2011 (2) TMI 600 - AT - Central Excise

Classification of product Vipul Booster as Plant Growth Regulator under Tariff heading 3808.20 or as an insecticide under tariff heading 3808.10 - Consequent to the classification of the product as an insecticide u/h No. 3808.10, the product became chargeable to excise duty on MRP basis u/s 4A & a differential duty demand in extended period of Limitation with interest and penalty - Held that - The product Vipul Booster, which has as its active ingredient, Triacontanol, which is an insecticide merits classification as an insecticide u/h No. 3808.10 of the Central Excise tariff and not as a plant growth regulator u/h No. 3808.20. Regarding differential duty in extended period of Limitation. - Held that - the department has failed to prove any suppression or willful mis-statement of facts with an intent to evade duty on the part of the appellant. therefore the demand of duty has to be restricted to the normal period of one year from the relevant date. the matter essentially relates to a classification dispute, imposition of penalty is not warranted. decided in favour of Assessee.

Issues Involved:
1. Classification of the product "Vipul Booster" under the Central Excise Tariff.
2. Valuation of the product for excise duty purposes.
3. Allegation of suppression or willful misstatement of facts by the appellant.
4. Imposition of penalty under Section 11AC of the Central Excise Act.
5. Departmental appeals against the orders of the Commissioner (Appeals).

Detailed Analysis:

1. Classification of the Product "Vipul Booster":
The primary issue in all five appeals was the classification of "Vipul Booster," whether it should be classified as a "Plant Growth Regulator" under tariff heading 3808.20 as claimed by the appellant or as an insecticide under tariff heading 3808.10 as claimed by the department.

The Tribunal noted that "Vipul Booster" contains Triacontanol 0.1% w/w, an insecticide, as the active ingredient. The product was registered as an insecticide under the Insecticides Act, 1968, and all procedures and formalities under this Act were followed by the appellant. The Tribunal concluded that the active ingredient imparts the essential character to the product, thus classifying "Vipul Booster" as an insecticide under heading 3808.10.

2. Valuation of the Product for Excise Duty:
Since "Vipul Booster" was classified as an insecticide under heading 3808.10, its valuation for excise duty purposes should be done on the MRP basis under Section 4A of the Central Excise Act, 1944. The Tribunal upheld the department's contention that the product should be valued accordingly.

3. Allegation of Suppression or Willful Misstatement of Facts:
The department alleged that the appellant suppressed the fact that Triacontanol is an insecticide and did not inform the department about the registration under the Insecticides Act, 1968. The Tribunal found that the composition of the product was known to the department since 1989, and the notification of Triacontanol as an insecticide was a public document. Therefore, the Tribunal concluded that there was no suppression or willful misstatement of facts by the appellant.

4. Imposition of Penalty under Section 11AC:
Since there was no suppression or willful misstatement of facts, the Tribunal held that the imposition of penalty under Section 11AC of the Central Excise Act was not warranted. The Tribunal emphasized that in classification disputes where different views are possible, penalties should not be imposed.

5. Departmental Appeals Against the Orders of the Commissioner (Appeals):
The department had filed appeals against the orders of the Commissioner (Appeals), who had set aside the duty demands based on the Tribunal's earlier order. Since the Supreme Court had remanded the matter for fresh consideration, the Tribunal upheld the department's appeals, subject to the modification that the duty demand should be restricted to the normal period of one year from the relevant date.

Conclusion:
The Tribunal concluded that "Vipul Booster," with Triacontanol as its active ingredient, is classifiable as an insecticide under heading 3808.10 of the Central Excise Tariff. The valuation of the product should be done under Section 4A of the Central Excise Act. The demand for the period beyond the normal limitation period was set aside, and no penalty was imposed. The departmental appeals were allowed, subject to the modification regarding the limitation period.

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