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2012 (7) TMI 748 - AT - Central ExciseWhether the Treated Tamarind Kernel Powder produced by the assessees is excisable Held that - Chemical process carried out gives the product a different molecular structure and makes it suitable for a different use. Any person wanting to use Tamarind Powder as thickener in textile industry will not buy and use such powder unless it is subjected to the processes that the appellants are carrying out. So prima facie the processes constitute a manufacturing process Classification Held that - Goods are manufactured goods and its classification was under sub-Heading 1301.10 of the Central Excise tariff Extended period of limitation Held that - Extended period of 5 years cannot be invoked for demanding duty - matter relates to a period where the system of filing of classification list in advance and seeking its approval by the department was in vogue and the officers of the department were expected to visit factories and conduct necessary verification for approval of classification list - demands invoking the extended period of time limit is not maintainable
Issues Involved:
1. Excisability of Treated Tamarind Kernel Powder (TPT-12). 2. Classification of TPT-12 under Central Excise Tariff. 3. Invocation of the extended period of limitation for duty demands. 4. Consideration of cum-duty price and Modvat credit. Issue-wise Detailed Analysis: 1. Excisability of Treated Tamarind Kernel Powder (TPT-12): The primary issue was whether the processes applied to Tamarind Kernel Powder (TKP) to produce TPT-12 constituted "manufacture" under the Central Excise Act. The appellants argued that the end product remained TKP with only a slight change in solubility, which did not result in a new product. They relied on precedents like Thungabhadra Industries Ltd vs. CTO, CCE vs. Tikatar Industries, and Shyam Oil Cake Ltd vs. CCE, which held that certain chemical processes did not amount to manufacturing. However, the Tribunal found that the chemical processes altered the molecular structure of TKP, making it suitable for use in the textile industry as a thickener, thus constituting a manufacturing process. The Tribunal concluded that the processes resulted in a new product, TPT-12, which was marketable and had a different use. 2. Classification of TPT-12 under Central Excise Tariff: The classification of TPT-12 was contested between Heading 11.01 (Products of the milling industry) and Heading 13.01 (Lac; gums, resins, and other vegetable saps and extracts). The appellants argued that TPT-12 should be classified under Heading 11.01, supported by CBEC Circular F. No. 10/18/86-CX.I, which suggested that tamarind seed powder could be classified under Heading 11.01. However, the Tribunal found that Heading 13.01 was more appropriate as it covered gums and products derived through chemical processes, aligning with the HSN Explanatory Notes. The Tribunal noted that the Central Excise Tariff was aligned with the HSN at the chapter level and concluded that TPT-12, being a chemically processed product, fit better under Heading 13.01. 3. Invocation of the Extended Period of Limitation for Duty Demands: The Tribunal examined whether the extended period of five years could be invoked for demanding duty from M/s Hindustan Gum and Chemicals, Ahmedabad. The Tribunal noted that during the relevant period, the classification list was approved by the department, and there was no suppression or mis-declaration by the assessee. Therefore, the extended period could not be invoked, and the demand was limited to the normal period prescribed under Section 11A of the Central Excise Act. 4. Consideration of Cum-duty Price and Modvat Credit: The Tribunal addressed the appellants' prayers for considering the price realized as cum-duty price and allowing Modvat credit for duty paid on inputs. The Tribunal found merit in these prayers and allowed them, directing the adjudicating authority to rework the duty liability accordingly. Conclusion: The Tribunal held that TPT-12 is a manufactured product classifiable under sub-Heading 1301.10 of the Central Excise Tariff. The demands invoking the extended period of limitation were not maintainable. The Tribunal also granted the benefit of cum-duty realization and Modvat credit for duty paid on inputs, directing the adjudicating authority to revise the duty liability.
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