2012 (10) TMI 869 - AT - Central Excise

Manufacture - classification - Mayuri Henna Natural Black 50 gms , Mayuri Henna Natural Black 30 gms , Mayuri Henna Natural Brown 50 gms , Mayuri Henna Natural Brown 30 gms , Mayuri Henna Burgundy 50 gms , Mayuri Henna Burgundy 30 gms , Mayuri Henna Natural Henna 100 gms The assessee contended that Mere mixing of various powder products with the final good does not amount to manufacture - Held that - As a different product has emerged as decided in case of Heena Export Corporation versus C.C.E. 1993 (2) TMI 185 - CEGAT, NEW DELHI Duty has to be deposited by the assessee - classifiable under Heading 33.05. - pre-deposit ordered

Summary

Issues:
1. Confirmation of demand, interest, and penalty on the company.
2. Imposition of penalty on the director of the company.
3. Correct classification of products for duty payment.

Issue 1: Confirmation of demand, interest, and penalty on the company:
The Commissioner confirmed a demand of Rs. 2,82,11,437 along with interest and imposed a penalty on the company for alleged clandestine clearance of products without duty payment. The company was engaged in manufacturing various henna products and repacking mehndi products. The officers intercepted a vehicle loaded with henna products without proper documentation, leading to investigations and imposition of penalties.

Issue 2: Imposition of penalty on the director of the company:
A penalty of Rs. 50 lakhs was imposed on the director of the company for his involvement in the alleged clandestine clearance of products without duty payment. The penalty was in addition to the penalties imposed on the company for the same violations.

Issue 3: Correct classification of products for duty payment:
The dispute revolved around the correct classification of henna products under Heading 1404 or Chapter 33 for duty payment. The company claimed the products fell under Heading 1404, exempting them from duty payment, while the Revenue classified them under Chapter 33, requiring duty payment. The chemical examiner's report highlighted the composition of the products, emphasizing the absence of a specific chemical. Arguments were presented regarding the presence of chemicals in the products and their intended use for hair coloring.

The Revenue argued that the products were meant for hair coloring based on declarations and packaging, supporting their classification under Chapter 33. They cited previous tribunal decisions to justify their classification. The Tribunal disagreed with the company's contention that the mixing of henna with other powders did not constitute manufacturing. The Tribunal upheld the classification under Chapter 33 based on precedent decisions and the products' intended use for hair coloring.

The Tribunal directed the company to deposit a specified amount within a set timeframe, with the pre-deposit of the remaining amount, interest, and penalties stayed during the appeal process.

In conclusion, the judgment addressed issues related to demand confirmation, penalties on the company and director, and the correct classification of products for duty payment, ultimately upholding the Revenue's classification under Chapter 33 and directing the company to make specified deposits while staying the remaining financial obligations pending appeal.