2015 (12) TMI 1443 - AT - Central Excise

Classification of Primosa and Simrose - Medicaments or fixed vegetable oils - Classification under Sub-heading No. 15159091 or under Sub-heading No. 30049069 - enhancement of penalty - Held that - tribunal in appellant s own case held that the Primosa and Simrose which are encapsulated fixed vegetable oil,classifiable under Heading No. 15.03 of CETA as fixed vegetable oil. In that case, the Revenue contended that it would be classifiable under Sub-heading No. 2108.99 of CETA as Dietary Food Supplement . - It is evident from record that EPO is a fixed oil obtained from the seeds of plant containing Linolenic Acid with some Gamolenic Acid. It is encapsulated i.e. packed in small capsules in the appellants premises. It is not chemically modified. The Fatty acids contained in EPO is natural ingredient. There is no addition of fatty acid under Section VI of CETA. As per Chapter Note I (e) of Chapter 15 of CETA, fatty acid of Section VI of CETA would not cover in Chapter 15. Section VI of CETA covers Products of Chemical or allied industries. In the present case, EPO is edible grade oils and sold as EPO in capsules with the name of Primosa and Simrose. We find that the similar issue was raised before the Tribunal in the case of M/s. Supreme Enterprises (2015 (2) TMI 954 - CESTAT MUMBAI). This product is of Amazon origin and inca inchi oil is a natural oil extracted from the seeds of the Inca Inchi tree. The oil contains natural vitamins and antioxidants (Omega 3) and has not been chemically modified at all. Revenue contended that the product is claimed to have properties of preventing blood clotting triglycerol blood sugar and so on. The Tribunal held that impugned product merits classification in under Sub-heading No. 1515.90 of CTA. In the present case, it should be kept in mind that the Customs Authorities classified EPO under Sub-heading No. 1515 of CTA and the dispute was raised by Central Excise Authorities - products Primosa and Simrose would be classifiable under Heading No. 15159091 of CETA and not under sub-heading No. 30049069 of CETA and the demand of duty alongwith interest and penalty cannot be sustained. The impugned orders are set-aside - Decided in favour of assessee.

Summary

Issues Involved:
1. Restoration of appeals.
2. Classification of products "Primosa" and "Simrose" under CETA.
3. Demand of duty, interest, and imposition of penalty.
4. Enhancement of penalty by the Revenue.

Issue-wise Detailed Analysis:

1. Restoration of Appeals:
The Tribunal initially dismissed the appeals filed by the assessee for non-prosecution. The assessee filed applications for restoration of these appeals. The Tribunal found sufficient reason for restoration and decided to take up the appeal hearing. Consequently, the appeals were restored to their original numbers for further proceedings.

2. Classification of Products "Primosa" and "Simrose" under CETA:
The core dispute revolves around whether the products "Primosa" and "Simrose" capsules should be classified under Chapter Heading No. 15159091 of CETA, as claimed by the assessee, or under Sub-heading No. 30049069 of CETA, as held by the Adjudicating Authority. The assessee argued that these products are classifiable under Chapter 15 of CETA 1985, referring to previous decisions by the Tribunal and the Hon'ble Supreme Court, which classified similar products as fixed vegetable oils under heading No. 15.03 of CETA. The Revenue, however, contended that the products should be classified under Chapter 30 of CETA as they contain fatty acids, which are excluded from Chapter 15 per Chapter Notes 1(e).

3. Demand of Duty, Interest, and Imposition of Penalty:
The Adjudicating Authority had confirmed the demand of duty along with interest and imposed penalties on the assessee for the period from January 2006 to March 2013, based on the classification of the products under Chapter 30. The Tribunal, however, found that the products "Primosa" and "Simrose" are encapsulated fixed vegetable oils and should be classified under Heading No. 15159091 of CETA, not under Sub-heading No. 30049069. Consequently, the demand of duty, interest, and penalties could not be sustained.

4. Enhancement of Penalty by the Revenue:
The Revenue had filed an appeal for the enhancement of the penalty against the order dated 28.02.2008. This appeal was linked with the present appeals and treated as listed for the day. However, given the Tribunal's decision to classify the products under Heading No. 15159091, the appeal for enhancement of the penalty was rejected.

Conclusion:
The Tribunal held that the products "Primosa" and "Simrose" are classifiable under Heading No. 15159091 of CETA. The demand of duty, along with interest and penalties, was set aside. All appeals filed by the assessee were allowed, and the appeal filed by the Revenue for enhancement of penalty was rejected. The applications for restoration of appeals were also allowed.