2010 (2) TMI 662 - HC - Central Excise

Classification - Demand - assessee claimed this product as a medicament, whereas the department sought to classify the same as organic chemical - the bare perusal of the questions framed by the appellant would clearly indicate that the main grievance of the appellant is about the non-speaking and non-reasoned order passed by the Tribunal - Mere reliance on an earlier decision, that too, when it was decided ex parte, is also not sufficient to take any decision one way or the other - Without discussing anything else the tribunal in that case observed that the manner in which the products have been described, makes it difficult to believe that they are mixture of different constituents - It is open for the Tribunal to take appropriate decision in accordance with law and after considering the submissions that may be made by the parties before it - Appeal is allowed

Issues Involved:
1. Non-reasoned and non-speaking order by the Tribunal.
2. Classification of Calcium Gluconate under Chapter Note 2 of Chapter 30.
3. Reliance on an earlier ex parte order for classification.
4. Classification under Chapter Heading 2918.00 vs. Chapter Heading 3003.30.
5. Tribunal's consideration beyond the Show Cause Notice (SCN).
6. Demand period in relation to the extended period.
7. Classification favorable to the assessee.

Issue-wise Detailed Analysis:

1. Non-reasoned and Non-speaking Order by the Tribunal:
The appellant contended that the Tribunal's order was ex-facie non-reasoned and non-speaking, failing to deal with submissions raised before it. The Tribunal merely relied on the decision of Shanpur Industries without addressing the appellant's arguments and the legal precedents cited. The High Court agreed, emphasizing that mere reproduction of submissions in the order's body is insufficient; the deciding authority must provide findings on these submissions. The Tribunal's reliance on an ex parte decision without considering the appellant's specific arguments was deemed inadequate.

2. Classification of Calcium Gluconate under Chapter Note 2 of Chapter 30:
The appellant argued that Calcium Gluconate should be classified as a medicament under Chapter 30, citing Chapter Note 2 which defines 'medicaments'. The product in question, comprising two or more constituents mixed for therapeutic uses, should fall under Chapter Note 2(i)(a). The Tribunal, however, classified it under Chapter Heading 2918.00 as an organic chemical. The High Court noted that the Tribunal failed to appreciate the clear language of Chapter Note 2 and the appellant's detailed submissions, which highlighted that the product need not be in a state directly administrable as medicine to be classified as a medicament.

3. Reliance on an Earlier Ex Parte Order for Classification:
The Tribunal's reliance on the decision in Shanpur Industries, which was ex parte and involved multiple products, was criticized. The High Court observed that the Tribunal did not consider the distinguishing facts and submissions specific to Calcium Gluconate. The Shanpur Industries decision lacked detailed discussion and was not directly applicable to the present case.

4. Classification under Chapter Heading 2918.00 vs. Chapter Heading 3003.30:
The appellant claimed that the product should be classified under Chapter Heading 3003.30 as a medicament, not under Chapter Heading 2918.00 as an organic chemical. The High Court noted that the Tribunal did not adequately address this issue, merely relying on the Shanpur Industries decision without proper analysis. The Tribunal's failure to consider the therapeutic and prophylactic uses of the product, as admitted in the SCN, was highlighted.

5. Tribunal's Consideration Beyond the Show Cause Notice (SCN):
The appellant argued that the Tribunal erred by proceeding beyond the SCN, which only charged that the product needed to be converted into injection or tablet form to be classified as a medicament. The High Court did not specifically address this issue but implied that the Tribunal's reliance on an ex parte decision without proper consideration of the SCN's contents was problematic.

6. Demand Period in Relation to the Extended Period:
The appellant contended that once the extended period was dropped, the shorter period demand could not subsist. The High Court did not specifically address this issue but focused on the Tribunal's overall failure to provide a reasoned order.

7. Classification Favorable to the Assessee:
The appellant argued that when classification under different chapter heads is possible, the favorable one to the assessee should be adopted. The High Court did not specifically address this issue but implied that the Tribunal's failure to consider all submissions and legal precedents was a significant oversight.

Conclusion:
The High Court set aside the Tribunal's order and remanded the matter back for fresh consideration, emphasizing the need for a reasoned and speaking order. The Tribunal was directed to consider all submissions, legal precedents, and distinguishing features presented by the appellant. The High Court did not express any opinion on the product's classification, leaving it to the Tribunal to decide in accordance with the law.

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