant cited various judgments to support their classification. The departmental representative relied on a Chemical Examiner's report indicating the product is a chemically modified polymer. The tribunal found that the product should be classified under chapter 39, as a similar product imported by another manufacturer was classified under the same chapter. The tribunal also noted that the appellant did not challenge the Chemical Examiner's report.

Time limitation for demanding differential duty:
The appellant contended that the show cause notice issued on 12-01-1999 for demanding differential duty for the period 01-05-1995 to 31-10-1997 was time-barred. They argued that the classification lists were approved by the authorities, and they had followed the approved lists in the past. The tribunal agreed that the notice was time-barred, as the appellant had filed classification lists and discharged duty based on the approved lists. The revenue authorities did not follow the procedure for provisional clearance of goods, indicating their awareness of the appellant's classification. The tribunal held that there was no evidence of misstatement or suppression of facts by the appellant, so the extended period for issuing the notice could not be invoked. Consequently, the show cause notice dated 12-01-1999 was deemed time-barred.

In conclusion, the tribunal set aside the impugned order, allowing the appeal on the grounds of time limitation for demanding differential duty. No observations were made on other submissions as the appeal was disposed of based on the limitation issue.