2013 (11) TMI 1387 - AT - Central Excise

Correct classification of Nestea Tea premix Under Heading 2108.99 OR Heading 2101.20 of CETA Held that - It cannot be accepted that the appellant suppressed the ingredients with an intent to evade payment of duty - There is no elaboration in the show cause notice indicating as to which particular ingredients, which was relevant for the purpose of classification, does not stand disclosed by the appellant in the said flow chart or manufacturing process - no initiative was taken by the Revenue to propose change in the classification of pre-mix tea and to raise differential duty demand - There is no explanation as to why when Revenue was aware of the facts, the show cause notice was issued only 3.7.2008, covering the period June, 2003 to February, 2008. The appellant filed proper classification list, and they were also regularly filing monthly ER-1 returns showing the manufacturing and clearance of the pre-mix tea, by adopting classification under heading 2108.99 - No objection was ever raised by the Revenue - When the Revenue was raising the show cause notice in respect of pre-mix coffee, they could have or they should have raised show cause notice in respect of pre-mix tea also - It is well settled law that claiming classification under a particular heading does not amount to suppression or mis-statement with intent to evade payment of duty - the demand was beyond the period of limitation is not sustainable - the demand was confirmed as being within the period of limitation which demand is already quantified and deposited by them alongwith interest - in the absence of any malafide on the part of the assessee, it was not fit to impose any penalty Decided partly in favour of Assessee.

Summary

Issues:
Correct classification of Nestea Tea premix under heading 2108.99 or 2101.20 of the CETA; Dispute regarding duty, interest, and penalty; Invocation of longer period of limitation.

Analysis:
1. Correct Classification Dispute:
The dispute in the present appeal revolves around the correct classification of the appellant's product, Nestea Tea premix, under heading 2108.99 or 2101.20 of the CETA. The appellant claimed classification under 2108.99, while the Revenue classified it under 2101.20. The Commissioner confirmed the duty demand, interest, and penalty by invoking a longer period of limitation.

2. Issue of Limitation:
The appellant's advocate contested the impugned order on the point of limitation. The period in question was from June 2003 to February 2008, with the show cause notice issued on 3.7.2008. The advocate argued that the appellant had complied with the law by filing the necessary classification list in 2000, and the Revenue was aware of the facts but failed to take timely action. The advocate requested the appeal to be allowed based on limitation and sought the setting aside of the penalty.

3. Analysis of Classification and Limitation Arguments:
The Tribunal examined the appellant's filing of the classification list in 2000, which correctly described the Nestea Tea premix under sub-heading 2108.99. The appellant had also submitted a detailed process block diagram of the manufacturing process, indicating all ingredients used. The Tribunal found no basis for the allegation of ingredient suppression to evade duty. Additionally, the Revenue's failure to act on the classification discrepancy despite being aware of the Tribunal's decision in a similar case raised questions about the delayed show cause notice issued in 2008.

4. Decision and Ruling:
The Tribunal ruled in favor of the appellant, setting aside the demand beyond the normal period of limitation and confirming the demand within the limitation period, which had already been deposited by the appellant along with interest. The penalty imposed on the appellant was also set aside due to the absence of any malafide intent. The appeal was disposed of with the demand within the limitation period confirmed, interest paid, and the penalty annulled.

In conclusion, the judgment primarily addressed the correct classification of the Nestea Tea premix, the invocation of a longer period of limitation, and the subsequent ruling in favor of the appellant based on the lack of justification for the demand beyond the limitation period and the absence of malafide intent warranting a penalty.