2011 (9) TMI 604 - AT - Central Excise

Classification - Held That - Aluminium Hydroxide Gel (AHG) is classified under sub- heading 2818.10 and not sub-heading 3002.00. Extended Period - Held That - The appellants did not show the production and clearance of the AHG in the statutory records and returns. The details of production and clearance of the goods were not brought to the notice of the department. Even the range officers informed them that duty is payable under sub heading 2818.10, the appellants did not change their stand. Thus appellants cannot be held to be bonafide and extended period of limitation is rightly applicable.

Summary

Issues:
1. Classification of Aluminium Hydroxide Gel (AHG) under Central Excise Tariff Act, 1985.
2. Applicability of the extended period under proviso to Section 11A of the Act.

Classification Issue:
The case involved the classification of Aluminium Hydroxide Gel (AHG) by M/s. Intervet Laboratories Ltd. The appellants initially believed the goods should be classified under sub-heading 3002.00 but later conceded to the Revenue's view that the correct classification was under chapter 28 of the Central Excise Tariff Act, 1985. The Revenue contended that the appellants misclassified the product and failed to pay duty under the correct sub-heading. The Commissioner upheld the classification under sub-heading 2818.10 and imposed a duty demand, which the appellants challenged before the Tribunal.

Extended Period Applicability Issue:
The second issue revolved around the applicability of the extended period under proviso to Section 11A of the Act. The appellants argued that the extended period should not apply as the department was aware of the classification since 1995, and they had submitted classification lists and monthly returns to the department. They claimed that the show-cause notice dated 4.12.2001 was time-barred as the department had knowledge of the activity before that date. However, the Revenue contended that the appellants changed the classification without approval, stopped paying duty, and provided misleading information about the production and clearance of AHG, justifying the application of the extended period.

Judgment Analysis:
After considering both sides, the Tribunal focused on whether the show-cause notice was time-barred and the classification of AHG. The Tribunal acknowledged the appellants' concession that the correct classification was under sub-heading 2818.10. It noted that the appellants had initially classified the product correctly but later changed it without approval, leading to non-payment of duty. The Tribunal found the department's argument regarding the extended period valid, as the appellants failed to provide accurate information and ignored directives to pay duty under the approved sub-heading. The Tribunal upheld the Commissioner's decision that the extended period of limitation was rightly applicable due to the appellants' actions. Consequently, the Tribunal dismissed the appeal, affirming the Order-in-Original passed by the Commissioner.

In conclusion, the judgment addressed the issues of classification of AHG and the applicability of the extended period under the Central Excise Act, 1944. It emphasized the importance of accurate classification, timely duty payment, and compliance with departmental directives to avoid penalties and extended periods of limitation.